The Medicaid Look Back Period: What You Need to Know

What is the Medicaid look back period?

Medicaid is designed to provide health care to those with low income or limited assets and is administered through each state. When applying for Medicaid, the state social security office is responsible for confirming you have limited income and assets. The Medicaid look back period is a period of time the office will review to see if you sold, donated, transferred, or gifted any of your assets. The period is 5 years for every state except California where it is 2.5 years. This period starts on the date you apply for Medicaid.

Is there a penalty?

Yes, there is! If the social security agency finds that you sold, donated, transferred, or gifted any of your assets beyond the granted exemptions, you will have a penalty. The penalty is a length of time that you will be ineligible for Medicaid. This is called the penalty period, and there is no limit on the amount of time you can be penalized for.

The penalty is based on the dollar amount of sold, donated, transferred, or gifted assets divided by the monthly private patient rate of care in a nursing home. For example, if you gifted $60,000 during the look back period and the average monthly cost of nursing home care is $4,000, your penalty would be 15 months of Medicaid ineligibility ($60,000 gift/$4,000 average month cost = 15 months).

 Can you avoid the penalty?

Planning is key in an attempt to avoid the penalty. Did you know you can gift up to $15,000 a year without paying a gift tax? This is a great option if you’re wanting to leave a certain amount of your savings to a child or loved one. If you want to gift $60,000 it will take 4 years to avoid taxation. This means that you would need to start gifting 9 years before applying for Medicaid to avoid the look back penalty.

Are there exemptions?

Fortunately, there are exceptions that allow applicants to transfer assets without a penalty. The exceptions include:

  • Spouses

Medicaid applicants can transfer a certain amount of their assets to their spouse. The spouse cannot be in the Medicaid application process and must plan to live independently in the community. The total amount of assets able to be transferred will change annually, but in 2018 the limit is $123,600.

  • Disabled Children

Applicants can transfer their assets or establish trust funds for disabled children who are under the age of 21, including children who are legally blind.

  • Siblings

A home can be transferred to a sibling who has equity in the home and resided in the home for a minimum of one year prior to a nursing home placement.

  • Caregivers

Applicants can transfer their home to their adult children if they lived in the home for a minimum of two years before the Medicaid application was started. The child must be the primary caregiver.

  • Debt

Applicants can pay off their debt without a penalty.

If you’re interested in learning more Medicaid information that is specific to your state, visit our Medicaid by State page. Plus, you may be eligible for both Medicare and Medicaid! Our licensed agents can help answer any questions you may have and help you sort through your health care options. To get started, fill out this form or call us at 844-431-1832.

Drug Price Transparency: Everything You Need to Know

Drug Price Transparency: Everything You Need to Know

The Henry J Kaiser Family Foundation estimates that $1 out of every $6 in Medicare spending is for prescription drugs. These medications play an important role in the health of 59 million seniors and Medicare eligibles. Drug price transparency is crucial in informing consumers and developing new strategies that address the issue of rising drug costs.

How is CMS involved?

Earlier this month, CMS proposed a new drug price transparency rule that was targeted at direct-to-consumer television advertising. This rule would require drug manufacturers to publish wholesale prices during commercials. This will allow beneficiaries to make informed drug purchasing decisions, especially beneficiaries with high deductibles and drug costs.

Direct-to-consumer television advertising can dramatically impact a beneficiary’s purchasing decisions. These commercials can spark informational discussions between beneficiaries and their health care providers, but understanding the costs is crucial when making a final decision.

State vs Federal Legislation

Several states across the US are implementing new bills and laws that require drug companies to not only report but also justify any dramatic increases in their drug prices. Since early August, there have been over 100 bills introduced into legislation addressing the different issues of drug price increases. 30 states have drafted a total of 60 drug price transparency bills.

States are feeling the pressure to improve the sustainability of their budget and promote coverage access to all of their residents. As the push for drug price transparency rises, more states may begin to explore new laws and federal legislation could be impacted. Many of these proposed changes are in the works and may be finalized in the near future.

How should you choose a pharmacy, doctor, or Part D plan?

Do you already have a primary pharmacy? Are you concerned about enrolling in a plan where your doctor is out of network?  Our agents at Medicare Plan Finder work with nearly every carrier in your state. Agents can help you enroll in the plan that best fits your needs, budget, and network requirements. Ready to learn more? Call us at 844-431-1832 or fill out this form to arrange a no-cost, no-obligation appointment with a top agent.

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