The Medicaid 5-Year Lookback, Explained

I want to talk about a crucial topic — Medicare, Medicaid, and how they fit into estate planning and important differences between the two.  It can be confusing, and they are both quite different. Whether you are navigating your own healthcare needs or helping a loved one, today’s episode is packed with important information that can make a real difference in managing long-term care and protecting assets.

If you are an older adult concerned about protecting your assets or the adult child of an aging parent, understanding the Medicaid five-year look-back period is key to planning for the future. It comes up a lot when I am in strategy sessions.    

In this episode, we will dive into this rule, share several examples, and give you recommendations on how to best prepare. We will also discuss some strategies that can help you avoid the consequences of the five-year look-back, including using Medicaid Asset Protection Trusts and Miller Trusts. Plus, we will talk about an alternative strategy for individuals who prefer to retain control over their assets: with a Revocable Living Trust. 

Let’s start by revisiting the basics of Medicaid. If your aging parent needs long-term care—like help with daily activities or a stay in a nursing home, Medicaid may be available to help with the costs of that care.  I emphasize maybe.  Because before they can qualify for Medicaid, they must meet certain eligibility requirements, which include having limited income and assets. It goes up a little bit every year – here we are into 2025. The current income limit here in Tennessee is just under $3,000.00 or $2,901.00.  Step one for qualifying for Medicaid is having monthly income lower than this amount. That’s not all…

This is where the five-year look-back period comes in. Medicaid has a rule that says it will look at any asset transfers made in the last five years. What do I mean?  Well, the standard example is quitclaiming the family house away to your kids.  That is a big problem.    Let’s say your parents gave away any significant assets, sold property for less than its value, or transferred assets to someone else during that time, Medicaid can and often will penalize them for that transfer. The penalty usually means a delay in eligibility for Medicaid benefits.

Let’s break this down with some real-world examples of what the five-year look-back period might look like in Episode 62 of Boomer Time.

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Disclaimer: The information provided on this website and on the podcast is not intended to be considered as legal advice or constitute an attorney/client relationship as provided under the Tennessee Rules of Professional Conduct.

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