As you grow older, you may think more and more about what your future holds. Maybe you have limited mobility and know you will need to enter an assisted-living or nursing facility at some point. Maybe you receive a dementia diagnosis at your latest physical and want to plan ahead for when you need full-time nursing home care. You know you don’t want all your savings to go toward your care costs, but can you really avoid that?
Understanding Medicaid and the look-back period
You first need to understand how Medicaid eligibility works if you don’t want all your assets to go toward your nursing home care. You will need to spend down your assets to avoid being penalized in Medicaid’s look-back period.
In every state except California, Medicaid has a five-year look-back period for applicants. Medicaid reviews applicants’ finances, making sure they just didn’t give their assets away so they could qualify for federal aid. So, if you gave your daughter $50,000 for a down payment on a house in 2019, that could delay your ability to receive Medicaid for a several months.
Expenses exempt from Medicaid’s look-back period
However, certain expenses are exempt from Medicaid’s look-back period. These include the following:
- Medical bills
- Home improvement costs
- Prepaid funeral costs
- Setting up a trust for a blind or disabled child
You also may avoid a look-back period violation if you transferred ownership of your home to a child who cared for you, delaying your need to enter a nursing home.
Getting help with Medicaid planning
Before you begin spending down to avoid Medicaid’s look-back period penalty, consult with an experienced elder law attorney. An attorney can advise you on the best way to preserve your assets, plan ahead for when you may need Medicaid and help you meet Medicaid requirements.
Avoiding Medicaid’s look-back period penalty is one of the reasons Medicaid planning is so important. So you can better control reallocating your assets and yet meet Medicaid eligibility when you need to.