Explain the “5-Year Lookback Period” for Medicaid

Many Virginia seniors are planning to depend on Medicaid to cover the costs of a nursing home or home nursing care. Far too many do not understand how to prepare and are not aware of the rules governing Medicaid eligibility.

One of these is the notorious “Five-Year Lookback Period.” Most already know that too many assets or too much income can disqualify you from receiving Medicaid Long-Term Care. But simply divesting yourself of most of your assets is a serious mistake. There are legal strategies you can employ in advance to make sure you qualify for Medicaid when the time comes to apply. One of the guiding factors is the lookback period. We’ll explain more about it here.

What Does Medicaid “Look Back” at Concerning My Finances?

Virginia Medicaid has a strict asset and income limitation to qualify for Medicaid Long-Term Care (LTC). A single applicant is allowed no more than $2,742 per month in income and $2,000 in personal assets. Before applying for Medicaid LTC, seniors must find ways to retitle, transfer, or protect most of their assets in order to qualify. But the law foresees many people scrambling to get rid of assets just in time to meet eligibility requirements.

The five-year Medicaid Look-Back Period actually begins five years before your application date. Medicaid will review this period to ensure no assets were sold for less than fair market value or given away. If there were, they assume you were juggling assets to meet the asset limit. Violating this rule by working to transfer or shield your assets during the five-year period prior to your application results in a penalty period where you are ineligible for Medicaid LTC.

Common Mistakes that Violate the Lookback Rule

Here are some of the most common violations of the five-year lookback rule that can complicate your Medicaid LTC eligibility.

Spousal Transfers

The allowable asset transfer from one spouse to another of a specific dollar amount in assets is technically allowed to allow for Medicaid eligibility and the amount changes each year. But for Medicaid purposes, all assets jointly owned by spouses count toward eligibility, so this is a sticking point depending on your situation. You should consult a Medicaid LTC Planning Attorney in Virginia about this Community Spouse Resource Allowance (CSRA) and how it affects you.


Gifting assets to others, even family members, can violate the lookback period. Many think because the IRS allows you to gift a certain amount of money and it is exempt due to the estate gift tax exemption, that this also does not count toward Medicaid eligibility. This is false. Even birthday, holiday, or wedding gifts can earn you a penalty from Medicaid.

Undocumented Asset Transactions

Lacking the appropriate documentation from legitimate asset transfers that are equal to the fir market value will earn a Medicaid penalty. It is critical to keep all documents from asset transfers, especially ones that will appear on government records, like vehicles and physical property.

Irrevocable Trusts

Irrevocable Medicaid Trusts are not exempt from the lookback rule. While they are a trusted tool for advance LTC planning, they must be set up and funded before the five-year lookback period to prevent a penalty. Any irrevocable trusts made during the look-back period are considered gifts.

Avoid the Stress of Crisis LTC Planning by Starting Now

Don’t let Medicaid LTC Planning sneak up on you! Avoid the stressors of MLTC crisis planning by starting today. Your first step is to take advantage of the FREE virtual Medicaid LTC Planning Workshop from Promise Law. This virtual presentation reveals critical issues to avoid and how to plan for a more secure future. You are not obligated to partner with us for LTC planning after viewing this workshop presentation.

Register today for this informative and helpful virtual workshop and begin planning for a more secure future today, or contact us now to learn more about advance Medicaid Long-Term Care Planning in Virginia.


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