Friday, August 1, 2014
By way of explanation, Medicaid is different from Medicare in that Medicare is a an entitlement program paid for through payroll withholding. Medicaid is a form of social welfare designed to help people in need. Medicaid is administered in each state and sometimes by each county, thus, benefits and rules will vary. Medicaid is designed to pay for long-term care once the individual’s funds and assets are extinguished. This is why many people engage in long-term planning to protect some portion of their savings and assets.
When you apply for Medicaid, any gifts or transfers of assets made within five years of the date of application are subject to penalties. Any gifts or transfers of assets made greater than five years of the date of application are not subject to penalties—hence, the five-year look back period. This is why Medicaid planning tactics should be put in place before a latent need arises.
See Mark Eghrari, The Medicaid Look Back Period Explained, Forbes, August 1, 2014.