What is the Medicaid 5-Year Lookback Period?

As you age, you may require long-term care in a facility. The problem is, long-term care is expensive: in North Carolina, long term skilled nursing care can cost upwards of $10,000 per month.

Medicaid can pay for your long-term skilled nursing care, but you should be aware of certain guidelines. One of these guidelines is the Medicaid 5-year lookback. Read on to learn how the lookback works and what you can do to preserve your Medicaid eligibility.

Do You Qualify for Long-Term Skilled Nursing Medicaid in North Carolina?

You may qualify for long-term skilled nursing Medicaid in North Carolina if you are:

  • Blind,
  • Disabled,
  • Aged 65 or older.

You must also fall within the current Medicaid income and asset limits. An experienced Medicaid attorney can explain the current limits, including what assets are countable assets for Medicaid purposes, determine what assets you are able to keep, and help you find out whether you are eligible.

What Is the Medicaid 5-Year Lookback Rule?

The idea behind the 5-year lookback rule is simple: the government wants to prevent people from giving away assets and resources solely for the purpose of qualifying for Medicaid.

Under the 5-year lookback rule, Medicaid will look back 5 years from the date of your long-term skilled nursing Medicaid application to determine if you have made any gifts, transfers for less than fair market value, or uncompensated transfers. If you have made any of these gifts or transfers, Medicaid will penalize you for a period of months that you must pay out of pocket for care.

This includes gifts under the Federal Gift Tax Rule, which allows you to gift up to $17,000 without tax consequences. While perfectly legal and tax friendly, these gifts can still cause a private pay penalty period and delay your eligibility.

How To Preserve Medicaid Eligibility and Avoid Penalty Periods

There are legitimate ways to spend down assets within the 5-year lookback period without affecting your Medicaid eligibility, including:

  • Prepaying for funeral and burial expenses,
  • Making exempt home improvements,
  • Paying off existing debt,
  • Paying attorney fees.

Another option is to establish and fund a Medicaid Asset Protection Trust. This Trust must be created at least five years before applying for long-term skilled nursing Medicaid. The trust can provide you income payments; however, because the trust will assume ownership of the assets, and you cannot access the trust’s principal funds, the assets won’t count for the purposes of Medicaid eligibility. A Medicaid asset Protection Trust is an effective way of protecting your assets for you while you are alive, and for your children after your death.

Contact an Experienced Medicaid Attorney in Raleigh and Wake Forest, NC

At Brady Cobin Law Group, PLLC, we have over three decades of experience helping seniors with long-term and nursing home care planning. We can advise you how to qualify for Medicaid without spending down retirement funds or falling foul of the Medicaid 5-year lookback rule. Call 919-782-3500 or contact us online to schedule your consultation.

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Our North Carolina estate planning and elder law attorneys are committed to honoring the life, work and charity of every individual. Call us at (919) 782-3500 or complete the form below.

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