The Medicaid Five-Year Look Back Rule Explained
Generally, the Medicaid five-year look back rule is triggered by filing an application for the benefit. On the Medicaid application, the applicant is required to report every gift made in the five-year period leading up to the application date. If an applicant made any gifts during the five years prior to the application date, they will be penalized. The penalty is expressed as a waiting period during which the applicant is required to self-pay for care until the penalty expires. The length of a given penalty period is determined by the total amount of gifts made during the look back period as more fully discussed below.
Here are the technical aspects for applying the five-year look back rule. The rule considers four specific periods of time: 1) the date the application was filed, which is the “base line date”; 2) the date five years prior to the application date, which is the “look back date”; 3) the time in between, which is the “look back period”; and 4) the resulting “penalty period” (if any).
The base line date (the date of application) determines the look back period. A penalty will be assessed for every gift that falls within the look back period. The length of the penalty period is determined by dividing the total amount of gifts made during the look back period by the 2021 divisor number $10,554.83. Any gift made prior to the look back date is not subject to a penalty. Hence, the look back is from the date of application. A helpful rule of thumb is that for every $10,554.83 gift, a 30-day penalty is assessed.
Please keep in mind that each applicant has only one base line date and the first application sets that base line date, regardless of how many times the application is filed. So, withdrawing the original application and refiling it later to try to make a transfer (gift) fall outside of the look back period, will not work.
 Most people make gifts prior to applying for Medicaid. This is why the rule is applied as a look back from the base line date. There are times that gifts are made after the base line date as part of the spend down to the asset limit of $2,000 for individual applicants. The regulations plug this hole with the proviso that any gift made after the base line date is subject to a penalty.