Can someone explain what the 5-year "look back" period for Medicaid is?

I do have your book , 2008 edition.
Is there a newer edition ?
I could not find the chapter specific to this Special needs trust.
Appreciate your help & guidance.

Hi: Yes, new editions come out each year. We are up to the 2012 edition, now! The exceptions to the transfer penalties are found in the chapter entitled "Transfer (Gift) Strategies" (on p. 175).

My mom is in an assisted living place in Minnesota to help her with dealing with her Alzhiemer's. Six years ago, she took out I Savings Bonds (Federal) in her name with each of her children being listed on the bond to make it easier to distribute her estate later. The place where she is living will accept Medicare once she qualifies for that and have guaranteed us that she wouldn't have to move once she's done a private pay for 3 years. That time is almost up. Now, I don't know how the bonds that are in her name with the child's names would be counted. Does the 5 year look back count from when the bonds are purchased (6 years ago) or when the bonds are cashed (which they are still sitting in a safe deposit box)? She would be able to give these gifts to her children herself, if they would not have to count in the 5 year look back of assets. Any guidance would help!

Because she still is an owner of the bonds, the value of the bonds will be counted as her assets in determining if she has more than $2,000 (the maximum amount she is permitted to have and still qualify for Medicaid). Because she never gave the bonds to her children, she never made any gifts, so the five-year lookback period does not apply.

i have a whole life insurance policy that has a cash value of 24K, if i put my son as the owner, would this be considered in the five year look back in west virginia?

If you transfer the ownership of the policy, it will be deemed a gift/transfer of the value of the policy on that date, which is roughly the cash surrender value. If you then apply for Medicaid within 5 years, that gift will cause a penalty period.

I live in NYS and my father has Parkinsons AND thinks he is going to live forever, OH AND he's 89! I have been battling with him for at least 11 years now, ever since my mother died of Alzheimers, that he needs to start gifting his money SO that the 5 year look back will not apply to him IF and when God forbid he needs to go into a nursing home and falls under medicaid! I'm trying to understand what his options are now. His health is failing and has been in the hospital 3 times in the past year and he is still arguing with me on this subject. He's very stubborn and just does NOT agree that "they" can take all his money that he has saved his whole life and eventually would want to leave to his family. SO I told him that he needs to at the very least use his money for "valid" things, such as home re[airs for family or paying scool debt, etc. Are these moneys allowed and not part of the "look back"? Also, I thought he was allowed to "git" a certain amount of money per year that is both not part of the "look bak" AND not part of medicaid, am I wrong?

You are correct that purchasing things for yourself or your house is not considered a gift that can cause a penalty for Medicaid purposes. However, virtually all other gifts will indeed cause a penalty period; there is no de minimis rule for Medicaid purposes, so even small gifts can be counted if the person making the gift applies for Medicaid within 5 years.

What happens in the case of fraud? A relative of my mom wrote checks on her account and purchased other things online equal to about $10,000 in the last two years. This was reported to the Vulnerable Adult Division in our state and was investigated. But, because Mom refused to prosecute, there was nothing they could do. Will this now be counted as a "gift" in Medicaid's view?

Because she refused to pursue a return of the money, the state may decide that the checks were approved by her and therefore would be deemed a Medicaid gift. However, that is not a legal opinion, so you will need to check with your own state Medicaid department to find out for sure.

Maybe this is too simple a question: Why can't an elderly person, whose husband has been deceased for nearly twenty years, "sell" her home to anyone at whatever price she wants, and at any time prior to an affliction that may someday cause the need to be placed in a nursing home? If she only received ten dollars from the sale, how could the 5 year look back be applied? To qualify this even further, just because a municipality places a value on a home and property, that is no indication of the true market value of that property (just look at all the abandoned and rundown homes), so a property assessed at $200K is often times really worth far, far less due to its condition. It would not be placing the home in a trust to buffer it, it means selling it outright, but not receiving any real profit from it.

bj - there are lots of really good posting on this questions from the experts on this forum as well as family who have been through all this. It's great for you to get insight on this but imho you're real issue is that no matter what you think or what you know, your dad is not going to be accepting of facts that don't fit his viewpoint.
Is that what you're really up against?

