Planning for Medicaid should involve careful consideration of the look back period, which varies by state.
Planning for long-term care services in our sunset years is an important part of ensuring our future financial security. The United States Department of Health and Human Services states that those who turn 65 have a 70 percent change of needing some form of long-term care services. These services are often costly, averaging $3,293 per month for care in a one-bedroom unit in an assisted living facility or $6,235 per month for a semi-private room in a nursing home. The Massachusetts Bar Association, a group of legal professionals from throughout the state, notes that residents of Massachusetts generally make use of three primary ways to pay for the costs associated with long-term care: private payments, a long-term care insurance plan or Medicaid.
Due to these high costs, many who require care rely on Medicaid. Qualifying for Medicaid assistance is a complex process, but proper planning can help. One step in this process may involve transferring assets to loved ones. In some cases, it can be wise to transfer things like a family home or savings that are intended as inheritance. However, transferring these assets at the wrong time can negatively impact an application for Medicaid assistance.
The look back period: What is it and how does it work?
One thing to be aware of if transferring assets before applying to Medicaid is the look back period. According to the Centers for Medicare and Medicaid Services (CMS), the look back period involves an investigation conducted by States. This review will include an examination of the following:
- Applicant. Transactions completed by both the individual and the applicant’s spouse will be reviewed.
- Assets. The State will review whether either individual transferred assets such as cash gifts or home ownership.
- Value. If the asset was transferred, the State will check to see if it was transferred for “less than fair market value.”
Questionable transfers that occur within a certain time period are subject to penalties. The time period reviewed is referred to as the “look back period.” The look back period varies state to state. In Massachusetts, the current look back period is five years. However, in neighboring Maine the look back period was extended to ten years.
The look back period in Massachusetts: Is an extension in the state’s future?
Massachusetts recently considered passing an extension as well. In 2012, the legislature considered a bill that was designed to provide “adequate technical assistance and other support to States for long-term care partnership programs, and for other purposes.” Various provisions were included within this bill, including a provision for a study that would estimate the impact of an extension of the look back period in the state from five years to ten. This provision was included under the subheading of a “study and evaluation of methods and policies to reduce dependence on Medicaid long-term care financing.”
Ultimately, the bill was not enacted. However, it provides an example of the ever changing nature of the laws that impact long-term care planning. As a result, those who are looking to better ensure their assets are sheltered are wise to seek the counsel of an experienced Medicaid planning lawyer. This legal professional will guide you through the process, advocating for your rights and working to better ensure a more favorable outcome.