What Is the Medicaid Look-Back Period?

May 11, 2026 | Medicaid Planning

Planning for long term care is one of the most important financial decisions many families will face. At Duncan Legal, PC, we help individuals and families better understand how Medicaid planning works and how proper preparation can help protect assets while preparing for future care needs.

Medicaid can help cover the cost of long term institutional care for individuals who meet certain income and asset requirements. However, if an applicant’s assets and income exceed these limits, they may not qualify for assistance until those limits are met.

Given the high and continually rising cost of long term care in 2026, some individuals attempt to give away assets before applying for Medicaid in order to become eligible. To prevent this, state Medicaid agencies require applicants to disclose all financial transactions made within a specific timeframe prior to applying.

Understanding the Five Year Look-Back Period

At Duncan Legal, PC, one of the most common questions we hear involves the Medicaid “look- back period.”

This timeframe is known as the Medicaid “look-back period.” In most states, this period is five years from the date of application. (California is an exception and continues to operate under different rules, including a shorter look-back period.)

During this period, Medicaid agencies carefully review financial activity to identify any assets that were transferred for less than fair market value.

What Happens If a Transfer Is Found?

The team at Duncan Legal, PC often explains that if the state Medicaid agency determines that an improper transfer was made during the look-back period, it will impose a “penalty period.” This penalty is a set amount of time during which the applicant will be ineligible for Medicaid coverage.

The length of the penalty period is calculated by dividing the total value of the transferred assets by the state’s average cost for private pay institutional care, which continues to increase in many states.

Common Transfers That Can Cause Issues

Many people are surprised to learn that nearly any transfer can be scrutinized, regardless of size. Medicaid does not make exceptions for transfers that may seem harmless or routine.

This includes:

Gifts to children or grandchildren
Charitable donations
Informal payments to caregivers
Loans to family members

In short, the burden of proof lies with the applicant to demonstrate that transfers were made appropriately and for fair market value.

At Duncan Legal, PC, we help families evaluate prior transfers and understand how those decisions may impact Medicaid eligibility.

Transfers That May Be Allowed

There are, however, certain situations where transferring assets will not trigger a penalty period. These include transfers to:

A spouse, or someone acting for the benefit of the spouse
A trust for the sole benefit of a disabled or blind child
A trust for the sole benefit of a disabled individual under age 65 In addition, a primary residence may be transferred without penalty to:
A child under the age of 21
A blind or disabled child
A caretaker child who lived in the home for at least two years and helped delay the need for long term care
A sibling who lived in the home for at least one year prior to institutional care and has an ownership interest in the property

The attorneys at Duncan Legal, PC can help determine whether a transfer may qualify under one of these exceptions.

Planning Ahead Can Make All the Difference

With proper planning, it is possible to protect your assets from transfer penalties. Even if you have already made transfers within the last five years and expect to apply for Medicaid soon, there may still be opportunities to preserve a portion of your life savings under current 2026 Medicaid rules and strategies.

Taking the time to understand these rules today can help you make more confident decisions for tomorrow.

At Duncan Legal, PC, we work closely with families to create personalized Medicaid and estate planning strategies designed to help protect what matters most.