This answer is not intended as legal advice. Medicaid rules are complicated and vary somewhat by state. It is always best to consult an elder law attorney in the state where the older adult lives. Also, since Medicaid rules change, no one can guarantee that something that works today will work when an elderly person actually applies for Medicaid.
The five-year look-back rule will not fully be in place until February 2011. As of April 2010, the look-back period is 50 months and increases by one month until 60 months is reached. The rule generally states that, if you give away assets or sell them for less than market value within five years of applying for Medicaid, there is a penalty period during which you are disqualified from receiving Medicaid. Once the person starts receiving care, the length of the penalty is the value of the transfer (less any monies received) divided by the average monthly cost of care in the state where the elder person is receiving care.
There are a few exemptions that will not cause a penalty. Check your state laws for additional transfers that may qualify.
1. Transfer of home to a child who for two years lived with and provided care to an applicant that kept him or her out of a nursing home.
2 Transfers to or for the sole benefit of a spouse.
3. Transfers to or for the sole benefit of or in special trusts for disabled persons.
Again, seek out legal advice for answers to questions that are specific to your situation.
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