Medicaid is a program that assists low-income seniors with medical costs. When a senior applies for the program, Medicaid will conduct a five-year look back.
Because Medicaid is a program for people with low income, the financial records and assets of the applicant must be examined before a senior can qualify for Medicaid. Seniors often find themselves needing to spend down excess funds in order to qualify. They must be careful, however, not to try to create a need when there really isn’t one.
Medicaid’s penalty period
When a senior is declared eligible for Medicaid, but the five-year look back reveals that they have given financial gifts to family members during those five years, they are disqualified from receiving benefits for a time period to be determined by Medicaid. This is what is known as the Medicaid penalty period.
For example, if the senior applicant gave their daughter $15,000 three years ago, the applicant is temporarily penalized. This is because, in Medicaid’s determination, that $15,000 could have been used to help fund care for the senior applicant. They may be approved for Medicaid benefits, but there will be a penalty that delays the date that the Medicaid coverage begins.
What does this mean for seniors?
Basically, if you apply and are approved, but a penalty period is imposed, you may have to pay for your nursing home or health care out of your own pocket until the penalty period ends.
The Medicaid five-year look back can be complicated. To avoid being penalized, it is recommended that you seek assistance with the application process.