Hook Law Center Elder Law Attorney Details Medicaid Look-Back Rules
Virginia Beach, VA (Law Firm Newswire) October 7, 2013 – Stiff penalties for careless Medicaid planning make it necessary for families to form a proper strategy many years ahead of time.
Medicaid provides health care for those with little assets or income and is the most popular way to pay for long-term nursing home care. Long-term care is very expensive, making Medicaid the only option for many families who need it, but qualifying for Medicaid usually requires very low asset levels. As Virginia elder law attorney Andrew Hook explains, this can lead families to make missteps with severe consequences.
“A layman who approaches the problem of qualifying for Medicaid in order to pay for long-term care might think that simply giving away their assets to heirs is the solution,” Hook said. “But the law is much more complex than that. There are restrictions in place to prevent people from burdening the system when they in fact have or had funds that could go toward their own health care.”
Those restrictions include a “look-back” period of five years. If during the five years before an individual applies for Medicaid, they gave away money or other assets, a penalty period is triggered during which the individual is ineligible for Medicaid.
The penalty period is equal to the duration of nursing-home care that the transferred assets could have purchased in the individual's local area. For example, if someone gives away $50,000 to heirs and nursing-home care averages $5,000 per month in that person's area, a penalty period of 10 months applies before the individual qualifies for Medicaid.
Before February, 2006, the look-back period was just three years. That is when the Deficit Reduction Act (DRA) of 2005 took effect, lengthening it to five years. The DRA also changed the onset of the penalty period. The period used to commence with the asset transfer, and would often run out before the individual applied for Medicaid. Now, it begins when the individual applies for and is found eligible for Medicaid. At that point, the applicant has, by definition, spent virtually everything and needs public assistance.
“Proper estate planning is crucial for qualifying for Medicaid when you need it,” Hook added. “And if Congress updates these laws again in the future, it will most likely be to make them even more restrictive. Lots of good options are available for those who take the time to plan well in advance with the help of an experienced elder law attorney.”
Hook Law Center
295 Bendix Road, Suite 170
Virginia Beach, Virginia 23452-1294
5806 Harbour View Blvd.
Suffolk VA 23435
- Why You Need an Elder Law Attorney
As elder law attorneys, we help our clients navigate through a host of issues: planning for incapacity or death; determining which long-term care services are appropriate for them; handling concerns about family dynamics, divorcing, feuding, or dysfunctional children; providing for children and grandchildren with special needs; and qualifying and applying for long-term care Medicaid and […]
- Medicare Actively Expanding MSP Compliance for Personal Injury Claimants
On February 3, 2017, the Centers for Medicare and Medicaid Services (CMS) announced that they would be establishing two new Medicare Set-Aside (MSA) processes – one for Liability Medicare Set-Asides (LMSA) and the other for Non-Fault Medicare Set-Asides (NFMSA). As a result, CMS will begin rejecting claims for payment of Medicare expenses associated with an […]
- Predators and Creditors: How to Protect Your Family
Estate planning has come a long way from when I first began practice in 1993. At the time, estate planning was highly driven by a need to avoid or minimize estate taxes and the tax rules took precedence over many other considerations for many families. Now, with possibility of estate tax repeal again looming on […]
- Events That Inspire Estate Planning
Frequently clients call our office due to a perceived risk, such as an upcoming surgery or a long-distance vacation. The refrain is usually, “I need to update (or create) my will in case something happens!” Fear of one’s own mortality naturally arises prior to these events because there is always an inherent risk in certain […]
- Beware Hospital “Outpatient” Observation Status
Picture this: You’re 80 years old and you suffer a fall that lands you in the hospital for a week. At the end of your stay, you are discharged to a rehab facility for three weeks of rehabilitation and skilled nursing care. The time you spend in the hospital and at rehab is stressful, but […]