Understanding Medicaid’s 5 Year Look-Back Period and Transfer Penalty

Before selling assets, gifting assets, or transferring property, it is vital to understand the impact this may have on an individual’s eligibility for Medicaid long-term care benefits.  These may also be referred to as vendor benefits or nursing home benefits.  Seniors must understand Medicaid’s look-back period and the regulations and requirements for gifts and transfers of property. 

Any assets sold or given away during the last 60-months before the need for long-term care benefits could cause penalties and a delay in their Medicaid application process. This is also true of transferring property. Everything must be done following the proper legal requirements when seeking to qualify for Medicaid, and assets and property are involved. 

What Is the Medicaid Look-Back Rule?

First, it is essential to understand why the Medicaid look-back rule is in place.  Medicaid is an assistance program providing benefits based on means test.  A means test looks at the monetary resources a person has available to pay for specific goods or services.  The program then determines if the individual qualifies based on their income and assets. 

Generally, when a senior enters a nursing home, their life expectancy is usually limited, limiting them to spend their assets on anything besides nursing facility care.  This reduces the senior’s incentive to retain their assets for future use.  In contrast, because nursing home care is expensive and the probability of having anything left to pass down to loved ones is reduced, the incentive to transfer assets to their family beforehand is more prevalent. 

Without the look-back rule, limiting the amount of assets an individual can give away, a well-off person could give away all of their assets when it becomes evident nursing care is needed.  In this scenario, a millionaire could sign away all of their assets and immediately become eligible for Medicaid.  The look-back rule has established guidelines penalizing individuals for gifting and transferring their property to become eligible for Medicaid.

understanding medicaid look-back period

What is the Look-Back Period?

When senior citizens or disabled persons apply for long-term care Medicaid, regardless of whether it is in-home care services, a nursing home, or assisted living, there is a specific preset limit for assets or property one can have and qualify for Medicaid. Medicaid has a limit set for the amount of assets or property a person can have on hand to receive Medicaid. The look-back period is in place to prevent an applicant from gifting or selling all their assets or property under fair market value to meet the asset limit for Medicaid assistance.

The look-back period begins on the date the Medicaid application is made and looks back 60 months.  During the 60-month time frame, all transactions are subject to review before the applicant’s approval for Medicaid benefits. Before 2006, the look-back period was three years; however, Congress changed the ruling to five years as part of the Deficit Reduction Act (DRA).

Which Medicaid Programs Are Subject to the Look-Back Period?

Medicaid offers various programs, and the look-back time frame doesn’t apply to all of them. Depending on the program used for, Medicaid services may or may not require the look-back period. Programs designed for pregnant women, pregnant mothers, and newborns don’t have a look-back period.

Violations of The Look-Back Period

If the applicant violates the rule, there is a penalty period wherein the applicant is ineligible for coverage. Violations may be due to assets being sold or gifted for less than fair market value.  Or may be due to other rules and regulations outlined under Medicaid guidelines. These assets could have been sold and used to pay for long-term care and thus, if not correctly handled, will count against the applicant’s application for Medicaid.

Other examples of violations are gifting grandchildren money for graduation, transferring the title of a house to a relative, selling a coin collection for half the value, donating an old vehicle to a local charity, and other similar donations. If donations, gifts, and sales do not follow the proper channels, the applicant may become ineligible for benefits.

Receiving care without formal care agreements and paying those caregivers can also result in a violation and require a period of ineligibility. If, after the initial look-back time frame, a Medicaid beneficiary happens to come into an inheritance or gives away some or all of their money, they are also in violation of the look-back rule.

If someone violates Medicaid’s look-back period, there are still several ways in which to be Medicaid eligible. Typically, the best way to go about this is to work closely with an Elder Care Attorney who is well versed in Medicaid law, preventing any misuse of funds and penalization.

medicaid look-back transfer penalty

Spending Down Assets Not Violating the Look-Back Rule

There are many ways to spend down assets over Medicaid limits without violating the look-back period.  The strategies outlined below are ways to spend down assets; however, the Medicaid look-back period is complex.  It is recommended to consult an Elder Care Attorney before implementing any of the strategies listed below.  Further, this list is in no way intended to be exhaustive as there are many options available under the law.

