What is the Medicaid Lookback Period?
There are many myths and misconceptions about the Medicaid qualification process and how it applies to elder citizens receiving long-term care. Many of these involve the “Medicaid lookback period” — one of the most challenging aspects of Medicaid planning. Understanding the realities and limits of the Medicaid lookback rule is essential to effective asset protection planning — and to avoiding disqualification from the Medicaid program.
An older person generally applies for Medicaid when most of his or her other financial resources have been exhausted on long-term care expenses. To prevent applicants from simply giving away assets in order to qualify earlier, the Florida Department of Children and Families examines every significant financial transaction an applicant has made during the 60 months prior to the date of application. The state agency identifies any instances where property was given away for less than fair market value:
- Outright gifts to individuals
- Signing over real estate
- Selling property to family and friends for significantly less than its actual value
- Sham transactions where applicants paid for goods or services they didn’t actually receive
- Purchases of annuities that are not actuarially sound
If the state agency determines such transactions took place and no exception applies, either the property must be returned and used to pay for care or the applicant becomes ineligible for a period of time. This is determined by dividing the total value of the property given away by the average cost of one month of nursing care in the state. During this period, the applicant cannot receive Medicaid benefits even if they have no other assets.
Medicaid planning is a thorny area whose regulations are usually incomprehensible for the uninitiated. That is why an experienced Florida Medicaid planning lawyer is an essential ally, whether you are planning for your own assets or acting as a guardian or attorney-in-fact for a loved one.