Medicaid’s 5 Year Lookback: What’s that about?

When you apply for Medicaid, the caseworker at the Department of Social Services uses the Medicaid Manual to determine your eligibility for the program. The Medicaid Manual is their “Bible.”

The North Carolina Medicaid Manual defines the “Lookback Date” as “The earliest date a transfer can occur and be evaluated for a transfer of assets for less than fair market value. The lookback date varies depending on when an individual applies for Medicaid, is admitted to a NF [Nursing Facility] or ICF/MR [Intermediate Care Facility/Mentally Retarded] or requests CAP [Community Alternative Program] waiver services. Sanctions can be determined for transfers that take place on or after the lookback date.” The above will confuse anyone not trained to understand it. Let’s break down what all of that means.

Let’s start with when the Lookback starts. The lookback date depends on the date one applies for Medicaid. The lookback date starts on that date five years ago. For example, if an application is submitted on 6/21/20, the lookback starts as of 6/21/15.

So, we’ve figured out when the look back starts, but what does that *really* mean? It means that DSS will look at all your financial records (bank statements, IRAs, Annuities, Life Insurance policies, property, etc.) over the course of that period. They are looking to see if there have been any transfers of assets or money given away for less than fair market value. This also includes cash transactions that cannot be accounted for with receipts. They require proof of where every deposit came from and every large withdrawal went. DSS focuses on transactions involving children or grandchildren (anyone other than your spouse). They do this to assess a sanction to delay your getting Medicaid benefits.

They total the amount of transfers over the five-year period to determine the “sanction” (total amount transferred divided by 6,810 – average nursing facility rate) or penalty they will assess to your application. That number translates into months and days that DSS will not pay for nursing home services even after the applicant is eligible (meaning they have less than $2,000 I countable assets). It can also lead to a monetary sanction if the sanction does not end on the last day of the month.

What’s the significance of the Lookback period? Using the example above with an application for Medicaid filed on 6/21/2020, if there was a $100,000 gifted on 5/15/15, there is no sanction because the gift was made more than 5 years prior to the application. If that same gift was made on 7/15/15, there is a 14 month and 21-day sanction (plus a potential monetary sanction). This means DSS will not begin paying for nursing care with Medicaid benefits until approximately September 2021. Likewise, if you know that a significant gift was made almost 5 years ago, it would be a huge mistake to apply for Medicaid today (or allow a social worker to do it for you) because if you wait until the 5-year lookback has past, that gift will not be considered or sanctioned. The good news is that an elder law attorney can determine the best time to apply for Medicaid and help your family undo a Medicaid sanction created by gifts during the 5 year look-back period.

Medicaid rules are complicated and making a small misstep can cause a financial hardship for many families. If you need help wading the waters of Medicaid, call our office at 919-256-7000 to schedule an appointment with a seasoned attorney.