Annuities

Annuities, frequently referred to as Medicaid Annuities or Compliant Annuities, are also a common way to avoid violations. Here, a person will pay a lump sum with cash. In return for the annuity, the senior, or the senior’s spouse, will receive a payment each month for a period less than their life expectancy. The annuities used for Medicaid are to convert an asset into an income stream. Thus, they lower the value of assets a person has to fall below the Medicaid eligibility limit and increase the spouse’s income which does not affect the nursing home spouse’s income or payments to the nursing home.

Buying annuities during the look-back time frame is not a violation of the rules for Medicaid. Each state has its own rules and regulations in regard to annuities and Medicaid. Keep in mind these annuities must comply with the rules and regulations.

medicaid annuity

Caregiver Agreements

If hiring a caregiver, it’s essential to have Caregiver Agreements. These are contracts outlining the relationship of the caregiver in writing.  A caregiver agreement is necessary even if the caregiver is a family member or a friend. Agreements may go by the following terms:

  • Life Care Agreements
  • Long-Term Care Personal Support Services
  • Elder-Care Agreements/Contracts

The agreement’s formality allows the senior to fairly compensate their friend or family member for the provided care. It will show the spend-down assets without the senior being in violation of the Medicaid look-back period.

The agreement also allows seniors to receive care Medicaid does not cover, and it gives friends or family members fair compensation for their time. Caregiver contracts may stay in place even if a senior enters a care facility, such as assisted living or a nursing home, as an advocate.

It’s essential to carefully draft the contract (which is typically for the duration of the senior’s life). A caregiver agreement should include the date services begin, responsibilities, and the caregivers’ work hours.  Additionally, the caregiver must keep track of the hours they work and the tasks they perform each day.  For tracking purposes, the caregiver should maintain accurate notes on the services they provide, and invoice services rendered. The contract should state the compensation amount (which must be reasonable) for the provided duties. Should the caregiver be paid upfront and the senior pass away, Medicaid requires the caregiver to forfeit any remaining unearned funds.

Home modifications

Applicants can also use assets over the Medicaid limit for home modifications without violating the look-back rule.  Home modifications can include replacing old plumbing, upgrading bathrooms, installing wheelchair ramps, a chair lift, wider doorways, etc.

Irrevocable Funeral Trusts

Irrevocable Funeral Trusts are also an option for avoiding the look-back period. Each state limits this money as to how much can be set aside for burial and funeral costs.

Paying off Debt

Paying off debt is another way to avoid a violation. If the senior chooses to pay off a mortgage or their credit cards, it is not a violation of the look-back period.

medicaid look-back period exceptions

Exceptions and Loopholes to The Look-Back Period

Fortunately, Medicaid’s look-back period has some loopholes and exceptions.  The applicant can make some transfers without being in violation in an effort to protect the family of the applicant from being destitute. Such exceptions allow for the transfer of assets without fear of any penalties. To avoid penalties, always consult a Medicaid attorney before making any transactions.

Married Couples Joint Assets

Assets for married couples are considered to be jointly owned by Medicaid. Each spouse is allocated a portion of the joint assets to prevent spousal impoverishment for the spouse not under Medicaid. There is a specific spend-down calculation based on the married couple’s financial assets.

The Medicaid applicant can transfer a maximum of $128,640 to their non-applicant spouse who continues to live independently.  This transfer of assets is known as the Community Spouse Resource Allowance (CSRA).  The maximum allowed amount may vary each year and by state.  Applicants must spend any assets over the CSRA to be eligible.

Assets Transferred to Minor Children

Applicants can also transfer some assets to legally blind or disabled children and, in some cases, under the age of 21 years old. Trusts may also be established to help aid the children in the future.

