For those who think they may end up needing Medicaid in the future, proper estate planning is a crucial step in helping to preserve the assets belonging to you and your families. Unfortunately, someone who needs Medicaid cannot just transfer away significant assets before applying, as there will be a look back period once they begin the process of applying for Medicaid.
What is the Look Back Period?
When you apply for Medicaid, the law allows the program administrators to review your finances for the 60 months previous to that. They look for indications that you may be hiding assets, such as large transfers of wealth, for little or no consideration.
The idea of the look back period is to attempt to prevent Medicaid applicants from defrauding the program. Given that you are supposed to use the bulk of your own assets to pay for care before you turn to Medicaid, the look back period helps administrators to uncover improper transfers. When someone is found to have wrongfully transferred wealth, the result can be a lengthy period of ineligibility for Medicaid—in some cases, the applicant could even be permanently barred from the program.
What is Considered When Reviewing Transfers
Of course, this is not to say that all transfers of wealth will automatically trigger a penalty. Medicaid will review the transfers to see if they were “arm’s length” transfers for equal value or not. For example, if you transfer $50,000 to a third party, but in exchange you obtain goods or services of equivalent value, the transfer will not be considered to be improper.
Navigating the Medicaid process requires a thorough knowledge of the law and of estate planning. Even with the look back period, proper estate planning can help you preserve your assets as much as possible. Contact the experts at AlerStallings today!