Medicaid Look-back and Disqualification Periods [video]

00:00:00:00 - 00:00:28:23
Hello, I'm Stephanie Burnham. I'm an estate planning attorney licensed in New Hampshire, in Massachusetts. Today, I'd like to talk to you about Medicaid and the difference between the look back period and the disqualification period. So a lot of confusion about what those two periods are and how they relate to each other, as well as what each one really, truly affects you the most.

00:00:29:01 - 00:00:54:21
Now, most people know about the lookback period here in New Hampshire in 2023. The lookback period is five years, and that means that when somebody actually applies for Medicaid, for something like long term care, nursing home, or even stay at home care when they apply, the Department of Health and Human Services will look back through their financial records for five years.

00:00:54:23 - 00:01:24:01
And what they're looking for is they're looking for the transfer of assets that can't really be explained. They're looking for those gifts. What is the difference between a gift and a transfer for value? Because that gifting gets you punished, a transfer for value does not. Let's suppose a farmer owns land worth $200,000, and they have a child that's working on that land with them.

00:01:24:03 - 00:01:57:11
If the farmer decides that they want to give their child the $200,000 worth of farmland because the child's been helping them out around the farm and working the land with him. That may be considered a gift. The child is not actually giving the farmer $200,000 worth of money or other value, even though they're working the land together. Now, if that farmer decides that they want to sell their cows, and the person that's receiving those cows pays them $2,000 for each cow, that's not a gift.

00:01:57:13 - 00:02:27:21
That's actually a transfer for value, meaning that the farmer can go ahead and sell their livestock, even if that happens within that five year lookback period. The farmer can go ahead and sell that livestock for the $2,000 each and put that money into their bank account or their investment account, or put that into new livestock. And that's not considered a gift, because the farmer received money equivalent of the same value of what the farmer was transferring out.

00:02:27:23 - 00:03:10:17
So the gift becomes a matter of something. You're transferring out where you're not receiving anything back in value. An actual transfer for value, which does not cause a disqualify vacation period, is something where you're transferring something out, but you're receiving the same amount of value back, either in money or in another asset. The idea that you might have known or somehow looked in your crystal ball and figured out that you might need nursing home care, and when you did that, you decided that the best way to make sure that you gave as much money to your family as possible was to give those assets away, rather than use them to pay for your own care.

00:03:10:19 - 00:03:38:13
When that happens, that's considered a gift. And since Medicaid is a federal program, but it's managed by the states, the state wants to make sure that only people who really need the money get the money. So they don't want somebody who has vast amounts of money showing up on the front step of the nursing home, taking all their assets, giving them all to their family, and then saying, okay.

00:03:38:15 - 00:04:02:09
State of new Hampshire, please pay for my nursing home care because I don't have any money left. So in order to prevent that, they created this lookback period. And they said, when you apply for Medicaid, we want you to provide us all of your financial records, every bank statement for the last five years on every bank account that you owned and even if it's closed.

00:04:02:10 - 00:04:21:05
Now, if it was open within the last five years, they want a copy of it. They want to know about all the assets you owned and with whether or not you transferred any. For example, do you own a car? Did you give your car away to your favorite grandson? That might not work so well. Do you own real estate?

00:04:21:11 - 00:04:42:10
Have you transferred the real estate to anyone? The Department of Health and Human Services is looking for all of that information. Because what happens next is they say, well, if you did give away any assets, if you transferred any assets to any family members, and it wasn't for very fair and equal consideration, then we're going to punish you.

00:04:42:11 - 00:05:12:02
We're going to apply a disqualification period. And a disqualification period is a period where they say, even though you might qualify or meet the criteria to receive Medicaid, we're not going to give it to you because you gave away your stuff. And when that happens, what they do is they say you're now not going to be able to have Medicaid pay for that nursing home care for a period of time.

00:05:12:04 - 00:05:43:20
That is equal to how much time the assets that you gave away would have been able to pay for the nursing home had you not given them away. And that calculation date starts at the later of the time you qualify for Medicaid, or the time you enter into the nursing home. So what does that really mean? Well, suppose that you have $100,000 and you are going into a nursing home.

00:05:43:22 - 00:06:12:08
You give that $100,000 to your favorite daughter, and that daughter has now your $100,000. When you're in a nursing home, if you need to pay for that nursing home, and that nursing home costs $10,000, that $100,000 would have paid for ten months of care in that nursing home. So Medicaid says, well, you might qualify because now you don't have enough money to pay for the nursing home care.

00:06:12:10 - 00:06:40:17
The threshold this year is again roughly around $2,500. If you have under $2,500 because you gave all $100,000 to your daughter, then you'll qualify again with some special caveats like you have to be medically necessary and other, and you have to have less than a certain amount of income. But just sticking with the disqualification period, you qualify for Medicaid, with all other items being equal.

00:06:40:18 - 00:07:03:03
And now they're stuck. They're saying, well, we could pay for you, but you just gave $100,000 away since you just gave that hundred thousand dollars away. Medicaid won't pay for your next ten months worth of care at the nursing home. Now, they can't make your daughter give you the money back, but they say that they won't pay. So now you're stuck.

00:07:03:04 - 00:07:21:04
You've given $100,000 to your daughter. You have no money to pay for your nursing home, and the state's not going to pay for your nursing home. So that's when the family has to figure out how they're going to pay for the nursing home, or they have to bring you back to their house to take care of you, because the nursing home isn't going to let you stay for free.

00:07:21:06 - 00:07:51:05
So the lookback period is actually just a period in which they're looking for any transfers. You might have made the gift to your daughter a transfer to an irrevocable trust. any gift or giving that you might have done that's not for fair and equal consideration. But the disqualification period is a lot more difficult, because that's the one where they're now actually punishing you for the gift that you have made during that look back period.

00:07:51:07 - 00:08:23:09
All of these deadlines start the day you apply for Medicaid. The Medicaid lookback period takes the date you apply for Medicaid and goes back five years. The disqualification period it takes the date you would actually qualify for Medicaid and goes forward five years. This presentation should not substitute for good legal advice. You should talk to your own attorney about your particular circumstances to make sure you were getting advice for what's best for you.

00:08:23:11 - 00:08:28:16
Thank you so much for joining me and have a great day.