If you are DPOA, then go to see an attorney to help sort out the options that can be done on your dad's behalf in your state. If you're not DPOA and he just won't do that, then eventually there will be an accident / emergency / medical condition that places him again in the hospital and the doc's will discharge him to a NH and he will be unable to leave and his assets will have to be used to private pay for his care and probably permanent stay there. His $$ saved will have to be used for this and at 5K to 10K a month for room & board at a NH, his $ will get used up in short order unless he is truly generationally wealthy. He will be fortunate in that by being private pay he can choose a facility and have the option of paying for individual services that Medicaid NH recipients do not. Good luck as none of this is easy.

Fieris - As a property owner, you can sell, transfer or do whatever with your assets as you see fit. No one is taking that ability away from you. If you want to put your assets in a trust on behalf of your poodle, you can do do. If the real estate comps for houses sold is 30% below the tax district assessed value and you sell your property at 30% below, that is a fair and legit property sale.

However, if within the near future, you should apply for Medicaid to pay for your needed NH or other Medicaid paid for service, then the state requires that those benefits go to those that meet both the financial and medical criteria for the program. Medicaid is a needs-based program for the very poor.

Because Medicaid is needs-based, doing a 5 yr look-back on the applicants assets is critical for the states to operate the program. If we were able to transfer all of our assets, empty out accounts, spend monthly retirement & SS on nonNH stuff today then go into a NH tomorrow paid 100% by the state, the system couldn't afford it & there would not be any NH to go to & be paid by Medicaid.

Medicaid compliance is all about either doing very advanced planning beyond 5 years; spending your share by paying almost all of your income to the NH; and spending down your assets wisely & legally to qualify for impoverishment.

Medicaid gets to the heart of the issue of who should pay for long-term care -- the public through the tax-supported Medicaid program, or users of long-term care through their personal resources, including those remaining after death.

If you choose to sell or transfer a property at a lesser value, without good cause, and then apply for Medicaid, you will face a transfer penalty period in which Medicaid will not pay until the transfer penalty is paid first.

If you don't want to spend down your assets to qualify for Medicaid for NH you don't have to but you have to private pay for the NH care. No one is making you apply for Medicaid and hopefully you have the long term fortune to private pay for all your care forever. It's my experience, that if you live long enough and are in a facility, that you will eventually run out of $ and sooner than you ever thought. And thank goodness that there is Medicare and Medicaid out there to pay.

My bad, it should read...."trust on behalf of your poodle, you can do so."

If you had three seperate annunities and they were cashed and given to your children. Then you needed to be placed in a nursing home long term care, before the five year lookback was up,would the cash value of the annunities have to be paid back to the government before medicaid would begin to pick up your bills for long term care?

No, the cash value you received and then gifted would not have to be paid to the government, but it would result in a "penalty period," i.e., a certain number of months that Medicaid would not cover your nursing home bills. After that time period, assuming you otherwise qualify, Medicaid would start to pay your nursing home bills. The length of the penalty period depends on the total amount of gifts you made within the past 5 years (the "lookback period") and the state you are in, because each state calculates the penalty period slightly differently.

My Dad might be going in to a nursing home within the next few months. All this is happening fast.
He wants to have his money to spend when he's in the home so he can buy "what he wants when he wants", you know, to feel in control of his life. I know he can buy what he wants for himself (possessions, E.G. TV , radio, microwave, ..) in the 5 year window and it won't count against him. What happens if he buys a TV for himself and then gives it away in the following week? Does Medicaid check to make sure he still has the TV?
What would stop him from buying a high-end TV and then returning it the next day, taking the cash and then putting it away? Would this be a loophole?

In most states, giving away an exempt asset (other than the home) does not cause a penalty when the person who made the gift applies for Medicaid within 5 years of the gift. On the other hand, if the t.v. is sold, that resultant cash certainly is a countable asset, even though the t.v. itself was an exempt asset.

How does a person pay his long-term care costs if he is in the "penalty" period because he gave assets away during the "look back" period?

