You've worked hard your entire life, building savings and assets to provide security for yourself and your loved ones. As you consider the potential need for long-term care, you're concerned about protecting what you've built while ensuring you can access the care you might need. That’s why it’s so important to understand the rules for Medicaid eligibility.
At the Elder Planning & Elder Care Firm of Michigan, our Howell Medicaid attorneys understand the stress and uncertainty many seniors face when trying to follow Medicaid eligibility rules. The 5-year look-back period is a frequently misunderstood aspect of Medicaid planning, leaving many families vulnerable to costly mistakes. With proper planning and our lawyer’s professional guidance, you can protect more of your hard-earned assets while ensuring you qualify for the care you need when the time comes.
How the Medicaid Look-Back Period Works in Michigan
When you apply for Medicaid benefits to cover long-term care expenses in Michigan, the Department of Health and Human Services examines all financial transactions you've made during the 60 months (five years) preceding your application date. This review period is known as the look-back period.
The 5-year Medicaid look-back rule aims to prevent individuals from giving away or transferring assets at the last minute simply to qualify for Medicaid benefits. The state wants to ensure that those who genuinely need financial assistance receive it while those who could pay for their care don't artificially impoverish themselves.
Transfers That Trigger Penalties During the Look-Back Period
Certain types of asset transfers commonly trigger the Medicaid look-back rule scrutiny and potential penalties when you apply for Medicaid. Examples include:
- Gifts to family members. Gifts to loved ones often raise red flags during the review process. This includes cash gifts, signing over property deeds, or adding someone's name to a bank account or property title without receiving equal value in return.
- Selling assets below market value. Selling assets for less than they’re worth is another common issue. If you sell your home to a child for $50,000 when its market value is $250,000, Medicaid views this as a $200,000 gift. The undervalued portion is treated as an improper transfer that can affect your Medicaid eligibility.
- Caregiver agreements. Paying for a caregiver who is not Medicaid-approved can trigger penalties as well. If you pay a family member for care or services without a proper written agreement in place before services begin, Medicaid may view these payments as gifts rather than legitimate expenses.
When Medicaid identifies improper transfers during the look-back period, they impose a penalty period during which you will be ineligible for benefits. This penalty is calculated by dividing the total value of improper transfers by Michigan's average monthly cost of nursing home care (around $9,585 as of April 2025).
Exceptions to the Medicaid Look-Back Rule That May Help Your Situation
While the Medicaid look-back period rules are strict, Michigan recognizes several important exceptions that allow some asset transfers without triggering penalties. Understanding these exceptions can help with Medicaid planning.
- Transfers to a spouse. Certain transfers to your spouse are generally exempt from look-back penalties as long as they are not also applying for Medicaid.
- Transfers to a disabled child. Transfers to a trust exclusively for the benefit of a disabled child won't trigger penalties.
- Exempt assets. Transferring exempt assets is not subject to the Medicaid look-back period. These may include your primary residence (subject to equity limits), one vehicle, personal and household items, certain life insurance policies, burial plots, and prepaid funeral contracts.
- Caregiver child exception. You may be able to transfer your home without penalty to an adult child who lived with you and provided care for at least two years before you apply for Medicaid. The care they provided must have been of a nature and level that allowed you to remain at home when you would otherwise have required nursing home care.
It’s essential for you to carefully document and structure these exceptions to ensure that what you do meets the Medicaid look-back requirements.
How Our Howell Medicaid Attorneys Can Help Medicaid Eligibility Planning
Planning for long-term care and Medicaid eligibility doesn't have to leave you feeling overwhelmed or defeated. With knowledgeable guidance from the Elder Planning & Elder Care Firm of Michigan, you can develop a plan that protects your assets while ensuring access to needed care.
Our Howell Medicaid attorneys will take the time to learn about your unique financial situation, family dynamics, and care needs. We then create a customized Medicaid plan that works within the rules while maximizing asset protection. From reviewing your existing asset transfers that might trigger penalties to identifying applicable exceptions to the lookback period, we provide comprehensive guidance throughout the process. We can assist you, even if you're already within the five-year window or are facing an immediate need for care.