What is a look-back period?

When people think about long-term care planning, they often think of estate planning and wills. However, Medicaid can also be a crucial aspect of these plans as it is available to eligible Georgians who cannot afford the cost of medical expenses or staying in a nursing home.

If you are planning for the latter, you should understand that qualifying for Medicaid can be more complicated than you think. For instance, there are strict income and asset limits that cannot be exceeded if you want to qualify for Medicaid. Too many people make the mistake of thinking they can just gift or transfer assets to others to meet these limits without losing everything they own, but thanks to the "look-back period," this is generally not something you can do.

As discussed in this Forbes article, the look-back period is the five years prior to your application for Medicaid during which your financial transactions are scrutinized.

This period allows Medicaid to see any transactions that might trigger a transfer penalty, which sets back your eligibility for Medicaid. Essentially, they are looking for indications that you transferred money or assets to others strictly as a means of qualifying for Medicaid.

Between the asset limits and the penalties for transferring assets for five years, it can be enormously frustrating to manage your finances prior to applying for Medicaid. Essentially, a person could wind up spending every dollar they have on their own care before they can finally be eligible for Medicaid. By that point, they have nothing left to leave to heirs.

This is why long-term planning and legal support can be so crucial. Discussing your options for your care and your estate planning goals with an attorney can help you make some financial decisions long before you need to qualify for Medicaid and before the look-back period kicks in.

But remember: Timing is crucial when it comes to planning for future medical needs. Waiting until you actually need Medicaid to examine your financial options can already be too late. Therefore, discussing your long-term care plans with an attorney as soon as possible can be a wise decision.

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