Table of ContentsView AllTable of ContentsHigh CostEligibility for MedicaidMedicaid Look Back PeriodHow Look Back Works
Table of ContentsView All
View All
Table of Contents
High Cost
Eligibility for Medicaid
Medicaid Look Back Period
How Look Back Works
More than 1.7 million Americans live in nursing homes,but how do they pay for it? The majority of people rely onMedicaidto foot the bill. Getting approved for Medicaid, however, can be tricky, especially when it comes to the Medicaid Look Back Period. Here’s what you need to know so that you can get nursing home care when you need it.
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High Cost of Nursing Home Care
As of 2021, the average cost of a semi-private room in a nursing home in the U.S. is $7,908 per month. The monthly price goes up even higher if you want a private room, averaging $9.034 per month nationwide.How is someone on a fixed budget, often on Social Security, going to afford that?
The truth is nursing home care costs on average three times more than a senior citizen earns. Few people can afford to pay out of pocket so they turn to insurance.
Unfortunately, few people can afford private long-term care insurance. These types of plans are purchased to help pay for home health care and/or nursing home care. The premiums can be expensive and it can be hard to get a policy if you havepre-existing conditions.
Medicare does not help much either. Although the federal program covers a stay in a skilled nursing facility after a hospitalization, thattime is limited. Without a qualifying hospitalization, it does not cover long-term stays in a nursing home at all.
Medicaid is a federal and state-funded program aimed to provide health care for people on low incomes. Traditionally, you became eligible for Medicaid based on how much money you earned and how many assets you owned. That changed with the passage of theAffordable Care Act, aka Obamacare, in 2010.
The majority of people now qualify for Medicaid based on themodified adjusted gross income (MAGI). MAGI looks at different sources of income but does not take your assets into consideration. Other people, particularly those who rely on certain federal programs, will still need to qualify for Medicaid the old-fashioned way, referred to as non-MAGI Medicaid.
The problem is that MAGI Medicaid does not cover nursing home care. In order to get Long-Term Services and Supports (LTSS), the part of Medicaid that pays for long-term care in a nursing home, you will need to be eligible for the program based on your assets. In many cases, seniors try to spend down their assets or give them away so that they can qualify for care. Some place their funds inan irrevocable trustin an attempt to shield them from Medicaid, turning countable assets into non-countable assets.
The Medicaid Look Back Period
The Medicaid Look Back Period begins the day someone applies for Medicaid and goes back 60 months (5 years) in all states but California. At this time, California only requires a 30-month Look Back Period.
Although there are gift and estate tax laws in place that allow certain transfers to remain tax-free, that does not mean they do not count toward the Medicaid Look Back Period. For example, there is an annual exclusion gift limit of $15,000 per recipient as of 2021.That means you could give $15,000 to two different people and not be taxed on that money. However, that would be $30,000 that would be in violation of the Look Back Period if it was gifted within the designated time frame.
Irrevocable Trusts and the Medicaid Look Back PeriodAn irrevocable trust is not usually countable as an asset when determining Medicaid eligibility. That is, unless it was established within the past five years (30 months in California). Medicaid treats these trusts as if they were gifts, and for that reason, they are subject to the Medicaid Look Back Period.
Irrevocable Trusts and the Medicaid Look Back Period
An irrevocable trust is not usually countable as an asset when determining Medicaid eligibility. That is, unless it was established within the past five years (30 months in California). Medicaid treats these trusts as if they were gifts, and for that reason, they are subject to the Medicaid Look Back Period.
There are resources, however, that can be protected for the spouse of the applicant if they still live in the community. These do not count towards the Medicaid Look Back Period. The Spousal Impoverishment Standard changes every year. In 2023, the Minimum Monthly Maintenance Needs Allowance (MMMNA) for the community spouse is set for $2,465 ($3,080 in Alaska and $2,835 in Hawaii). Depending on the state, the spouse may retain assets ranging from $29,724 to $148,620. Home equity limits fall between $688,000 to $1,033,000.
How the Look Back Period Works
Any violations of the Medicaid Look Back Period will result in a penalty and that penalty results in a period of ineligibility. This can be a challenge for seniors who may need more urgent placement in a nursing facility.
Summary
Giving gifts, transferring assets, and selling goods for less than fair market value could delay your eligibility for Medicaid. You cannot always predict when you will need nursing home care. That is why it is so important to understand the Medicaid look Back Period. You will want to have a financial strategy in place so that you can get the care you need when you need it. It may be in your best interest to reach out to an elder care attorney for advice.
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6 SourcesVerywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read oureditorial processto learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.Centers for Disease Control and Prevention.Nursing Home Care.Genworth Financial.Cost of Care Survey.Kaiser Family Foundation.Medicaid’s Role in Nursing Home Care.American Council on Aging.Understand Medicaid’s Look-Back Period; Penalties, Exceptions & State Variances.U.S. Internal Revenue Service.Frequently Asked Questions on Gift Taxes.Centers for Medicare & Medicaid Services.2023 SSI and Spousal Impoverishment Standards. Effective January 1, 2023. medicaid.gov
6 Sources
Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read oureditorial processto learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.Centers for Disease Control and Prevention.Nursing Home Care.Genworth Financial.Cost of Care Survey.Kaiser Family Foundation.Medicaid’s Role in Nursing Home Care.American Council on Aging.Understand Medicaid’s Look-Back Period; Penalties, Exceptions & State Variances.U.S. Internal Revenue Service.Frequently Asked Questions on Gift Taxes.Centers for Medicare & Medicaid Services.2023 SSI and Spousal Impoverishment Standards. Effective January 1, 2023. medicaid.gov
Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read oureditorial processto learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
Centers for Disease Control and Prevention.Nursing Home Care.Genworth Financial.Cost of Care Survey.Kaiser Family Foundation.Medicaid’s Role in Nursing Home Care.American Council on Aging.Understand Medicaid’s Look-Back Period; Penalties, Exceptions & State Variances.U.S. Internal Revenue Service.Frequently Asked Questions on Gift Taxes.Centers for Medicare & Medicaid Services.2023 SSI and Spousal Impoverishment Standards. Effective January 1, 2023. medicaid.gov
Centers for Disease Control and Prevention.Nursing Home Care.
Genworth Financial.Cost of Care Survey.
Kaiser Family Foundation.Medicaid’s Role in Nursing Home Care.
American Council on Aging.Understand Medicaid’s Look-Back Period; Penalties, Exceptions & State Variances.
U.S. Internal Revenue Service.Frequently Asked Questions on Gift Taxes.
Centers for Medicare & Medicaid Services.2023 SSI and Spousal Impoverishment Standards. Effective January 1, 2023. medicaid.gov
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