Medicaid is the government program that pays for nursing home care for you if you cannot afford to pay for your own care. But if you gave money or other assets away in the 5 years before applying for Medicaid, Medicaid will penalize you for that. This is the five-year look-back rule that you hear about.
What is the penalty? For every $199.46 you gave away in the last 5 years, Medicaid will not pay for your nursing home for one day. That works out to be a month you will have to pay out of your pocket for the nursing home for every $6,000 you’ve gifted in the last 5 years.
Let’s look at a simple example of this.
Mom, who is 70 years old and healthy, gives her daughter $24,000 for the down-payment on a home. THREE YEARS LATER, Mom goes into the nursing home after having a stroke and becoming bed-ridden. She spends all of her money in the first 8 months in the nursing home and now has only $2,000 to her name. Her daughter goes to the Medicaid office and applies for Medicaid for Mom. Mom is otherwise eligible, but because of the $24,000 she gave her daughter 3 years and 8 months ago, her application is denied and Medicaid tells her to re-apply in 4 months when her penalty period expires ($24,000/$6,000 per month = 4 months). If Mom doesn’t pay for those 4 months, the nursing home can discharge her.
This doesn’t necessarily mean there’s nothing you can do to fix the problem. Contact Kentucky ElderLaw for a free consultation to find out how the gifts you made, or are thinking of making, may affect your Medicaid eligibility.