Change to Medicaid Look-Back Period

  1. What took place?  Congress passed, and the President signed into law, a bill called the “Deficit Reduction Act” (DRA) that includes provisions dealing with the Medicaid “look-back” period.  Specifically, the law changes the “look-back” period from three years (36 months) to five years (60 months).  As you know, “look-back” is the term for the period of time during which financial transactions of a Medicaid applicant/recipient are subject to review in determining whether or not that person is eligible for Medicaid. 

  2. Does this impact preneed funeral/burial contracts?   The law effectively “grandfathers” in all preneed contracts that are established before a yet-to-be-determined effective date.   In other words, the new five-year look-back provision will not apply to any contracts that are entered into before that date.  In any case, the law is NOT retroactive.

  3. Are preneed contracts still excluded as an asset?  Yes!  Even with the change in the look-back period, preneed funeral/burial contracts are still excluded as an asset for Medicaid purposes.  The new law concerns only the look-back period.

  4. When does the new five-year “look-back” period start?  Federal law states that it applies to assets transferred on or after its date of enactment (February 8, 2006).

  5. Can states choose to “opt-out” of the new requirement?  No.  The Federal law mandates that states comply with the new five-year look-back period.  However, it does provide for "hardship waivers" in limited circumstances. 

  6. How does this work now that it has taken effect?

When a person transfers assets before applying for Medicaid benefits that cover nursing home services, the local Department of Social Services “looks back” at all financial transactions made within a certain period of time. Any transfer of assets by either a Medicaid applicant or their spouse will affect the eligibility of the one applying for Medicaid-covered nursing home services. The applicant would be considered ineligible for a period of time equal to the value of the asset transferred, divided by the average cost of nursing home services to a private patient in that county. The Deficit Reduction Act of 2005 changed the look-back period from three years to five years. This change was phased in, with February 2009 being the first month affected by this phased-in increase from 36 to 60 months, as follows:

Date of Application Asset Transfers

  • 1993 – Jan. 31, 2009 . . . . . . . . . . 36 months

  • February 1, 2009 . . . . . . . . . . . . . 36 + 1 = 37 month look-back

  • March 1, 2009 through Jan. 31. 2011 . . . . . . . . . . .  . . . . Look back increases by one additional month,

     for example:

​     March 1, 2009 . . . . . . . . . . . . . . . 36 + 2 = 38 month look-back
     February 1, 2011 . . . . . . . . . . . . . 60 months for all transfers