How does the Medicaid look-back period work in Michigan?

Our Michigan Lawyers Explain Medicaid’s Look-Back Period Rules for Asset Transfers

If you need to go into a nursing home, it’s possible that you may need to qualify for Medicaid to pay for your care. You may be thinking about transferring funds or assets in advance of needing nursing home care so that everything doesn’t go to the nursing home, leaving nothing for yourself or your family members after you die. However, it’s not as simple as that. You have to be careful not to violate Medicaid’s look-back rules for transferring assets, as doing that could make you ineligible for Medicaid when you need it most. 

Our experienced elder law and Medicaid planning lawyers in Howell and Clinton Township at Estate Planning & Elder Care Firm of Michigan are here to help. Our legal team understands the intricacies of Medicaid look-back eligibility rules. We can help you make the right Medicaid planning decisions that will enable you to qualify for Medicaid and avoid being penalized for improper transfers of your assets before being admitted into a nursing home in Michigan.

What You Need to Know About Medicaid Look-Back Period Rules 

Some people are under the misconception that they can transfer their assets to their family members or others immediately before going into a nursing home in order to qualify for Medicaid to pay for their care. However, this is a myth about Medicaid planning. In Michigan and other states, citizens cannot simply give away their property for less than it is worth and expect the state to pay for their nursing home care.

It's important for you to be aware that Medicaid has a look-back period rule to discourage improper asset transfers. Under this rule, Michigan Medicaid would scrutinize the transfer of any of your assets within 60 months, which is five years, prior to the time you apply for Medicaid to cover the cost of nursing home care.

Consequences of Violating Medicaid’s Five-Year Look Back Period

If Medicaid finds you transferred any property for less than its market value or gave it away during the look-back period, they can impose penalties that could make you ineligible for Medicaid for a period of time. This can have serious consequences, as nursing home care is very expensive. If you do not qualify for Medicaid, you may not be able to afford nursing home care, or you and your family could struggle financially to pay for it.

How is this penalty calculated? Medicaid determines the penalty by dividing the total value of the assets improperly transferred by the state’s average cost for private pay nursing home costs. The average nursing home cost in Michigan is published twice a year, typically in January and July.

Exceptions to the Five-Year Look-Back Period for Asset Transfers

There are limited exceptions that can keep an asset transfer from violating Michigan’s Medicaid look-back rules. Our elder law and Medicaid planning lawyers can determine if your situation falls within an exception and help you qualify for Medicaid without losing your home, savings, and other property. Examples of possible exceptions include:

• Exempt assets. Transferring exempt assets you are allowed to keep, such as a home and prepaid funeral contract, may not violate the look-back rules.
• Disabled children. If you transfer property into a trust for the benefit of a permanently disabled or legally blind child, Medicaid will not penalize you.
• Spouse. Certain transfers to a spouse who is not going into a nursing home will not violate the rules against transferring assets for five years before entering a nursing home.
• Sibling. The transfer of your home to a sibling who has equity in the house and has lived in it for at least one year before you fill out an application for Medicaid may be an exception to the look-back rule.
• Caregiver. You are also permitted to transfer your home to a child who is your caregiver and who has resided in the house with you for two years or more prior to your Medicaid application. Their care must have permitted you to avoid the need for nursing home care.

Protect Your Assets and Access to Medicaid

You should not make any transfers of property with the intent of becoming eligible for Medicaid for your nursing home care in Michigan without first consulting with our Medicaid planning attorneys. Our legal team will help you avoid pitfalls that could make you ineligible for Medicaid while also helping you protect your assets.