If you or a loved one are beginning a medicare planning process, you may hear the term five-year lookback. Understanding what that is and how to prepare for it is a serious concern when discussing your long-term care plans.
To begin to understand the five-year lookback, you must first understand Medicaid.
What is Medicaid?
Medicaid is a U.S. Government insurance program that helps senior citizens pay for long-term care, which can be very expensive. Medicaid will provide payment, but only after the patient has fully exhausted all of their personal resources. The law requires you to use your own money and assets to pay for your care as much as you are able, and until you run out of money.
What is a five-year lookback?
Some seniors feel that they would prefer that their family and friends receive their assets instead of using them to pay for care; however, giving away or hiding money in an attempt to avoid responsibility for payment is fraudulent.
The five-year lookback is the financial audit process that the government uses to ensure you are not trying to defraud the government when you apply for Medicaid. Auditing the previous five years of financial data, including bank statements and tax returns, ensures that you did not attempt to defraud the government and that you are lawfully entitled to Medicaid insurance.
Careful planning can help you avoid running afoul of the Medicaid lookback regulations, but for the best results, Medicaid planning must begin many years before you think you’ll need it. Begin as soon as possible.