Most people come to our office wondering about the Medicaid 5-year look back. What is it and how does it affect you?
In order to understand the 5-year look back period, one first needs to understand that Medicaid is a welfare program, that is Medicaid is only given to people who are indigent. There are financial and medical conditions that you must meet in order to access to this benefit.
Unlike Medicare, to which you are entitled when attaining 65 years of age, Medicaid is not an entitlement program. In other words, you are not going to get Medicaid just because you turn 65.
As a welfare program, the laws prohibit intentional impoverishment for the purpose of accessing to Medicaid benefits. For example, you now have $500,000 in your bank account and you transfer all of it to your daughter just to get Medicaid. The result of this transfer is that you will be penalized for a certain amount of time to access to Medicaid benefits.
Here is where the 5-year look back comes into play. When you apply for certain types of Medicaid programs, you are obligated to answer this question: “Have you made any transfer in the last 5 years?” You have to answer this question under penalty of perjury.
If you answer “yes” Medicaid will ask you for more information about the transfer. They want to know why you transferred, to whom you transferred, when you transferred, and what was the value that you received for the transfer. If Medicaid determines that the transfer was made for the sole purpose of obtaining Medicaid benefits, they will deny your application and will impose a penalty. For example, you gifted all your money to your daughter.
If you transferred assets and you received value for it, then you should not be worried. For example, you sold your car to your daughter and she paid you market value for it. In this case no penalties will be imposed because you receive compensation for the transfer.
So, the 5-year look back period is just the period of time over which Medicaid will review or scrutinize any transfer that you made before applying for Medicaid. It doesn’t mean that because you transferred assets over that period you will get disqualified. If you transferred assets over that period and you didn’t receive any value for it, e.g. gifts, then you may not be eligible for a certain period of time.
The good news is that these transfers can be fixed. Florida allows you to cure transfers. If the gift is returned to the applicant and then the applicant engaged in proper planning, Medicaid eligibility is still possible. Also, there are exceptions and nuances that the experienced Elder Law practitioner can utilize in your favor to obtain eligibility in spite of the transfer.
So, if you are looking to apply for Medicaid benefits and you are concerned about transfers that you made in the past, don’t get discouraged. Give us a call for a complimentary evaluation of your case so that you become eligible for this important benefit!