The Medicaid Look-Back Period, Explained

The Medicaid Look-Back Period, Explained

Assisted Living vs. In-Home Care: Which is Better for You?

Life is full of surprises and, unfortunately, not all of them are pleasant. Health emergencies are among the most jarring and life-altering things that can happen to you and your family. An unexpected medical event can change just about every aspect of your life, from your ability to earn an income to your entire family dynamic. If you or a loved one finds themselves facing an unanticipated trip to a nursing home, it can also be extremely expensive. Qualifying for nursing home Medicaid is one of the best ways to protect yourself from running through your savings, but eligibility is a tricky situation which involves planning—thanks to something called the Medicaid look-back period.

What is Nursing Home Medicaid?

Nursing homes are often prohibitively expensive for most families, with yearly costs generally exceeding $100,000 a year. Nursing home Medicaid is a way for families to receive assistance that will help defray these costs. Medicaid will often cover 100 percent of most essential nursing home services; including room and board, skilled nursing care, meals, rehabilitation services, medications, and maintenance. Some services that may not be covered include private rooms and specially-prepared food. While most nursing homes do accept Medicaid, this is not always the case, so it is important to always check.

How Does the Medicaid Look-Back Period Operate?

Nursing home Medicaid is considered a last option, only available for patients who have no other resources when it comes to payment. For this reason, patients that do not plan ahead may use up their entire savings before they qualify for Medicaid. Medicaid planning, though, can ensure that this does not happen. Medicaid eligibility is based on financial need and is subject to both a monthly income limit and a limit in the number of countable assets you possess. The key to qualifying for Medicaid without running through your savings is to spend down your countable assets or transfer them into non-countable assets. This may involve gifting your money to loved ones, setting up a trust, or using several other Medicaid planning strategies.

The problem with spending down your assets, though, comes from what is known as the Medicaid look-back period. This means that, when you apply for Medicaid, your financial picture over the last 5 years will be taken into consideration. If you suddenly find yourself in need of nursing home Medicaid, you cannot simply gift all your assets to a loved one. Any assets gifted during the last five years for less than fair market value will be taken into account in your application and can lead to a period of ineligibility. If you suddenly find yourself or a loved one facing a health emergency and needing to qualify for Medicaid, there are options that you can take. However, the best way to plan for Medicaid is to gradually transfer your assets over a long period of time, so you don’t find yourself scrambling at the last minute.  None of this should be done without a legal strategy designed and implemented with the assistance of an Elder Law attorney who understands the Medicaid rules.

Either way, nursing home Medicaid planning can be a tricky business, but it’s essential to maintaining your family’s physical, emotional, and financial health.

Contact Miller Estate and Elder Law

If you have any questions about qualifying for nursing home Medicaid or the Medicaid look-back period, do not hesitate to contact the experienced attorneys at Miller Estate and Elder Law by calling (256) 251-2137 or by filling out the form below. We’re here to help protect you and your family!

Subscribe to Our Blog

Should I be Thinking About Medicaid Asset Protection Planning?

Should I be Thinking About Medicaid Asset Protection Planning?

Medicaid is a federal program administered by the states that helps individuals who meet certain asset criteria pay for long-term care costs. Because Medicaid is a means-tested program, certain financial conditions must be met to qualify, which means that it is important to plan ahead. Unfortunately, people often wait until it is too late and a sudden illness, disability, or other crises occurs before planning for long-term care. Medicaid crisis planning is a strategy that can help you qualify for Medicaid, without experiencing financial ruin.

Long-term care is expensive, and these costs only continue to increase. The average life span of adults is also increasing, which translates to more years of care at increasingly higher rates. Without a plan in place, these costs could be financially devastating. In fact, without proper planning, your life savings could be wiped out within months of needing long-term care.

Due to Medicaid’s strict eligibility requirements, many individuals fail to meet the income and asset requirements, but still cannot afford the cost of healthcare on their own. Medicaid planning is a way to assess an individual’s situation and devise a strategy to help qualify for Medicaid if it becomes necessary.

