Medicaid planning and the look back period

by | Jun 10, 2020 | Long Term Care Planning |

In planning for the future, it may be easy to assume that just because something appears to make sense then it should be okay. This is true for many things; however, when it comes to Medicaid planning, some things that may seem harmless or even beneficial can come back to cause problems. Medicaid benefits can be essential for Texas residents who need a nursing home, assisted living or even in-home care, but there are income and asset eligibility requirements that must be met in order to qualify for these benefits.

In determining eligibility, Medicaid considers the individual’s current assets along with financial transactions that have occurred over the previous five-year time period from the date that the individual applies for benefits. This five-year time period is often referred to as the look back period. The purpose of this look back is to verify that the individual has not attempted to shield assets that could otherwise be used to pay for needed care.

Actions that might cause one to not be eligible for benefits can include gifting or selling the home to a relative at below market value or even giving money or other assets to friends or relatives. Although one is able to provide monetary gifts up to a certain dollar amount without tax implications, this does not apply to Medicaid eligibility. Of course, there are exemptions that may apply.

It is possible for an individual to transfer funds, up to a set limit, to his or her spouse. Additionally, if one’s adult child has been living in the Texas home and caring for the individual for an established period of time, it may be possible to transfer the home to this child. There are a number of other exceptions; an experienced estate planning attorney can assist the individual when it comes to Medicaid planning and the various requirements for eligibility.