How to Avoid the Medicaid 5 Year Lookback Period in Arizona


How can you avoid the Medicaid lookback period in Arizona? How far back does Medicaid look for assets and what is the penalty for giving them away to meet requirements?

States are required by federal law to cover behavioral health care, nursing facility treatment, and other services for Medicaid recipients. But only medically and financially eligible individuals can receive these benefits. Medicaid imposes a 5-year lookback period to make sure recipients aren’t giving away their assets in order to qualify for the financial income and asset limits.

Many applicants will have questions about gifting money and Medicaid, whether it’s allowed, and what to do if you’ve already violated the rules. We’ll look into how that works and provide some solutions for working with this 5-year lookback period.

Arizona’s Medicaid Program

The Medicaid program in Arizona is called the Arizona Long-Term Care System (ALTCS). ALTCS provides long-term care services for financially and medically eligible individuals living in Arizona. This system is for blind, disabled, and elderly state residents and offers services at little to no cost. 

If you qualify for any ALTCS benefits, you’ll need to apply and, if you’re eligible, work with a case manager to create a care plan that fits your medical needs. This may include hospice services, help with prescription and doctor visit costs, a mix of out-patient and in-home care, nursing facility care, and more.

ALTCS Eligibility

To qualify for these services, you must be a resident of Arizona, be older than 65, and have a developmental disability. Some veterans may also qualify for ALTCS benefits. You will need to go through a Pre-Admission Screen as part of the medical check process to determine eligibility. You must provide your personal information including where you live, your date of birth, your age, and medical records.

How can you know if you or your loved one will qualify for these benefits? If the applicant is requiring hands-on care to perform basic daily activities, they will most likely be medically eligible for ALTCS.

ALTCS eligibility can be a little complicated when it comes to finances. In addition to medical requirements, to qualify for ALTCS, your assets and income need to be below a certain amount. As a single applicant, you may not have over $2,829 per month in income. If you’re married, this is doubled. The program will also look into your assets including bank accounts, owned property, and more.

The 5-Year Lookback Period

The lookback period is a method for making sure that people don’t just give away their money and assets to make sure that they qualify for the limits. ALTCS applicants and customers will receive a penalty for transfers they made without receiving equal value in return (gifts). 

What is the Medicaid Lookback Penalty?

If you qualify for ALTCS benefits apart from giving away assets, you will be penalized. The penalty is ineligibility (for a certain amount of time) for the long-term services you need. The amount of time they deem you ineligible will be determined according to the amount you gave away. This is one of the reasons why talking to an attorney is important before you use gifting as a strategy to qualify for Medicaid.

Can You Still Qualify with Excess Income? 

You may be able to work with the Medicaid 5-year lookback period by placing some funds in an trust called a Miller Trust. This must be irrevocable and when the beneficiary passes on, must go to Arizona Medicaid. While Medicaid states that you may not have over a certain amount of assets, some assets are exempt and won’t result in being denied benefits. 

If you have assets that aren’t exempt, you must liquidate them and apply the funds towards long-term care before you may receive benefits through Medicaid. To qualify under the Medicaid lookback rules, you may not transfer assets, give away property or money, or sell your assets for less than they’re worth.

Medicaid 5-Year Lookback Exceptions

There are a few exceptions to the 5-year rule that allow transfers without a penalty. For example, you can transfer certain assets in order to protect your family’s well-being. Transfers you made to benefit your children who are younger than 21, are legally blind, or are disabled are exempt from penalty. This also covers establishing trusts. 

You are also allowed to transfer your home under certain conditions involving family members. Although you may give away assets under some circumstances to help with your ALTCS eligibility, doing so without legal guidance is risky. And if you’ve already made a large uncompensated transfer, you may face a long ineligibility period as penalty.

Is Your Home a Noncountable Asset?

Under Medicaid law, your home is subject to special rules. You can’t gift your house to someone without incurring a penalty in most cases, with a few exceptions. Your home is exempt (meaning it won’t count towards your asset limit) under the following conditions:

  • You and/or your spouse live in the house
  • It’s in your or your spouse’s name
  • The equity value is $688,000 or less

There are a few other rules and it’s good to know the specifics before you assume anything. The law can be complex on this matter, so it’s best to speak with an attorney who is knowledgeable in this area before you make any transfers.

What If You Already Broke the 5-Year Rule?

Affording healthcare can feel difficult or even impossible without financial aid. If you gave away any gifts within that 5-year period, you may have to provide detailed financial records during the ALTCS application process. If you’ve already violated the lookback period, you may still qualify for Medicaid benefits. The income, assets, or equal value of what you gave away may be returned to you to avoid penalty. 

It’s best to speak with an elder law attorney as soon as possible to help you find potential solutions to the lookback period. They will know the ropes, how to come up with a plan that gives you the best chance of success and can answer your questions about ALTCS eligibility. 

Contact the JacksonWhite ALTCS team today at (480)467-4337 and learn more your options for long term care.

Contact Our ALTCS Team Today

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