Transferring a Home

An applicant may also transfer a home to a sibling showing dual ownership.  No penalty shall apply as long as the transfer is made one year before applying for Medicaid and relocating to a nursing home.  An applicant can also transfer homes to adult children, a caregiver-child exemption, who have served as caregivers for their parents. To be eligible, the adult child has to have been the primary caregiver to the aging parents, thus not needing the parent to relocate to an assisted living facility or a nursing home. The adult child must have lived with the parents for at least two years before the parents would have entered a nursing home.

setting up trust for children

Working with an Experienced Elder Law Attorney

Medicaid’s look-back period is extraordinarily complex and can be confusing when it comes to what is allowed and what is considered a violation of the rules.  Gifts or transfers made without the guidance of an experienced Elder Law attorney can create issues for a senior who may need nursing home care in the future.  Seeking sound legal advice and guidance for Medicaid planning can mean the difference between qualifying for Medicaid and losing your life savings.

At Paths Elder Law, we have close to 30 years of experience helping seniors navigate Medicaid eligibility rules.  We have helped hundreds of senior’s plan for a brighter future by protecting them from the financial devastation resulting from the need for long-term nursing home care.

If you or a loved one require legal guidance and assistance in planning for the future to avoid penalties from things such as Medicaid’s look-back period, we are here to help.  Contact Paths Elder Law to schedule a consultation.

Search

Table of Contents

Follow Us

Categories

Contact An Elder Law Attorney

We are legal experts focusing on wills, trusts, medicaid, guardianships, and asset protection for seniors and veterans in Missouri.

Accessibility Toolbar

Educational Seminar at Paths Law Firm

Paths Law Firm provides a Free Educational Elder Law Seminar every month to help you plan for your future.

Community Relations

Jeane M. Fracassa

Community Relations

Jeane M. Fracassa

Jeane Fracassa – a dedicated and accomplished professional who retired with an impressive 38-year service record from the Kansas City Missouri Police Department. Throughout her illustrious career, Jeane served as a Civian Supervisor in the Communications Unit, where she played a pivotal role in ensuring efficient and effective communication within the department.

Even in retirement, Jeane’s commitment to community service remains unwavering. Currently, she serves in various capacities within Community Relations at Paths Law Firm. Actively engaged in the Lee’s Summit and Overland Park communities, she proudly represents the law firm.

In all aspects of her life, Jeane Fracassa exemplifies the values of community, compassion, and family. Her commitment to making a difference and her love for exploration make her a remarkable individual, whose presence brightens the lives of those she encounters. Whether at work, with family, or during her travels, Jeane’s genuine care for others and her zest for life make her a truly remarkable and inspiring person.

Administrative Assistant

Laura E. Messer

Administrative Assistant

Laura E. Messer

Laura is the Law Firm’s marketing assistant, supporting all marketing tasks, including managing calendars, researching upcoming events, updating marketing software and spreadsheets, and partnering with organizations to maintain relationships that benefit Paths Law Firm’s clients.  Laura is also the law firm’s professional photographer as she provides the professional photographs for the headshots, organizations, events, and networking.

Laura has over 10 years of experience as a professional photographer.  She is also Adobe and Microsoft Certified.  She graduated from Columbia College, Columbia, Missouri with her Bachelor of Arts degree, Magna Cum Laude, in Behavioral Psychology (minors in Social Work and Criminal Justice), and her Photographic Craftsman degree from Professional Photographers of America. She is certified as a Qualified Mental Health Professional, Certified Gentle Teacher, Medicaid Billing Certified, Crisis Intervention Counselor, and a Missouri Notary.

Laura has been married more than 26 years and has a daughter and a son. She has four brothers, a niece, and a nephew. Her four spoiled pets that love her attention. A lot of Laura’s off time is spent taking photos and she is an internationally published photographer. Laura owns a studio on the historic Independence Square. 