Two popular strategies employed to meet these financial qualifications are:

  • Spend Down
  • Medicaid Asset Protection Trust

The spend down strategy is a way to reduce countable assets by carefully spending excess funds on things like medical expenses, home improvements, prepaid funerals, etc. To prevent applicants from simply giving away their money or resources to qualify for Medicaid, the federal government implemented the “look-back period.” Each state’s Medicaid program uses slightly different eligibility rules, but most states examine all of a senior’s financial transactions dating back five years from the date of their application. If a transaction is found to be in violation, the applicant will be assessed a penalty.

When it comes to the length of the penalty period, there really is no limit.  It is based on the amount of money given away during the last 5 years.  Unfortunately, if a senior has gifted their assets during the look-back period and requires nursing home level care, this will have to be paid out of pocket until the penalty period runs out and they become eligible for coverage.

The other problem with the spend down strategy is that your assets are depleted.  As an individual, you can only have $2,000 in countable assets!  A more favorable strategy to spending all of your assets is to implement a Medicaid Asset Protection Trust (MAPT).  A MAPT is exactly as it sounds – a trust designed to protect assets from being counted for Medicaid eligibility. When planned properly, an MAPT protects the home, other properties, and investments.  When designed properly and in advance, the assets in the trust will go to your heirs instead of having to spent on nursing home care.

The trust must be irrevocable for exemption from Medicaid’s asset limit. This means that the trust cannot be cancelled or changed. Once the assets are transferred into the trust, they no longer belong to the individual, nor can that individual regain ownership of the assets. If the assets are in a revocable trust, Medicaid considers the assets to still be owned by the Medicaid applicant. This is because they still have control over the assets held in the trust.  As a result assets in revocable trust do not provide the necessary asset protection from long term care costs.

Planning well in advance of the need for long-term care is the best course of action when considering a Medicaid Asset Protection Trust.  Transfers of assets to MAPTs do not result in immediate Medicaid qualification as they are subject to the 5 year look back as well.  The advantage is that if the assets have been in the MAPT for 5 years, they are not counted by Medicaid.  Therefore, the sooner you do the planning and get the MAPT set up, the more likely your nest egg will be protected if you need long term nursing home care down the road.

At Miller Estate and Elder Law we have extensive experience advising clients on Medicaid planning. Contact us today so that we can help you qualify for Medicaid, while also protecting your assets and your loved ones.

Subscribe to Our Blog

How to Care for Someone with Dementia: Guardianship/Conservatorship for Parents

How to Care for Someone with Dementia: Guardianship/Conservatorship for Parents

how to care for someone with dementia

As our parents and loved ones grow older, they become the target of scammers and con artists across the globe. This is especially scary if your parents have developed dementia, Alzheimer’s, or another form of mental incapacitation. Knowing how to care for someone with dementia—and how to protect them—isn’t always straightforward, and sometimes legal intervention is required. If you are not named the agent on a preexisting power of attorney document, having an elder care attorney help you set up a guardianship/conservatorship may be the best way to make sure your parent’s finances are safe from predators.

When considering how to care for someone with dementia, it’s important to remember that they are a much easier target than most due to memory loss, confusion, and not being as mentally present as they used to be.

One of the best resources available to help you tackle the legal and financial planning issues that arise with the elderly is to engage the services of an elder care attorney, or a law firm that specializes in elder law. Working with a qualified attorney will ensure you have what you need to protect your parents and aging loved ones.

However, with or without a lawyer, you should know how to care for someone with dementia, as well as how to recognize the warning signs that your aging loved one has fallen victim to a scam:

Common Scams To Be Aware Of

Some of the most common scams that target the elderly, as well as those with conditions like dementia and Alzheimer’s, are:

  • Fake lotteries and sweepstakes that ask for money upfront for prize collection or entrance fees
  • People posing as representatives from government agencies like Social Security, Medicare, or the IRS
  • Bogus discount prescriptions and medical equipment
  • Credit card fraud
  • The “Grandparent Scam” where someone will claim that a grandchild is in trouble and needs money
  • Investment schemes
  • And others…

Signs To Look Out For

Guarding against those who would abuse our elders is a big part of how to care for someone with dementia. The following are some of the many signs of suspicious activity to be wary of:

  • Unusual monthly charges on bank and credit card statements
  • Out-of-the-ordinary calls from companies, utilities, government agencies, or charities requesting money in an unusual way
  • Callers who pressure you to make immediate decisions, ask for a lot of personal or financial information, or demand payment in unusual or specific ways
  • Official-looking emails, letters, bills, offers, etc. with spelling and grammar mistakes, or that seem out of place

What You Can Do?

