How does Medicaid MassHealth’s Five-Year Look-Back Work?

People looking for assistance with paying for long-term care often turn to Medicaid MassHealth applications for help. 

What most people do not understand is how complicated a Medicaid MassHealth application truly is. MassHealth runs the Federal Medicaid program in Massachusetts, and sadly, they are constantly looking for ways to deny applicants. You work your whole life to build up assets and a legacy for your loved ones, and when it comes time for the government to help with long-term care, they make it nearly impossible for you to get the benefits you deserve. One of the biggest struggles with MassHealth Medicaid applications has to do with their look-back period. In Massachusetts, MassHealth will look back 5 years from the date that you are applying for these benefits. 

What does the “5-year look-back” mean exactly?

Essentially this look-back period is where MassHealth can review the last 5 years' worth of your financial records, including bank statements, financial transactions, real estate sales, and income taxes, just to name a few. They are "looking" for any reason to deny you benefits. MassHealth will look at every transaction in your bank statements from the last 5 years, trying to find evidence of gifts or income that will count against you and deny you benefits. Since MassHealth coverage is based solely on financial need, the financial review is used to determine if you meet their income and asset requirements. The examiner is looking at every account in your name, including checking, savings, investments, etc., to see if any assets were gifted away, sold for less than fair market value, or transferred without explanation.

Gifting or transferring assets for less than fair market value over the last 5 years will most likely result in a penalty for the applicant, called a “period of ineligibility”. There are very few exceptions, meaning they could be considered ineligible for benefits from MassHealth. 

What is the period of ineligibility? It works like this: If MassHealth finds evidence of gifts or below-market-value transfers, the total value of those assets that were gifted/transferred is divided by the set dollar amount, based on MassHealth’s daily long-term care payment rate. A result is the number of days that the applicant is then penalized for. In other words, they will not pay any benefits until that number of days has passed. The bigger the gift, the higher the number of days. MassHealth will look for any transfer to disqualify the applicant, no matter how small.

What are the MassHealth asset limits? To qualify for Medicaid MassHealth, a single individual cannot have more than $2,000 worth of assets in their name, and a married couple cannot have more than $137,400! - and while those numbers do not include the value of your home, they CAN (and WILL) put a lien against your home if it’s not protected. A lien is a lot like a mortgage – if the property is sold, the lien has to be paid, and MassHealth sets the dollar amount of the lien based on the benefits they pay out on your behalf. With the crazy costs of long-term care, you can imagine how fast the lien amount can go up! That is where planning ahead comes in. By putting your home in a Medicaid Trust, you protect it from MassHealth’s lien, but only if the trust is done right. In most cases 5-year look-back still applies to putting your home in a trust, so don’t wait! You need an experienced attorney to create one of these trusts because MassHealth will read every word of the trust in hopes of finding errors. You can learn more about Medicaid Trusts in Attorney Monteforte's free report.

The good news is that there are planning tools and even some exceptions to the penalties for transferring assets during this time period - including your home! 

Expert-level attorneys know how these exceptions work and how to get you qualified. If you need to apply for Medicaid now or think you may need to apply in 5 years, you need to start planning now. If you would like to talk about applying for Medicaid, or setting up your assets for the future, give us a call at 978-657-7437 to set up a Strategic Planning Session with one of our expert attorneys today. You can even book a session online! We have a 100% success rate on MassHealth Medicaid applications and renewals!