Administrative Assistant

Holly D. Bramble

Administrative Assistant

Holly D. Bramble

Holly is our newest member of the administrative team. She is hardworking, has proven organizational skills and excellent communication skills. Holly has transitioned to the Estate Planning field from healthcare administration where she gained valuable knowledge that has contributed to her success here at Paths.

Holly enjoys spending time with loved ones, cheering for the Chiefs, and relaxing on the beach.

Administrative Assistant

Tressa L. Purdy

Administrative Assistant

Tressa L. Purdy

Tressa has the important role of being a client’s initial point of contact as the law firm’s receptionist for all locations.  She also welcomes, assists, and cares for clients at the Lee’s Summit office. Additionally, she provides support in an administrative capacity for the attorneys, staff, and clients.  When you meet Tressa, the first quality many note is her readiness to be of assistance.

 

Tressa is a graduate of Park Hill High School with extensive administrative experience and executive level management. Tressa brings a stability and comfort to the law firm experience having worked in a variety of industries and having lived in six different major metropolitan cities.

 

Tressa has a daughter, two sons, and one grandchild.  In her free time, she enjoys her family and friends, loves being outdoors, gardening, bike riding and bird watching. Indoor hobbies include scrapbooking, painting cookies, and cheering on Chiefs football. She is a Kansas City native but enjoys traveling but is always happy to be back in her hometown.  

Attorney

Kathleen E. Overton

Attorney

Kathleen E. Overton

Kathleen Overton is an attorney and owner at Paths Law Firm. She has more than 17 years of experience advocating for those with special needs and navigating the state and federal agencies formed to help the disabled and elderly. At Paths Law Firm, Kathleen’s practice focuses on helping the elderly qualify for nursing home Medicaid, creating estate plans to protect beneficiaries, as well as a lot of time planning and forming businesses. Kathleen also enjoys helping clients form non-profit organizations and obtain 501(c)(3) tax exempt status.

 

After attending law school at the University of Oklahoma, Kathleen began representing clients before the Social Security Administration. Eventually her practice switched to federal court appeals and Kathleen spent years representing clients before the Eastern and Western District of Missouri, the District of Kansas, and the Eighth Circuit Court of Appeals. Kathleen has since focused her practice on estate planning and elder law after watching clients struggle to find ways to financially care for loved ones with special needs or aging parents.

 

Kathleen lives in the Northland with her husband and four children. She spends her free time attending soccer matches and ballet performances with her children and starting endless home improvement projects with her husband. 

Medicaid paralegal

Tena K. Dooley

Medicaid Paralegal

Tena K. Dooley

Tena is a Medicaid Paralegal.  She is very meticulous and organized.  She works closely with the attorneys, clients, and State representatives. 

Tena has an associate in applied science and has over 20 years of office management experience. She has two daughters and one grandson.

Tena enjoys spending time with her family.  She enjoys everything outdoors and her hobbies include fishing and gardening.

PARALEGAL & ACCOUNTANT

Sydney R. Morris

PARALEGAL & ACCOUNTANT

Sydney R. Morris

Sydney is the law firm’s internal accountant and one of their experienced paralegals having been with Paths Law Firm since 2017. She is a primary point of contact for estate planning and business planning.

Sydney graduated with honors from the University of Missouri Kansas City in 2022 with her Bachelor of Science Degree in Accounting. She is a Bloch Launchpad, Phi Theta Kappa, and National Honor Society alumni.

In her free time, Sydney enjoys spending time with her husband, reading, baking and going on long walks. 

SENIOR ADMINISTRATIVE ASSISTANT

Christy L. Phillips

SENIOR ADMINISTRATIVE ASSISTANT

Christy L. Phillips

Christy has three years of experience in elder law working for seniors and their families. She is currently the Senior Administrative Assistant and organizes the day to day functions of the office and makes sure everything runs smoothly. When asked why she loved what she does, Christy said at Paths Law Firm, she gets the opportunity to help clients in more ways than one. Her favorite parts of the job are getting to know the clients and helping them get their questions answered. 

