As seniors age, they often begin to think about when they will need additional care. Perhaps, a close friend suffers from Parkinson’s disease and now needs to be in a nursing home. Or a spouse now has dementia and a couple has to consider when to move into assisted living.
Quickly, those considering moving into a nursing home or assisted living facility realize how expensive that is. In Texas, the average cost of nursing home care in a private room is $6,540 a month – that’s more than $78,000 a year. Applying for Medicaid may be necessity for those needing long-term care. Of course, seniors applying for Medicaid have to meet certain income limits. They also can be penalized if they violate Medicaid’s lookback period.
What is Medicaid’s lookback period?
In Texas, and in 48 other states, those who want to qualify for Medicaid have a 60-month (five-year) lookback period. In that time, if Medicaid applicants gave away large amount of assets, they can’t receive Medicaid for a certain period of time. The lookback period was created to avoid having seniors give away their assets just so they can qualify for Medicaid.
So, if an elderly couple gave their son $10,000 for a down payment on a house in September 2017 and apply for Medicaid in February 2021, they would be in violation of Medicaid’s lookback period. The same would be true if they gave a fairly new car away to charity or sold a car at half its value. Also, if someone receiving Medicaid and inherits a large sum of money and then gives it away, they will lose their Medicaid benefits for a period of time.
Unfortunately, those planning for Medicaid often think that the IRS’ yearly gift tax exemption of $15,000 applies to Medicaid’s lookback period. However, that’s not correct.
Violating the lookback period
A violation of Medicaid’s lookback period disqualifies seniors from receiving benefits based on how much money was involved. If a couple gave their home valued at $250,000 to their daughter, they couldn’t qualify for Medicaid for 2,135 days – more than five years – after they transferred ownership of the home. The formula is based on the amount of money given away divided by $117.08, the average daily rate for private nursing care.
Planning ahead to qualify for Medicaid is complicated. Seniors should consult an elder law attorney about ways they can spend down their assets or protect them if they want to qualify for Medicaid in the future.