Nursing home care is costly — and in order for Medicaid benefits to cover these expenses, strict eligibility criteria must be met. For a person to qualify for Medicaid, they must have limited income and very few assets. To prevent individuals from transferring their assets and financial resources for the sole purpose of qualifying for these benefits, the federal government imposes a Medicaid “look-back period.” Medicaid would assess any financial transactions made during this time frame to determine an individual’s eligibility for benefits.

What is the Medicaid Look-Back Period?

The Medicaid look-back period refers to the five-year period preceding a Medicaid application during which all financial transactions are scrutinized. Medicaid reviews any asset transfers made within this time frame for those that are prohibited, including gifts to loved ones and transfers made for less than fair market value. If a prohibited transfer is discovered, Medicaid will impose a penalty period of ineligibility. The look-back period starts on the precise date the Medicaid application is filed.

What are Some Common Medicaid Look-Back Period Violations?

The income limits to qualify for Medicaid are relatively low. When applying for Medicaid, an individual must report all income and assets. Failure to disclose assets or making false statements to qualify for Medicaid is illegal and can result in criminal charges. However, even an unintentional failure to disclose an asset can lead to loss of eligibility if the forgotten asset pushes you over the resource limit.

Any violation of the Medicaid look-back period would result in a penalty. This is why careful planning is critical — one minor oversight could result in costly mistakes that impact your eligibility for benefits. Unintentional violations of the Medicaid look-back period can arise due to the following:

• Lack of proper documentation — It’s essential to have paperwork for all financial transactions. Failure to provide proper documentation of an asset transfer can lead to a violation.
• Transferring assets below fair market value — Asset transfers made below fair market value can result in a penalty based on the difference in value.
• Gifting under the federal gift tax exemption — Under the IRS’s annual gift tax exemption, an individual may gift $19,000 per recipient without reporting it. However, it’s important to be aware that this rule does not extend to Medicaid. Any gifts made under this exemption can violate the Medicaid look-back rule.
• Paying a caregiver informally — Payments made to a family member who serves as a caregiver are viewed as gifts if there is no formal agreement in place.

It’s crucial to fully understand the Medicaid look-back rules to avoid invoking the penalty period. There are a number of Medicaid planning strategies that can be used to help you manage your assets while meeting the eligibility requirements, including establishing a Medicaid Asset Protection Trust (MAPT) and using Medicaid-compliant annuities. A skillful trusts and estates attorney can discuss the planning techniques for Medicaid eligibility that are best for your specific situation.

What is the Penalty for Violating the Medicaid Look-Back Period?

The penalty for violating the Medicaid look-back period rules is not a monetary penalty — it is a period of ineligibility for Medicaid benefits. During the penalty period, Medicaid would not cover your healthcare costs. Rather, you would be responsible for paying your long-term care costs out of pocket.

In Ohio, the length of the penalty period is calculated by dividing the total value of assets transferred during the look-back period by the “penalty divisor.” The penalty divisor is the average monthly cost of long-term care. This number is updated on an annual basis to reflect any changes in the costs of nursing home care. For example, if you gifted $200,000 during the penalty period and the average monthly cost of nursing home care is $8,000, your penalty period would be 25 months ($200,000/$8,000 = 25).

Are There Exceptions to the Medicaid Look-Back Period?

There are several exceptions to the Medicaid look-back period that allow assets to be transferred without invoking the penalty period. Importantly, assets may be transferred to a non-applicant spouse. Under the Community Spouse Resource Allowance, in 2025, the non-applicant spouse may retain up to $157,920 of the couple’s combined assets. This is meant to help ensure that if one spouse enters a nursing home, the other is not impoverished. Other exceptions to the Medicaid look-back period include asset transfers for the benefit of a permanently disabled or legally blind child, and the transfer of a home to a child who is under the age of 21. There is also an exception for the transfer of a home to an adult child who served as the primary caregiver of an aging parent for at least two years prior to their relocation to a nursing home.

Contact an Experienced Ohio Medicaid Planning Attorney

Medicaid planning is complex and must be done years in advance. It’s vital to work with a knowledgeable Medicaid planning attorney to help ensure you avoid any pitfalls that could impact your eligibility for benefits. At Middleton Law Offices, we can assist you with meeting Medicaid’s eligibility criteria while still being able to preserve assets for your loved ones when you pass. Contact us today at 419.548.0196 to schedule a consultation to learn how we can help.

Articles appearing in this column are intended to provide broad, general information about the law. This article is not intended to be legal advice. Before applying this information to a specific legal problem, readers are urged to seek advice from a licensed attorney.