Christy’s experience in the finance industry has been extremely beneficial to her role as the Senior Administrative Assistant. Christy has a special place in her heart for the elderly and attributes this to the relationship she had with her grandparents. 

Christy was raised in Ogden, Utah and moved to Independence, MO, when she was ten years old. She has been with her high school sweetheart for 25 years and they have two beautiful children together. Her daughter works in the medical industry, and her son currently attends High School and plays Baseball. When Christy is not working, she enjoys crafting and spending time with her family and friends.

Christy’s experience in the finance industry has been extremely beneficial to her role as Benefits Coordinator. There have been many influences that went into her decision to select the field of Elder Law. Christy has a special place in her heart for the elderly and attributes this to her relationship with her grandparents.

When asked why she loves what she does, Christy said that at Paths Elder law, she gets the opportunity to help clients in more ways than one. Her favorite part of her job is getting clients approved for Medicaid or VA benefits as it is a huge relief for them and their loved ones.

Christy was raised in Ogden, Utah, and moved to Independence, MO, when she was ten years old. She has two children that keep her busy and fill her life with joy! Christy’s daughter cheers for Avila University, and her son plays competitive baseball for the Bucks and races BMX locally for the Motorcycle Closeout Team.

When Christy is not working, she enjoys crafting and making homemade gifts for her loved ones and raising her kids to be healthy, happy, and positive humans.

 

Practice Areas

  • Medicaid Benefits
  • VA Benefits

 

Professionalc Memberships and Affiliations

  • Missouri Notary

FINANCIAL MANAGER

René A. Fracassa

Rene A. Fracassa, Paths Law

FINANCIAL MANAGER

René A. Fracassa

René is the Financial Manager at Paths Law Firm overseeing all aspects of revenue, expenses, and financial planning. She is also responsible for general office management, including assisting in many of the administrative matters that periodically arise. 

 

René earned her Bachelor of Science in Hotel and Restaurant Management from Central Missouri State University in Warrensburg, Missouri and soon thereafter worked her way through management at The American Restaurant where she worked almost 17 years before relocating to the country of China.

 

René is the Financial Manager at Paths Law Firm overseeing all aspects of revenue, expenses, and financial planning. She is also responsible for general office management, including assisting in many of the administrative matters that periodically arise. 

 

René earned her Bachelor of Science in Hotel and Restaurant Management from Central Missouri State University in Warrensburg, Missouri and soon thereafter worked her way through management at The American Restaurant where she worked almost 17 years before relocating to the country of China.

 

René is the Financial Manager at Paths Law Firm overseeing all aspects of revenue, expenses, and financial planning. She is also responsible for general office management, including assisting in many of the administrative matters that periodically arise. 

 

René earned her Bachelor of Science in Hotel and Restaurant Management from Central Missouri State University in Warrensburg, Missouri and soon thereafter worked her way through management at The American Restaurant where she worked almost 17 years before relocating to the country of China.

 

René is the Financial Manager at Paths Law Firm overseeing all aspects of revenue, expenses, and financial planning. She is also responsible for general office management, including assisting in many of the administrative matters that periodically arise. 

 

René earned her Bachelor of Science in Hotel and Restaurant Management from Central Missouri State University in Warrensburg, Missouri and soon thereafter worked her way through management at The American Restaurant where she worked almost 17 years before relocating to the country of China.

 

In her spare time, René is currently quite active managing multiple generations of her family, including parents and grandkids.  René has had great impact on the lives of many women teaching discipling and teaching and abundance of Bible Studies. Her former career in management and event planning trained her well to juggle all the activity.

MARKETING MANAGER

Hilary R. Tichota

MARKETING MANAGER

Hilary R. Tichota

Hilary plays a vital role in managing the Marketing Department at Paths Law Firm.  She is excellent at bringing new ideas and sharing valuable resources with the law firm and our community. Hilary has been with the law firm since the beginning, working in nearly every role which is invaluable in her marketing endeavors as she brings a unique set of skills into the Marketing Department.

