When a senior intends to apply for long-term Medicaid, there is an asset limit. For you to be eligible, you cannot have assets that are above the threshold limit. Medicaid’s look-back period is supposed to prevent applicants from giving away assets or selling them below the fair market value in a bid to artificially meet that asset limit.
Assets transfers done within the look-back period are usually reviewed. If you are found to have violated the rules in place, a penalty period of Medicaid ineligibility will be established. This is because the assets you gifted or sold under their fair market value would have been used to pay for your long-term care. However, if you transfer or gift assets before the look-back period, there are no penalties incurred.
Any transfer is scrutinized
No matter how small, all asset transfers are usually reviewed. There are no exceptions to charity donations or gifts to grandchildren. Loans forwarded to family members without formal documentation and payments made to a caregiver done without a formal agreement can also be termed improper transfers. The worth of the assets in question will generally inform the length of the penalty imposed on you.
What is the look-back period in New Jersey?
States may have varying timelines with regards to Medicaid look-back. For instance, in New Jersey, the time is five years. It means that all transactions you made within that time will be reviewed for Medicaid purposes. Learning more about long-term care planning is vital in protecting your assets and savings.
For example, there are some exceptions where asset transfers won’t trigger a penalty period. With an informed plan, your assets can be used to support your spouse or children while allowing you to qualify for Medicaid – a win-win for your family.