Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Saturday, August 9, 2014

Understanding the Medicaid Penalty Period

Medical expenses

If you transfer any gifts or assets within 60 months of the date of application for Medicaid benefits, they are subject to penalties.  These penalties are not calculated in dollars, rather, in months; months you are ineligible for Medicaid and must use private funds. 

While this seems bad, it can get worse.  For example, if you give away $120,000 59 months ago, you are one month short of falling outside the five-year look back period, however, you need to enter a nursing home now.  Applying for Medicaid today will subject the entire $120,000 to the look back period and result in a ten-month penalty.  You will need to come up with $120,000 or more, depending on the cost of care.  This is a scenario thousands of elderly people and their families must answer every year. 

One solution is to avoid applying for Medicaid today.  Try to pay for one month of care.  While it may be expensive, in the long run it could save you thousands of dollars. 

See Mark Eghrari, The Medicaid Penalty Period Explained, Forbes, Aug. 8, 2014.


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