What is the 2017 Alabama Medicaid look back period for long term care in a nursing home?
Continuing our series on Alabama Medicaid in 2017, you are thinking about long term care and how that relates to giving away assets. Because there is a concept under Alabama Medicaid about a “look back” period of 60 months.
Let’s do this:
- Talk about the look back period;
- Purpose of the look back period; and
- How this relates to planning for long term care.
What is the look back period under Alabama Medicaid in 2017?
If you apply for, and are approved for Medicaid to pay for long term care in an nursing home, then we need to know about the look back period.
In 2017 it is 60 months.
Here’s what that means.
Alabama Medicaid looks back in time 60 months (5 years).
Well, what is it looking for?
Looking for any gifts.
What’s a gift?
Any asset you transfer where you don’t get back fair market value.
So if you have a $100,000 piece of land and you give it to your daughter, the gift is $100,000.
If you sell it to her for $25,000, then the gift is $75,000 (100,000 minus 25,000).
Alabama Medicaid is looking for those gifts and it looks back for 60 months.
Why do we even have a look back period — what is the purpose?
The purpose is to make sure Alabama Medicaid is used by those who qualify and follow the rules.
Sometimes when we give away assets, there is a penalty that we must pay.
That’s fine — we often intentionally do this as it makes the most sense. Nothing wrong with doing this as long as you know what you are doing.
But the 60 month look back period is to identify those gifts so Alabama Medicaid can decide if there is any penalty. So we follow this rule to the letter of the law. We don’t try to get around it or expand it — we take the law just as we find it.
How does knowing about the look back period help us to do long term care planning?
It is 60 months from when you qualify and apply for Medicaid. So to some extent, you may be able to control the timing of when you apply.
And if you are healthy right now, you may want to make transfers/gifts as long as you feel you will be ok until that 5 year (60 month) period is over.
We always suggest having a plan for if you need long term care before the 60 months.
Here’s the significance of the 60 month — we’ll use a few examples.
Suppose in May 2012, you gave away $400,000 of assets to your kids.
And now in April 2017, you need long term care in a nursing home.
Would you apply for Alabama Medicaid now in April 2017?
Almost certainly not! Because the 60 months would look back in time to about April of 2012.
What would Alabama Medicaid see?
The gift in May 2012 of $400,000.
So knowing this, if possible you would wait until after long enough after May 2017 so the 60 month period would not include May 2012. You would not want Medicaid to “see” this gift.
This is not wrong or illegal — remember Medicaid set the timing at 60 months. So knowing this, you control when you apply.
NOTE: often it makes good sense to go ahead and apply even though Medicaid will see the gifts. But in this example we would not.
There are lots of factors to consider but hopefully this simple example gives you an idea.
If you have questions, contact us and we’ll be happy to help you right away.
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Our goal is to help understand where you are right now and then help you see your options to get to where you want to go.
Sometimes that means doing nothing. Sometimes you can take action on your own. And sometimes it makes sense to hire a lawyer.
We’ll help you think through your options so you can make the best decision for your family.
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