Paying for Care
Medicaid 5-year look-back
Every Medicaid nursing-home application reviews 5 years of bank statements. Asset transfers under fair-market value during that window create a penalty period.
Updated 2026-02-27
What 'penalty period' means
If you gave away $100,000 within the 5-year window, Medicaid calculates a penalty: that gift divided by your state's average monthly nursing home cost (~$11,000). $100K / $11K = ~9 months. During those 9 months, Medicaid won't pay — even though you're financially destitute. The family pays cash or the patient leaves the facility.
What counts as a transfer
- Gifts to family — even $200 birthday checks add up over 5 years.
- Selling the house below market value to a relative.
- Adding a child's name to a deed.
- Forgiving a loan.
- Charitable donations.
What does NOT count
- Transfers to a spouse.
- Transfers to a disabled child of any age.
- Transfer of the home to a 'caretaker child' who lived in and cared for the parent 2+ years.
- Transfers to a special needs trust for a disabled person under 65.
- Spending on legitimate care, home modifications, pre-paid funerals.
Start planning 5+ years before need
- Establish a power of attorney now.
- If you're considering an Irrevocable Asset Protection Trust, the 5-year clock starts the day funds are transferred — so plan EARLY.
- Even if a diagnosis already exists, partial planning is often possible. Consult an elder-law attorney.
Frequently asked questions
- Does the look-back apply to in-home Medicaid?
- No — only to nursing home Medicaid in most states. HCBS waivers usually have shorter or no look-back, but rules vary by state.
- What if we genuinely needed to spend the money?
- Document why. Medicaid case workers can excuse transfers for legitimate purposes (medical bills, home repairs, taxes) with receipts.
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