Swimmer2 - my experience with dealing with transfer penalty is that it depends on
if the intent was done for Medicaid avoidance combined with when it was done. In general the state sends out the transfer penalty letter that assumes the transfer was done with intent and you have to prove otherwise. Then you kinda have to factor in your state's management of the Medicaid program AND the specific nursing home AND how proactive the family member who is the financial point person for the elder is AND the amount & type of transfer penalty AND most importantly if you have an attorney. If you get a penalty letter, the first thing is to file an appeal which basically gives you an additional 90 days (I'd defientely get an attorney in this 90 day period). The appeal has to be faxed (with a transmission report so you can show you did it) or sent return registered mail so again you can show you did this).If your parent is in the NH "Medicaid pending", the NH has to keep them during this appeal period. But the NH can ask that someone within the family sign off to be financially responsible for the elder - often that form was already done in the plies of paperwork in the initial admission. So if Sissy signed mom in and signed her name to all, then Sissy is financially responsible for the NH debt. The NH can and will send someone a bill and the family need to figure out how to pay for it either by doing a guarantee against the elder's assets or their own assets. So if Sissy signed them in, that means Sissy will likely get the bill for private pay amount for the elder's NH stay.

Now if Sissy signed all forms as "Jane Smith Jones as DPOA for Mary Smith" then she is not responsible. This is imho a very important item to do on all paperwork and in the rush and stress of getting them into the NH is overlooked.

For tangible property - like a home or a car - the state will easily found out if ownership is changed or transferred and the amount paid or gifted.
Tangible property value is usually done by each county or parish assessor and then dovetailed into the state's database so that info is just keystrokes away.

At my mom's first NH, there was a lady whose son transferred her home into his name after she was in & on Medicaid, imho done deliberately to avoid the state from taking it after she died. Also imho he is a total jackass. House definitely under 100K in value, maybe 50K. The lady was in the NH for several months before the transfer was found out. She was across the hall from my mom. State sent NH and family a letter regarding a transfer penalty was in effect. Son did the whole not gonna pay nonsense for like 4 months and what happened is that the lady was made an ward of the state and shipped out to a NH in another county that was desperate to fill their beds,as she was a ward of the state the family wasn't told; the son was billed probably 60K by the NH to forever be on his credit history and a claim was probably placed on the property by the state. This is an awful situation. So if he ever wants to do anything with the house later on, that claim has to be released in order to get a clean title. Not even to start to talk about what the little lady probably went through. What is so loco about what he did was that if he had just left the house alone and left it in her name and he just paid whatever minimum on it - like taxes - then when she died the state probably would not even have done a MERP (estate recovery) claim on it because the value of the house is too low to be worth going after it in probate and the time and costs involved in all that. So he would have gotten the house in the end in the probate hearing and the state would have paid for his mom's NH stay 100%.

My mother will be 98 in June, 2013. She has been living in my home in NYS for 6 years and she pays for private duty care. She has about $45,000 left. We do not have a 5-year look-back. In 2012, she gifted me $13,000 and her grand-daughter, $5,000 at graduation. She has less than a year's worth of savings before being Medicaid eligible. I understand there will be penalty on the monetary gifts because they fall within the 5 year look-back. Can someone tell me what these penalties may be? Can she make furniture purchases to support her comfort/care? She does not own life insurance, property, stocks or mutual funds. She is non-ambulatory, relatively healthy and not on any pharmaceuticals. We do not plan on having her go into assisted living as we feel her care is best managed at home with our family and emotional support. Any and all help is greatly appreciated. I'm retired with no pension, small social security, overwhelmed and with limited resources. Thank you.

The way the five-year lookback period works is as follows: When a person applies for Medicaid for nursing home care, all gifts made by that person within the previous five years are added together. The total number is then divided by the average cost of a nursing home in the state (or locality, in some states) where the person is living, to come up with a number that equals the "penalty period," i.e., a number of months that Medicaid will not pay for that person's care.
That divisor number (average cost in a state) is set by each state in January. To find out what it is in your state, call your state Medicaid eligibility department.

My question does not concern a nursing home. As I wrote, my mother is living in my home and we plan to continue for her to live with us.

She has about $45,000 left. We do not have a 5-year look-back. In 2012, she gifted me $13,000 and her grand-daughter, $5,000 at graduation. She has less than a year's worth of savings before being Medicaid eligible. I understand there will be penalty on the monetary gifts because they fall within the 5 year look-back. Can someone tell me what these penalties may be? Can she make furniture purchases to support her comfort/care? She does not own life insurance, property, stocks or mutual funds. She is non-ambulatory, relatively healthy and not on any pharmaceuticals. We do not plan on having her go into assisted living as we feel her care is best managed at home with our family and emotional support. Any and all help is greatly appreciated. I'm retired with no pension, small social security, overwhelmed and with limited resources. Thank you.

