Elder Law Attorneys
4828 Lincoln Ave. • Evansville, Indiana, 47715 • Phone: (812) 476-2762
101 S. Hull St. • Ft. Branch, Indiana 47648 • By Appointment Only

What is the 5-Year Look Back for Medicaid Planning?

The "5-year look back" period is a crucial aspect of Medicaid planning, particularly concerning eligibility for Medicaid-funded long-term care services. Here’s a breakdown of what it entails:

Definition: The 5-year look back period refers to the time frame that Medicaid examines an applicant's financial transactions to determine if any assets were transferred for less than fair market value (i.e., gifted or transferred) in order to qualify for Medicaid benefits. The purpose is to prevent individuals from transferring assets to others to meet Medicaid's asset eligibility requirements.

Duration: For 2024, the look back period is 5 years. This means Medicaid can review all financial transactions, including gifts and transfers of assets, made by the applicant or their spouse within the 5 years preceding the Medicaid application date.

Penalty Period: If Medicaid finds that assets were transferred for less than fair market value during the 5-year look back period, a penalty period is imposed. The penalty period is calculated based on the total value of the transferred assets divided by the average monthly cost of nursing home care in the state (or another Medicaid-covered service). For 2024, the current transfer penalty divisor in Indiana is $7,496.00. During this penalty period, the applicant will not be eligible for Medicaid benefits, potentially leading to significant out-of-pocket expenses for long-term care, unless the gifted funds are restored.

Planning Considerations:

• Timing: Because of the look back period, individuals considering Medicaid planning should meet with an elder law attorney well in advance of needing long-term care services. Planning can be done even if someone has already entered a nursing home or assisted living facility that accepts a Medicaid waiver.

• Seeking Legal Advice: Seeking advice from elder law attorneys extremely experienced in Medicaid planning can help navigate the complexities of asset transfers and ensure compliance with Medicaid regulations. Each person considering Medicaid planning advice should seek competent legal representation from an elder law attorney because every case is different and will require a unique planning strategies.

• Alternative Strategies: There are legal and ethical ways to structure assets to meet Medicaid eligibility requirements without facing penalties, such as using certain types of trusts or annuities. These strategies must be explored with professional guidance.

Understanding the 5-year look back period is essential for anyone planning for long-term care needs and considering Medicaid as a potential funding source for long term care. It underscores the importance of careful planning and transparency in asset management to avoid unintended consequences during the Medicaid application process.

**Disclaimer: This information is for informational and educational purposes only. It is not intended to be legal advice. We are not your attorneys unless you have established that relationship with our firm.