If you have a parent who has Alzheimer’s or dementia—or some other form of incapacity—and they’re having a difficult time making decisions, or are getting taken advantage of, you may want to contact an elder care attorney about getting a guardianship or establishing a conservatorship over their finances. If your aging loved ones are not able to manage their own care or money, an elder law attorney can help you navigate the process of stepping in and protecting them.

Download our Free Guide: Caring for Aging Loved Ones

If you need to protect your own aging parents or loved ones, start by downloading our free guide: Caring for Aging Loved Ones: The ABCs of Long-Term Care Planning or by calling our elder law firm at (256) 251-2137. Our team is here to help guide you through the process of planning for long-term care, and setting up guardianships and conservatorships when needed.

Contact Miller Estate & Elder Law

Subscribe to Our Blog

Ensuring Medicaid Eligibility Before Long-Term Nursing Care is Needed

Ensuring Medicaid Eligibility Before Long-Term Nursing Care is Needed

medicaid eligibility

If your spouse needs nursing home care, we hope that you’ve prepared by taking out a long-term care insurance policy or ensuring Medicaid eligibility well in advance of needing it. The question of how to pay for long-term care is generally the first issue that arises when placing a loved one in a nursing home. Many people don’t realize it, but there are only three viable ways to pay for long-term care:

1. Long-Term Care Insurance

Planning ahead by securing long-term care insurance is the best way to pay for nursing home care, but it only works if your spouse already has an insurance policy long before care is needed. If you try to get long-term care insurance after you need it, it’s too late to qualify. This is because most policies require medical underwriting, and if you already receive long-term care services, you are unlikely to qualify. Getting a long-term care insurance policy well before you need the benefits will save you much stress and hardship down the road.

2. Out of Pocket

Exactly as it sounds, out of pocket means that you will have to pay 100% of the nursing home care costs yourselves. Most couples don’t have the finances on-hand to cover care this expensive, especially considering how long you may need the care. In Alabama, for example, the average cost of long-term nursing care is $78,000 per year. Your life savings can be eaten up in a matter of months with nursing home fees that high!

3. Qualify for Medicaid

Medicaid—not Medicare—is the government program that covers the cost of long-term nursing home care. The application process is slow and difficult, and the requirements to qualify are very financially restrictive. Applying for Medicaid when you already need nursing home care—also known as Medicaid Crisis Planning—will likely mean paying out of pocket at first. That’s because, in order to qualify for Medicaid when you’re married, you’ll only be able to keep about 50% of your combined assets—up to a maximum of about $130,000. This means that if you have $300,000 total in assets, you won’t meet Medicaid eligibility requirements until you spend down about $170,000. Then, once you do qualify for Medicaid, all of your spouse’s income will go directly to paying for the nursing home, and you’ll have to rely on your income alone—plus whatever is left of your assets—to get by on. Learn more about the rules of Medicaid eligibility in Alabama.

However, through Long-Term Care Planning, you can employ several strategies to protect your assets from the cost of nursing home care and ensure Medicaid eligibility when you need it. A qualified elder law attorney will help you determine the best way to organize assets now, so you don’t lose everything to the nursing home later.

Take the Next Step

Sign up for our free webinar about how to get qualified for Medicaid by using the brief form below, or contact attorney Bill Miller today at (256) 251-2137.

Contact Miller Estate & Elder Law

Subscribe to Our Blog

What Does Medicaid Cover…and What Does Medicaid NOT Cover?