Yes, she can purchase furniture without it causing any type of penalty. All such personal property is considered exempt when and if she applies for Medicaid at some point.

if the assets are in a home is that protected in NJ law? In the case of a resident owning a home in NJ and then going into a nursing home, would the home be seized by Medicaid?

Hel2 - the NH is not in the real estate biz & neither is Medicaid. Neither is going to "seize" grannies house. But both expect a Medicaid NH resident to do whatever possible to pay for their stay and their costs paid. For the NH, the Medicaid resident will be required to do a "co-pay" of their personal monthly income to the NH. For Medicaid, the program will pay for the NH costs (assuming they qualify both financially and medically for NH level of care) BUT upon death any "exempt" asset will become a non-exempt asset. For most in a NH & on Medicaid, the only exempt asset left is their home. The states are required to have in place MERP - which is Medicaid Estate Recovery Program. What MERP does is, when feasible, to place a claim or a lein on the now nonexempt property. The key is - imho - whether or not the claim or lein is FEASIBLE. MERP has many exemptions and family has to file for those exemptions and provide whatever documentation needed to MERP.

MERP is run according to your state's law on death and probate. Like in some states MERP is done via a lein on the property. Other states - like TX - have it as a Class 7 claim against the estate (so class 1 - 6 get paid first). Some states are actively going after recovery, while other states (FL) not so much. Remember Medicaid is a joint federal & state program, but the individual state manages Medicaid and has to do so that it complies with state laws. Really this means you have to find an elder law specialist who understands how it runs in your state.

But back to the co-pay, what happens is that since they are required to do a co-pay of their income if they are on Medicaid, there is no more of grannies $$ to pay for everything on the house. Whether or not the state allows for some of grannies monthly income to be diverted to the costs on the house is by each state's discretion. Some states do and for a certain period of time, while other states don't. So if your state doesn't allow for a diversion, then family has to then pay for everything (taxes, insurance, utilities, maintenance, yard work, repairs.....etc) for grannies house. If there is still a mortgage, this could add up to alot of $ each month. So the house ends up getting sold with the proceeds from the house to pay or reinburse Medicaid the costs of grannies care. For most folks, it's just not feasible in cost to deal with a house for the possible years and years that grannie could be in a NH and then do whatever needed to get the MERP exemption after grannie dies. Plus often family totally run out of a sense of humor in having to cut the grass, or having to pay property taxes or all the other stuff that can happen with an empty house. Good luck & keep a sense of humor!

Father is 94, living alone at home in Ohio. His sight is very poor and getting worse plus other issues, though mentally fine. Three siblings offspring are concerned with grasping of his assets. This amounts to around $120,000 for his home and another $180,000 for his liquid financial assets. With Social Security and Army pension, he earns about $2,000 per month. Should he start giving $14,000 away per year? Can he give also to grandchildren or great grandchildren to decrease his estate. Would this be looked back at for 5 years in Ohio? What would happen to the gifted amounts?

What if the money given is a loan not a gift and being paid back on a monthly basis, how does that look during the look back period

A regular loan will be treated as an asset unless it is structured so that it is non-transferable, non-cancelable, with adequate security, equal payments and a few other requirements of the statute. In such case, the loaned amount will NOT be a countable asset nor will the loan be counted as a gift, and the monthly payments back will be treated as income for Medicaid purposes. However, note that some states--in derogation of the federal law--do not follow this, and will treat the loan as a gift.

My mom was on Medicaid for one year. She is in an assisted living. She got a lump sum of money from a family farm that was sold. She is now on private pay living at the same location. She wants to give me 15k to 20k for updates on my home, something we had planned on doing prior to her going on Medicaid. Is she able to do this? I have no other siblings and she doesn't want to spend the money on herself as much I try and encourage her to do so. Buy herself a big screen tv. buy all the movie channels, a new bed etc. I've talked her into getting new dentures and some new clothes and an occasional pedicure but other than that she is just not interested in buying herself anything. It's frustrating because I want to see her enjoy the money she finally got after so many years of not having anything. She said she would rather see the money go to updating my house.
I don't want to compromise anything when it is time to go back on Medicaid so we are not sure how to handle this. Any help would be appreciated.