Look-Back Penalty Calculator

If someone applying for Long-Term Care Medicaid gave away money or property, or sold something for less than it was worth, during the look-back period (60 months in most states), the state may impose a penalty period: a stretch of time when Medicaid will not pay for long-term care even though the person otherwise qualifies. This calculator estimates the length of that penalty using the state’s penalty divisor. Below the calculator, we explain how the rule works, when it starts, and the exceptions that can reduce or remove a penalty. Nothing you enter is stored or sent anywhere.

Figures change periodically. Double-check current amounts before relying on them.

The calculator

How the penalty is calculated

The basic formula is simple:

• Uncompensated value is what was given away. For a gift, it is the full amount. For a sale below value, it is the difference between fair market value and the price paid.
• The divisor is set by each state, usually based on the average monthly (or daily) cost of private-pay nursing home care in the state. Some states publish a daily figure; others a monthly one. Some use different figures for different regions.
• Transfers are added together. In most states, all transfers in the look-back period are totaled and divided once.
• Partial months count. States must count partial months; many convert the fraction into days.

Example. A mother gave her son $40,000 three years before applying. Her state's divisor is $9,000 a month. $40,000 / $9,000 = 4.44 months, or about 4 months and 13 days of penalty.

When the penalty starts

This is the part that surprises families most. Under federal law, the penalty does not start when the gift was made. It starts on the later of:

• the first day of the month in which the transfer was made (or the month after, depending on state rules); or
• the date the person is eligible for Medicaid and receiving (or would be receiving) long-term care that Medicaid would otherwise pay for, based on an approved application.

In practice, that usually means the penalty begins after the person has applied, is in a nursing home (or approved for waiver services), and has spent down to the asset limit. During the penalty, Medicaid will not pay for long-term care, and the person often has little money left to pay. See Penalty period.

The divisor in each state

The table below is drawn from our state guides. Some entries are daily rates; some are monthly. Use the figure and unit shown for your state.

Transfers that do not cause a penalty

Some transfers are exempt under federal law, including transfers:

• to a spouse (or to a third party for the sole benefit of the spouse);
• to a child who is blind or permanently disabled, or to a trust for that child;
• to a trust for the sole benefit of a disabled person under 65;
• of the home to a spouse, a child under 21, a blind or disabled child, a sibling with an equity interest who lived in the home for at least a year before institutionalization, or a child who lived in the home for at least two years and provided care that delayed institutionalization;
• made exclusively for a purpose other than qualifying for Medicaid, if this can be shown convincingly;
• that have been returned in full.

See Exempt transfers, Child caregiver exemption and Curing a transfer.

Small gifts

There is generally no federal "small gift" exemption for Medicaid. The $19,000 annual federal gift tax exclusion for 2026 is a tax rule, not a Medicaid rule, and a gift that is fine for tax purposes can still cause a Medicaid penalty. Some states disregard small gifts below a set amount or treat customary gifts such as holiday presents leniently; others do not. See Gift tax vs. Medicaid and Do holiday presents count as gifts?.

Ways a penalty can be reduced or removed

• Return the gift. If the full amount is returned, most states remove the penalty. Partial returns may reduce it in some states.
• Show fair value. If the transfer was payment for care or goods at fair value, it may not be a gift. Written caregiver agreements and receipts help. See Caregiver agreements.
• Show another purpose. If the transfer was made for a reason unrelated to Medicaid, such as when the person was healthy and had no expectation of needing care, a state may accept that, though the standard is strict.
• Request a hardship waiver. States must have a process to waive a penalty when it would deprive the person of food, shelter or medical care.
• Plan the timing. Some families use planned strategies, such as the "half-a-loaf" approach, that combine a gift with an annuity or note so the penalty is paid for. These must be done carefully and legally. See Half-a-loaf.

Limits of this calculator

• It assumes the full value entered is uncompensated. If part was payment for care, enter only the gift portion.
• It does not apply state-specific rules about rounding, partial months, small-gift disregards or how multiple transfers are combined.
• It does not tell you when the penalty will start.
• It does not account for exemptions.
• It uses the divisor you enter; divisors are updated periodically.

A worked example with two transfers

A father gave his daughter $15,000 two years before applying and paid $10,000 toward his grandson's tuition a year later. His state's divisor is $10,500 a month. The state adds the transfers ($25,000) and divides: $25,000 / $10,500 = 2.38 months, about 2 months and 11 days. If the daughter returns her $15,000 before the state decides, the penalty is based on the remaining $10,000: about 0.95 months, or 29 days.

Getting experienced help

A penalty can cost a family tens of thousands of dollars in unpaid nursing home bills. Whether a transfer is exempt, how to document fair value and whether to return a gift are questions where experienced help matters. A Certified Medicaid Planner can review the transfers, estimate the penalty under your state's rules and explain the options. As a rough guide, published fees for full planning range from about $2,500 to $15,000 or more, and hourly help from about $150 to $600.

Frequently asked questions

Does the penalty start when I made the gift? No. It usually starts when the person has applied, is in care and is otherwise eligible.

Can I pay the nursing home during the penalty? Yes, if there is money to pay. Many families plan to keep enough to cover the penalty.

What if I gave money to a charity? Charitable gifts are generally treated like other gifts. See Are charitable donations penalized?.

Are gifts older than five years counted? Not in states with a 60-month look-back. Gifts made before the look-back period are not reviewed.

Related guides

• The five-year look-back
• Gifts and the look-back
• How do I figure out the penalty divisor?
• Tools hub

Last updated for 2026. General information only, not legal or financial advice. Medicaid Answers is a free educational resource published by Medicaid Answers Foundation.