Does a New Medicaid Look-back Period Begin Every Time Transfers are Made to Trust?

 In Long-Term Care Planning
Medicaid transfer penalty

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We all hear about the 5-year Medicaid look-back period of an irrevocable trust and after the 5 years your assets are protected. What if you put an asset into the trust one week before the 5-year period ends, would that asset fall under the five-year rule or would a separate 5-year period start for that asset?


That would start a new five-year look-back period. The way the law is actually written, when you apply for Medicaid benefits you must report all transfers you or your spouse made (except those from one spouse to another) within the five years immediately prior to application. So, if you apply for Medicaid on July 1, 2022, you must report all transfers made on July 1, 2017, or later. You do not need to report transfers made on June 30, 2017, or earlier.

If on June 15, 2022, you were to make a new transfer, you would have to report it on any Medicaid application made through June 15, 2027. However, that does not mean you would necessarily be ineligible for benefits through that date. The period of ineligibility, known as a transfer penalty, is calculated based on the value of the transfer and the average cost of nursing home care in your state. So, for example, if you transferred $70,000 on June 15,2022, and the average cost of nursing home care in your state was $7,000 a month, the period of ineligibility would be 10 months. It would begin on the date you applied for Medicaid. So, if you moved to a nursing home on July 1, 2022, and applied for benefits on August 1, 2022, the 10-month ineligibility period would run from August 1, 2022, through May 31, 2023, even the the look-back period extends into 2027.

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