Medicaid Look-Back

What Is Medicaid’s Look-Back Period and Why Does It Matter?

The Medicaid Look-Back Period is a review window where the state examines all financial transactions made by an applicant (and their spouse) before applying for long-term care Medicaid. Its purpose is to prevent people from giving away or underpricing assets just to meet Medicaid’s strict asset limits.

In most states, this period spans 60 months (5 years) from the application date. Any asset transfers made during that time that violate the rules can result in a penalty period where Medicaid will not pay for your care.

Which Medicaid Programs Use the Look-Back Rule?

The Look-Back applies to long-term care Medicaid programs, including:

• Nursing Home Medicaid
• Home and Community Based Services (HCBS) Waivers

It does not apply to Regular Medicaid for seniors, often called Aged, Blind, and Disabled (ABD) Medicaid.

How Do Look-Back Rules Differ by State?

While the federal government sets the framework, each state can set its own rules:

• California: 30-month look-back for nursing home Medicaid, ending completely by July 2026.
• New York: 60-month look-back for nursing homes; no look-back for community Medicaid yet, but a 30-month period is planned.
• Some states allow small monthly gifts without penalties (e.g., Pennsylvania allows up to $500).

What Transactions Can Trigger a Penalty?

• Gifting money or property
• Selling items for less than fair market value
• Paying relatives for care without a valid written agreement
• Transferring a home without meeting an exemption
• Creating an irrevocable trust within the look-back window

What Are Common Mistakes That Cause Unintentional Violations?

• IRS gift rule confusion: The federal gift tax exemption doesn’t apply to Medicaid.
• Lack of proof: Selling an asset without documentation can be treated as a violation.
• Improper trust setup: Irrevocable trusts created within the look-back period may be counted as gifts.
• Informal caregiving payments: Paying a family caregiver without a formal Caregiver Agreement can trigger penalties.

Are There Legal Exceptions to the Look-Back Rule?

Yes — some transfers are allowed without penalty if done correctly:

• Transfers to a spouse (Community Spouse Resource Allowance rules apply)
• Transfers to a disabled or blind child of any age
• Transfers of a home to:
  • A minor child (under 21)
  • A sibling with partial ownership who lived there at least a year before nursing home entry
  • An adult caregiving child who lived there for at least two years and kept the parent out of care

What Happens If You Violate the Look-Back Rule?

You may still qualify for Medicaid, but you’ll likely face a penalty period unless action is taken:

• Recovering assets: Returning all or part of the transferred assets can reduce or remove the penalty in some states.
• Undue hardship waiver: If denial of benefits would leave you without basic needs, you may apply for a waiver — though approval is rare.

How Can You Spend Down Assets Without Breaking the Rules?

Some strategies can legally reduce your assets while staying compliant:

• Setting up a valid Life Care Agreement with a family caregiver
• Purchasing a Medicaid-compliant annuity
• Paying off debts like mortgages or credit cards
• Making home repairs or accessibility modifications
• Creating an irrevocable funeral trust within allowed limits

Because rules are complex and vary by state, working with a Certified Medicaid Planner is the safest route to avoid penalties and protect assets.