Your elderly parent needs long-term care, and you know it has the potential to be expensive. You want to protect your loved one’s assets, but you also are aware of Medicaid’s look-back rule. If you don’t move your parent’s assets soon enough or correctly, you could end up having to exhaust them for his or her care.
To understand how to protect your funds, you need to recognize the look-back period. This is the period of time during which the Centers for Medicare and Medicaid Services look over to make sure assets are not being hidden for financial gain.
Applying for Medicaid: The look-back period
When you apply for your parent’s Medicaid, remember that the look-back period is 60 months. This five-year period is important, because any major money transfers or transfers of major assets could be subject to penalties. If gifts are made before that time period, they are not penalized by the process.
Here’s an example. If you received a gift from your mother of $20,000 4.5 years ago, you may wish to wait at least another six months before applying for Medicaid. If you do not, those assets and their transfer may be penalized. On the other hand, if the transfer was made six years ago, you have nothing to worry about.
Long-term planning helps protect assets
Typically, those who obtain Medicaid must first exhaust their financial assets before they can use it. To help prevent a large amount of funds from being used up for nursing care, it’s a better idea to begin gifting the maximum amount allowed each year to the intended beneficiaries. Then, if something happens and your parent must go into immediate care, only the most recent gifts would face a Medicaid penalty and more of the funds would be protected.
Planning for long-term care now can help you in the future. Your attorney can talk to you more about protecting assets and what needs to happen to avoid penalties.