What Does Medicaid Cover…and What Does Medicaid NOT Cover?

what does medicaid cover

Medicaid is a government-administered health insurance program that provides coverage to low-income Americans during all stages of life, from birth to age 65+. Given the massive breadth of this program, it should not come as a shock that it’s an incredibly complex system, governed by a confusing set of rules. This article aims to answer the questions, what does Medicaid cover, and what does Medicaid NOT cover?

While Medicaid can support individuals of any age, it’s an especially excellent resource for seniors. Long-term nursing care costs in Alabama average $78,000 per year, and that is for a shared room. However, qualifying for Medicaid can be a challenge. Applicants must meet certain financial and medical eligibility requirements. There are strict income and asset limits, with policies designed to prevent individuals from giving away their assets in order to qualify. A qualified elder law attorney can help you navigate the Medicaid maze, and avoid unsuspecting mistakes that could leave you or a loved one without the coverage they need.

For seniors who qualify, Medicaid is a wonderful program that works in collaboration with Medicare to cover a variety of healthcare needs

What Does Medicaid Cover?

Medicaid covers mandatory healthcare services, including:

  • Hospital care
  • Skilled nursing
  • Home healthcare
  • Doctor’s appointments 
  • Preventative care & wellness screening
  • Transportation to and from medical appointments
  • Diagnostics

Optional benefits include hospice care, case management, prescription drugs, physical or occupational therapy, rehabilitation, dental, vision, and more.

However, Medicaid does have some limitations…

What Does Medicaid NOT Cover?

In most circumstances, Medicaid will not cover medical care provided outside of the United States, though certain circumstances—such as if a foreign hospital is closer than a domestic hospital—may be covered. Like with private health insurances, Medicaid will also not cover services deemed unnecessary, or services paid for by another insurance provider. 

Some other services that Medicaid will not cover include:

  • Free health screening or medical devices that are given away
  • Cosmetic surgery or complications that result from cosmetic surgery
  • Personal comfort items or beauty services

Every state has slightly different Medicaid qualifications and coverage, so the best way to gain comprehensive (and accurate) understanding is to speak with a qualified elder law attorney in your home state.

Miller Estate and Elder Law is happy to offer a number of free resources to help you better understand how Medicaid planning works, and how to avoid going broke paying for long-term care. Gain access to our brief 20-minute webinar about how to get you or a loved one qualified for Medicaid by completing the brief form below, or download one of our free guides.

Contact Miller Estate & Elder Law

Subscribe to Our Blog

Do I have to wait 60 months to apply for Medicaid?

Do I have to wait 60 months to apply for Medicaid?

Medicaid is an excellent resource that helps cover the costs of long-term care for those who are eligible. However, applying for Medicaid and being eligible can be a difficult process. After you apply for Medicaid, there is a 60-month look-back period where your finances are reviewed. In order to apply for Medicaid, the applicant’s monthly income must not exceed $2,349 and cannot have more than $2000 in non-exempt assets.

What is the Medicaid Look Back period?

The Medicaid look-back period is 60 months prior to your Medicaid application date. The purpose of the look-back period is to keep people from qualifying for Medicaid unfairly and to ensure there were no assets transferred or given away in order to fall under the asset  cap of eligibility. If transfers are made during the look-back period then it could trigger a penalty and you could be disqualified from receiving Medicaid for a certain period of time.

Income & Asset Caps for Married Couples

If you are married and your spouse is going into a long-term care facility, it is critical that you understand the income and asset restrictions for married couples. If your spouse is going into the nursing home, , all of their income must go towards their care. You can keep all of your income.  You can also keep a maximum of one-half of the total assets up to $128,640.

The Bottom Line

Once you are under the income and asset limits, you can apply for Medicaid. Medicaid can be a confusing maze with many different twists and turns throughout the process. If you have questions about your Medicaid eligibility, we encourage you to contact Miller Estate & Elder Law at (256) 251-2137 or register for one of our free estate planning workshops.

Events Form

  • Reserve your seat today

  • This field is for validation purposes and should be left unchanged.