Hilary is nearly complete in her Bachelor’s of Arts Degree in Marketing at Park University.  She has earned the honor of being listed in National Honors Society, Phi Theta Kappa, and the Dean’s List. Hilary is always looking for new and innovative ways to share the law firm’s message.

While not working, Hilary spends her time with her family at their rural home. They tend to their chickens and honeybees and enjoy the solitude of country living.

SR. PARALEGAL & OPERATIONS MANAGER

Jennifer A. Bronson

SR. PARALEGAL & OPERATIONS MANAGER

Jennifer

Jennifer is the Sr. Paralegal and Operations Manager at Paths Law Firm.  She oversees the firm’s probate department as well developing, implementing, and managing all the firm’s administrative processes having been with the law firm almost from the beginning.  She enjoys client contact as well as behind-the-scenes operations.

 

Jennifer began her legal career in 1990 as a legal secretary.  She has worked in small and medium sized firms, as well as court operations.  She has her Paralegal Certificate from Boston University, Law Office Management Certificate from University of Central Missouri, and she is a Master Financial Coach. 

 

Jennifer has two daughters, twin sons, and twin grandsons.  She spends as much time as she can with them.  She enjoys reading, listening to podcasts, and tending her yard. 

ATTORNEY

Russell A. Fracassa (Rusty)

ATTORNEY

Russell A. Fracassa (Rusty)

When asked what he wants to do, his reply was “I just want to sit at the kitchen table and work directly with people.” Rusty enjoys working with clients providing experienced advocacy and supporting them through their unfamiliar and overwhelming situations. Due to all the challenges faced by seniors, it is essential to work with an experienced elder law attorney who has expertise in the law, issues, and concerns affecting seniors and their families.

Rusty brings more than 30 years legal experience and expertise working for seniors and their families as an elder law attorney in Kansas City and surrounding. Prior to law school, Rusty was an accountant and his first couple years practicing law was as a tax attorney. This provides invaluable experience in his current practice of law. Rusty’s focus is helping protect seniors’ assets from taxes and long-term care costs, benefit qualification, and navigating more complex family scenarios in their estate planning.

Rusty has personally experienced the loss every parent fears, caring for a spouse suffering with cancer and the treatment, and working with aging parents through all stages of their lives.  He intimately understands the challenges faced by individuals and their caretakers when capacity or health declines, how to prepare for it, and the legal matters while in the midst of it.  He may not be able to eliminate his client’s grief, but he strives to provide clients with peace of mind.

In 2010, Rusty’s faith and love led him and part of his family to China as Christian missionaries. He and his wife, went permanently, but ended up dedicating 3 years to that ministry. They returned to Missouri to help with grandchildren after a family tragedy and later began anew with Paths Elder Law. The goal is providing compassionate care through legal advocacy.

Rusty has multiple degrees and advanced study spanning his Bachelor’s of Arts in Business Administration – Accounting at Rockhurst College (now Rockhurst University), Masters of Arts in Accounting and in Intercultural Studies, as well as his Juris Doctorate from the University of Missouri at Kansas City School of Law.

When Rusty is not practicing law, he enjoys spending time with his family, grandchildren, and excessive eating at local restaurants.

Practice Areas

  • Wills and Trusts
  • Estate Planning
  • Asset Protection
  • Medicaid Benefits
  • VA Benefits
  • Probate
  • Guardianship and Conservatorships
  • Education

 

BSBA and Master’s in Accounting, Master’s in Inter-Cultural Studies, and Doctorate in Juris Prudence

  • Rockhurst University
  • Liberty University
  • University of Missouri – Kansas City


Admissions to Practice

  • Missouri


Professional Memberships and Affiliations

  • State Bar of Missouri
  • National Academy of Elder Law Attorneys (long-time Member)
  • Elder Counsel (Charter and Ongoing Member)
  • Missouri Association of Trial Attorneys (Past Member)
  • Kansas City Metropolitan Bar Association
  • Missouri State Bar Committees – Elder Law, Estate Planning, Probate