The Medicaid Look-Back Period is the timeframe in which an applicant’s financial records are reviewed to determine the applicant’s eligibility for Medicaid. In North Carolina (and in most other states), the Medicaid Look-Back Period is 60 months. This means that for the entire 60-month period preceding filing a Medicaid application, the caseworker is going to review any and all financial records from that 60-month period to determine whether the applicant is Medicaid eligible. If a transaction was made 61 months before the date of the application, then that transaction cannot be considered by the caseworker for determining eligibility.
The Look-Back Period itself does not determine eligibility–it simply “sets the stage” for determining eligibility. The financial records from within those 60 months are what determine the applicant’s eligibility.
When the caseworker examines all of the records from the North Carolina 60-month look-back period, they are going to assess any transfer of assets such as gifting a child $10,000 or transferring ownership of a house without selling it. Depending upon the nature of the transfer that the applicant made, the applicant may be subject to a penalty period before the applicant can begin receiving Medicaid benefits. The penalty period is the number of months that the applicant must wait to receive Medicaid benefits based on an uncompensated transfer of an asset within the 60-month look-back period, meaning that the applicant transferred an asset without receiving something in return.
For example, the applicant may have transferred ownership of their car to their child without their child paying them any money for the car. There is no specific threshold that an uncompensated transfer can be under to not be made to count towards the penalty period. The applicant’s total uncompensated transfer of assets number is going to be determined by the caseworker when the application is reviewed. The caseworker could flag a $10 uncompensated transfer or a $1,000 uncompensated transfer, which is why it’s beneficial to have an attorney prepare and file the application so that any possible flagged transfers are noted before the application is submitted.
A penalty period is calculated by dividing the dollar amount of the total uncompensated transfer of assets by the penalty divisor, which is based on the average cost of nursing home care. Currently, in North Carolina, the penalty divisor is $7,110. This means that if an applicant had $115,000 of uncompensated transfers over the course of the applicant’s 60-month look-back period, the applicant would be ineligible to receive Medicaid benefits for a period of 16.17 months ($115,000 ÷ $7,110 = 16.17). After those 16.17 months have passed, the applicant would then begin receiving Medicaid benefits, but during the penalty period, the applicant would be required to find another way to pay for their care.
How can I get help with avoiding a long penalty period?
Some people have been misinformed about the North Carolina look-back and penalty periods and think they can just give things away and qualify for Medicaid benefits once they have done so. However, as we just calculated above, this could subject an applicant to a hefty penalty period. Therefore, it’s important to consult with an experienced elder law attorney before taking any actions like gifting your child your house.
When planning for a future need for Medicaid, we factor in the 60-month look-back period to ensure that we can minimize any type of penalty period and maximize the allowable assets for an applicant. If needed, we also work with clients to develop a spend-down plan to limit the penalty period as much as we can.
If you would like to find out what your options may be for yourself or a loved one to apply for Medicaid benefits, please call our office at 919-443-3035 or schedule a free needs assessment call.