The Impact of the New Medicaid Five Year Look-back on Families

The new federal law mandates that the look-back period be FIVE years on all transfers, not just transfers into a trust.  This change is only effective for nursing home Medicaid and Lombardi home care, and not for community based care, including most home care.

It is important to understand that the three year look-back period will still be in effect until February 8, 2009.  This represents three years from the date the law was enacted.  Transfers made before February 8, 2006 are evaluated under the old rules, for which the look-back period was three years.  So looking back more than three years before February 8, 2009 would be unnecessary.  For the next three years, applicants for nursing home care should still be required to furnish only three years of financial records.

Beginning February 2009, the look-back period will start being phased in by one extra month until the February 2011, by which point the look-back period will reach the five year requirement. 

While it is clear that adhering to these new requirements will be a costly and burdensome addition to families and caregivers, there is no doubt that time alone will not be the only cost to comply.  Financial institutions have been silent throughout this process because of the windfall they will get as a result of it. 

I did an informal survey of the banking institutions in New York City and found some very interesting facts.  It should come as no surprise that most bankers are not knowledgeable about the changes in Medicaid laws.  And why should they; there is technically no need for them to have specific knowledge of this.  One person that I spoke with at HSBC Bank said he had already served a couple of customers who had requested bank statements going back five years already.

All banks charge a fee for requesting prior period statements.  In fact, only Citibank offers the ability to obtain this information electronically, and does not charge a fee for this service.  However, if it is a paper statement that you are seeking since most do not offer this ability electronically, the minimum cost is $5.95 per month per account, while others charge as much as $8.95.  HSBC Bank is the only bank that does not have a published fee for this; they charge based upon the amount of time it takes to complete the request.  I’m sure this is attributable to bank mergers that have occurred over the past few years.  While it is not uncommon for an individual to have three or four accounts (if you’re lucky), the numbers start to add up quickly.  This does not even factor in brokerage statements, insurance company annuities, or all of the other fragmented financial data that a family is likely to have.

It is important to have a system in place now for all financial records that are subject to review.  This will help matters in the event that someone needs to go into a nursing home in the future.  It is very burdensome to gather five years worth of records to begin with, but when you have to then explain every transaction over $3,000 during this timeframe, it makes the task daunting. 

Please feel free to contact us if you are interested in learning more about such a system.  It will save you countless hours if you are proactive and not reactive.