The Holidays are here! For many, this is the season for giving. This is a perfect time to remind families managing the care of a disabled loved one (one who needs care with activities of daily living) about the Medicaid five-year look-back rule.
Every applicant has a look-back period. It is triggered when the Long-Term Care Medicaid application is filed. The applicant must self-report all gifts made (any transfer of an asset for less than full market value) during the five-year period leading up to the application date (hence the look-back).
The Long-Term Care Medicaid regulations attempt to eliminate gifting by penalizing the applicant for doing so. The penalty is expressed as a waiting period during which the applicant must self-pay for their care until the period ends. The length of the period is calculated by dividing the total amount of gifts made in the past five years by $11,000 (the 2023 divisor). The quotient is usually stated in months or days. When the penalty period ends, Long-Term Care Medicaid will begin to pay for care.
For most applicants, a history of gifting assets during the holidays does not overly complicate their application. Problems begin when a disabled person makes large gifts. For example, a gift of $11,000 creates a 30-day waiting period. If the applicant's cost of care becomes $15,000 per month for example, then a significant history of gifting becomes problematic. This is why giving your house away to a family member as a Holiday gift can really complicate a future application for Long-Term Care Medicaid.