The Medicaid lookback rule ensures that applicants do not “cheat” their way into the program by transferring assets to qualify for Medicaid benefits. The lookback period in Massachusetts is five years, which means Medicaid will examine any asset transfers made within five years before approving you for coverage.
Overcoming the lookback requirement is important for avoiding penalties or disqualification from benefits. There are strategies that can help ensure you meet the financial eligibility requirements without violating the lookback rules.
Creating an irrevocable trust
With enough foresight, you can create an irrevocable trust more than five years before applying for Medicaid. This enables you to protect your assets while ensuring they will not count during the Medicaid lookback period. However, once assets are in the trust, you no longer have control over them. They will instead pass to a beneficiary in the future.
Spending down assets
Spending down means using excess resources on legitimate expenses such as paying off debts, making home improvements or purchasing medical equipment. By spending down assets in an acceptable manner, you can reduce your countable resources and become eligible for Medicaid. In order to still qualify for Medicaid, you must only make these payments for necessary expenses rather than trying to hide or give away money.
Gifting assets
Gifting assets in a timely manner is another method to manage the Medicaid lookback period. Although gifts within the five-year window may lead to penalties, giving away assets well in advance can be part of a long-term care strategy. If Medicaid is a priority, you should ensure that you make these gifts at least five years before applying for Medicaid to avoid penalties.
Medicaid planning requires consideration of your long-term care needs as well as your overall estate planning. By addressing both sides of Medicaid planning with proper strategies, you can qualify for benefits while also continuing to provide for your family’s needs.
