5 YEAR MEDICAID LOOKBACK—3/04/08
INTRO: You may have heard that the new Medicaid rules include a 5 year look back. Lots of people think that means you must pay the nursing home yourself for 5 years before you can get Medicaid coverage. And lots of people are wrong!
1. WHAT IS THE 5 YEAR MEDICAID LOOK BACK?
A. When you apply for Medicaid to pay for nursing home costs for a parent or spouse, the State will look back to see if your loved one gave any money or property away within the last five years. It not, your loved one may immediately qualify for Medicaid.
2. IF A PERSON DID MAKE GIFTS OR TRANSFERS WITHIN 5 YEARS, DOES THAT MEAN THE MONEY HAS TO BE GIVEN BACK?
A. No. The state will first look at the circumstances surrounding the gift to see if the gift is A exempt@ from any penalty. There are a number of exemptions. For example, if the gift was to a disabled child, then there's no problem and the person may qualify for Medicaid immediately.
3. WHAT IF NO EXEMPTION APPLIES? THEN DOES THE GIFT HAVE TO BE RETURNED?
A. No. At that point, the state will look at the amount of the gift, and then apply a Medicaid penalty. That means that the Medicaid applicant won't be given Medicaid coverage for a period of time, which could be for 5 years, 10 years, even more. Or the wait for Medicaid might be much less. For example, a gift of $5000 disqualifies the applicant from getting Medicaid for only one month.
4. LET'S SAY MOM IS IN A NURSING HOME AND HAS $100,000. SHOULD MOM GIVE IT AWAY TO PROTECT IT?
A. No. If mom just gives the $100,000 away to her child, and no exemption applies, she'll create a penalty period of about 19 months. That means the child will spend the entire $100,000 paying the nursing home bills over 19 months before mom gets help.
In many cases, we might suggest a partial gift combined with a Medicaid qualified annuity. Now, this gets very complicated. But with proper planning, mom might give away to her child about $40,000 to $50,000 of her $100,000 savings, make herself ineligible for Medicaid for about 9 or 10 months, and use the rest of the savings to pay for that period. After the 9 or 10 months has passed, mom will get Medicaid, and the $40,000 to $50,000 which was given away would be protected.
5. WHERE CAN WE LEARN MORE?
A. Unfortunately, the state's website isn't real helpful. You can go to the GO website www.golden.tv. Or you can come out to one of our free workshops.
CLOSE: Medicaid is a critical safety net to help you protect your life savings from nursing home costs. But there's lots of incorrect information floating around.