Medicaid planning and the look-back period

On Behalf of | Apr 22, 2020 | Estate Planning |

If you are relatively young and still in good health, you may not be thinking about if you will ever need to live in a long-term care facility. But if you live long enough, there is a good chance that you will need to spend time in a nursing home, assisted-living facility or similar institution.

Because long-term care is so expensive, most people need assistance from Medicaid to pay for it. But qualifying for Medicaid without penalty requires careful planning that starts years before you could possibly need it. One reason advance planning is so essential is the five-year look-back period.

Medicaid planning: what is the ‘look-back period’?

Medicaid is a need-based program. To qualify, you must have no savings in your name. A large part of Medicaid planning is finding ways to leave some of your assets to your spouse, children and other family members while still qualifying.

You may be able to accomplish this by giving tax-free gifts. But if you do this, you should be aware that when you apply for Medicaid, investigators will look into your finances going back 60 months from the date you applied. So if you have made any valuable gifts in the past five years, you will be penalized by Medicaid.

This is not to say that you should not makes gifts to your children as part of your estate plan. All we are saying is that your gifting should be carefully planned. You should consult with your estate planning attorney about your desire to do Medicaid planning properly, as well as avoid things like the New York and federal estate taxes.