Editing Medicaid (section)

==== Five year "look-back" ====
The DRA has created a five-year "look-back period." This means that any transfers without fair market value (gifts of any kind) made by the Medicaid applicant during the preceding five years are penalizable.

The penalty is determined by dividing the average monthly cost of nursing home care in the area or State into the amount of assets gifted. Therefore, if a person gifted $60,000 and the average monthly cost of a nursing home was $6,000, one would divide $6000 into $60,000 and come up with 10. 10 represents the number of months the applicant would not be eligible for Medicaid.

All transfers made during the five-year look-back period are totaled, and the applicant is penalized based on that amount after having already dropped below the Medicaid asset limit. This means that after dropping below the asset level ($2,000 limit in most states), the Medicaid applicant will be ineligible for a period of time. The penalty period does not begin until the person is eligible for Medicaid.<ref>42 U.S.C. 1396p</ref>

Elders who gift or transfer assets can be caught in the situation of having no money but still not being eligible for Medicaid.