Why Florida Utilizes a “Look Back” Period

Generally, in order to receive Medicaid Long-Term Care, the applicant must not have “given away” assets within five years of applying for Medicaid benefits.

This five year window is known as the “look back” period. The rule only identifies transfers that were made below fair market value, therefore transfers of assets at or above fair market value are exempt.

The most common example of a non-exempt transfer is a gift of an asset to a friend or family member within the prior 60 months of applying for Medicaid benefits.

Since Medicaid is a needs-based program, this rule is designed to ensure that applicants are actually in need of government assistance and did not just position themselves to receive Medicaid benefits just before applying.

Currently, five years is the maximum amount of time the Department of Children and Families (DCF) is allowed to look back at transfers of assets by the beneficiary.

A couple looking at the horizon as they give us their back

How to Calculate the Medicaid Transfer Penalty

If an applicant is found to have made a non-exempt transfer during the “look back” period, the State of Florida will impose a penalty of ineligibility based on the amount of money that was transferred away.

The length of the penalty of ineligibility is calculated by dividing the amount of money that was given away by the average monthly private-pay nursing home facility cost.

The penalty divisor currently being used by Medicaid in 2018 is $9,171.

The following fact pattern is an illustration of how the Medicaid transfer penalty works:

  • Doris is a widow and mother of three adult children. She wishes to make a $100,000 combined distribution to her children so that they may enjoy some of their inheritance during her lifetime.

    However, a year later Doris fell while decorating her house and she can longer live on her own due to her poor health after the fall requiring her to live in a nursing home.

  • Doris then applies for Medicaid as she would currently qualify for Medicaid benefits given her current financial situation.

    However, Doris made a $100,000 gift to her children just the prior year.

    This gift would make Doris ineligible for Medicaid benefits for 10.9 months ($100,000 gift / $9,171 penalty divisor).

  • The children could simply return their inheritance to their mother to avoid the transfer penalty, but Doris would now be ineligible for Medicaid benefits due to her financial strength of having of $100,000 in her bank account.

However, with the proper advice and guidance from an elder law attorney, there are still ways to legally protect her $100,000 even though she is already in a nursing home.

How to Legally Protect Your Assets Before the “Look Back” Period

If you are healthy and not immediately looking to receive long-term care in the immediate future, there are several steps that you can take now to better prepare yourself for the future:

  1. Ensure your estate plan is in order. Is your will and/or trust up-to-date? Do you have a valid power of attorney, living will, and healthcare surrogate? Visit our estate planning page to answer any questions you might have regarding your estate plan. 
  2. Create an irrevocable trust for Medicaid purposes which if done properly allows you to protect both principal and income while allowing the applicant to still qualify for Medicaid long-term care.
  3. Obtain long-term care insurance coverage. Some private insurance carriers provide options for this type of insurance, but the applicant typically must be healthy in order for them to be covered.

Reach out to us to receive the proper advice and guidance from an elder law attorney, we are here to help you!

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