Introduction to the Medicaid 5-Year Look-Back Rule
In this Elder Law Minute, Wes Coulson explains different solutions in which DCEL can help you work around the Medicaid 5-year look-back rule.
Understanding the Medicaid 5-Year Look-Back Rule
Greetings, I’m Wes Coulson from Dent Coulson Elder Law, and this will be your Elder Law Minute. We’re happy to present these insights because we believe they can inform you about how we can assist with your elder care and estate planning journey. We hope you find this information helpful.
The Concern with Asset Transfers
Today, I want to address a concern that many people have. The Medicaid 5-year look-back rule states that if you’ve given away assets or transferred them for less than fair market value within 5 years, you will face a penalty that delays your eligibility for Medicaid. A common question that arises is: “What if a year ago, I gave one of my kids $20,000? Am I going to face a penalty? Is it too late to do anything about it?” The answer is no, but it’s a qualified no. It’s no if you have the help of a skilled elder law attorney who knows how to handle this situation.
Reversing Asset Transfers Under the Medicaid 5-Year Look-Back Rule
One potential solution is to undo the transfer by returning the gift before applying for Medicaid. However, some people may say, “But I can’t do that. We can’t get the money back. It was money that my daughter or son needed because they had fallen behind on their credit card bills.” In this case, is there anything we can do? The answer is yes. We can use the remaining assets to help provide the income needed to pay for the nursing home during the penalty period caused by the gift. So, while we must address the issue, we can develop a plan that allows us to manage it successfully.
Strategies for Married Applicants Affected by the Medicaid 5-Year Look-Back Rule
An even more powerful strategy exists for married applicants. One approach is to have the gift temporarily returned. This might involve another family member loaning the recipient of the gift the money to pay it back. Once the planning is complete and the application is filed, the non-applying spouse retains the assets, which they can use as they wish. We can then return the gift through the person who loaned the money, effectively restoring the situation to where it was before the application, but without the transfer penalty.
Conclusion: Professional Help with the Medicaid 5-Year Look-Back Rule Is Crucial
If any of this seemed difficult to understand, I acknowledge that. This process is complicated, and it underscores my earlier point that my answer to whether there’s anything we can do about it is a qualified yes. It’s yes if you have the help of a knowledgeable elder law attorney. That’s where we come in. We would love the opportunity to help you, just as we have assisted hundreds of other families.
Also looking for information about Medicaid and Asset Preservation? Visit these articles:
“Your Trusted Advisor on the Elder Care Journey”
Dent-Coulson Elder Law is dedicated to providing families in the St. Louis area with their Elder Law needs. Our practice areas include Asset Preservation Planning, Veterans Benefits, Medicaid Eligibility, Alzheimer’s Planning, Special Needs Planning, Estate Planning and more. We understand the financial challenges you may face as you and your loved ones grow older. At Dent-Coulson Elder Law, our clients’ well-being is our number one priority. For immediate help, call (618) 632-7000 (IL) or (314) 567-9292 (MO), or Contact Us and we will get in touch as soon as possible.
