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When a senior is applying for long-term care Medicaid, whether that is for services in one's home, an assisted living residence, or a nursing home, there is an asset (resource) limit. In order to be eligible for Medicaid, one cannot have assets greater than the limit.

Medicaid's look-back period is meant to prevent Medicaid applicants from giving away assets or selling them under fair market value in an attempt to meet Medicaid's asset limit.

All asset transfers within the timeframe of the look-back period are reviewed, and if an applicant is found to have violated this rule, a penalty period (a period of Medicaid ineligibility) will be established. This is because had the assets not been gifted, sold under their fair market value, or transferred, they could have been used to pay for the elderly individual's long-term care. If one gifts or transfers assets prior to this look-back period, there is no penalization.

Some people have too much income to qualify for Medicaid. This amount is called excess income. Some of these people may qualify for Medicaid if they spend the excess income on medical bills. This is called a spend down.

For example, a person over 65 is denied Medicaid because her monthly income is $50 more than the limit for Medicaid eligibility. If she incurs medical bills of $50 per month, the rest of her medical bills will be covered by Medicaid. The spend down in this case is the $50 of medical bills she incurs.

Individuals must prove that their excess income is spent down on medical bills to qualify for Medicaid. It is a similar concept to a deductible. For example, if an individual's income is $250 over the limit, once that amount is spent on qualifying expenses, Medicaid kicks in to pay the rest.

Medicaid Spend Down is what you must do when you have too many resources. In other words, you have too much money and you have to "spend down" assets before you will be eligible for Medicaid coverage. Those excess assets are called the "spenddown" amount. Finding a qualified Texas elder law attorney who specializes in Medicaid spend down and asset protection can help.

Medicaid programs in Texas have income and asset limits that someone within a covered group must not exceed in order to qualify for the program.  However, there are additional programs for those who exceed these limits but have special circumstances. In this case, the medically needy program has been established to help those who don't qualify for traditional Medicaid but who still need medical financial assistance.

The classic "spend down" technique is to pay for the nursing home bill using your assets until you've reduced your life savings to the point that you qualify for Medicaid coverage of those bills. In most cases, however, you do not have to spend anything. Instead you can essentially convert an asset that is countable into one that is not countable.

The idea is that instead spending money on something that Medicaid can ultimately pay for, you instead pay for something that will benefit you or your family yet not be considered a gift or a countable asset. There are some very smart ways to spend down so let's review a few techniques in detail. Before transferring any assets, you should always seek professional advice from an attorney or financial advisor.

The consequences of making transfers that are not eligible for exemption can be severe and include rendering the applicant ineligible for Medicaid.

Texas has a look back period of 5 years with a penalty for people who sell assets below fair market price, transfer assets to others, or give money and property away. Basically, all money and property, and any item that can be valued and turned into cash, is a countable asset unless it is listed as exempt.

Find a Texas Medicaid Planning Specialist

When you're looking to qualify yourself or a loved one for Medicaid a look-back period is now applied. The look-back period is a balancing act between the government's way to provide Medicaid support and your desire to be able to leave property to heirs in a Will or Trust.

You can't simply give property away and begin receiving Medicaid. In 2005, The Deficit Reduction Act (DRA) changed the Medicaid asset-transfer rules:

• The look back rule time period was changed from 3 years to 5 years.

• The penalty period or ineligibility period for transferred assets is the date when the person applies for Medicaid - generally when the person enters a nursing home.

• States are required to apply the DRA to their state programs, because Medicaid is run by both the state and federal government.

Medicaid Asset Protection

Transferring Assets

The cost of Long term care continues to increase, making such services difficult to afford for most individuals, and inaccessible for many. The Medicaid Program provides coverage of long term care services for individuals who are unable to afford this care. Some individuals, with assistance from financial planners and attorneys, have developed methods of arranging assets in such a way that they are not countable when Medicaid eligibility is determined, and are thus preserved for the individual and/or family members.

Various techniques are used to artificially impoverish Medicaid applicants, including gifting of assets to family members, investing assets in financial instruments that are inaccessible, and executing financial transactions for which fair market value are not actually received to get LTC coverage through Medicaid.

Sections 6011 through 6016 of the DRA include several provisions designed to discourage the use of such "Medicaid planning" techniques and to impose penalties on transactions which are intended to protect wealth while enabling access to public benefits.

You must disclose the amount of your assets and when you made the asset transfers. Medicaid can question any transfer within the look-back period. If you didn't get something of at least equal value in return for a transfer, you'll be ineligible for Medicaid. The look-back period is 5 years for transfers made after February 8, 2006, the date the DRA went into effect.

Ineligibility Period