If you want to pay for nursing home care with Medicaid, you should know that you will only qualify for Medicaid if you have minimal income and assets. The government wants you to use your own funds to pay for nursing home care before turning to Medicaid.
You may be tempted to just give away most of your money and assets right before you need to enter a nursing home to qualify for Medicaid. But if you do this, you could be hit by the Medicaid five-year look-back period.
What is the look-back period?
When you apply for Medicaid, the Centers for Medicare & Medicaid Services (CMS) will go over your financial transactions and gifting for the previous five years. They are looking for assets sold under their fair market value or assets that were simply given away within the five-year period immediately preceding your application for benefits.
What happens if you violate the look-back period?
If CMS finds you violated the five-year look-back period, your eligibility for Medicaid benefits may be limited or delayed. If you need nursing home care immediately, this can be very problematic.
As part of the penalty for violating the look-back period, you may be ineligible for Medicaid for the length of time the asset could have been used on its own, based on its value, to pay for your nursing home care. The penalty starts on the month you applied for Medicaid, not the month you gave away or sold the asset.
The good news is that once the penalty ends, you can qualify for Medicaid benefits, assuming you have not committed any other violations in the meantime. Still, you want to be careful about how you handle your assets when doing your elder care planning so you do not run afoul of the Medicaid look-back period.