Medicaid’s 5-year look-back
Recent gifts can delay coverage.
The penalty starts late. It begins once you’re in care and out of money, not when you gave the gift.
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1. What Medicaid looks for
Medicare doesn’t pay for a long nursing home stay. Medicaid does, but only after you’ve spent most of your savings. To stop people from giving money away to qualify, Medicaid reviews your bank and investment records for the 60 months before you apply.
Anything given away or sold for less than it’s worth in that window can trigger a penalty. That includes:
- Cash gifts to children or grandchildren, even small regular ones.
- Adding a child to the deed of your house or to an account they can draw from.
- Selling a car, land or a house to family below its fair price.
- Paying a relative for care without a written agreement at a fair rate. Many states treat those payments as gifts.
Paying your own bills, buying things for yourself and paying fair prices for services are not gifts.
2. How the penalty is figured
The penalty is a stretch of months when Medicaid won’t pay for your care. Federal law sets the math:
Each state publishes that monthly figure, often called the penalty divisor. States can’t round the result down.
The penalty starts on the later of the month of the gift or the day you’d otherwise qualify: already needing nursing home care and already spent down. So it lands when you have the least money left. Often the only way to cover those months is for family to give the money back.
3. Transfers that don’t count
Federal law exempts some transfers completely:
- To your spouse, or to someone else only for your spouse’s benefit.
- To a blind or disabled child, or to a trust only for that child.
- To a trust only for a disabled person under 65.
- Gifts you can show weren’t made to qualify for Medicaid, or that were all given back.
If a penalty would leave you without food, shelter or care, you can ask your state for an undue hardship waiver.
4. Your home
Your home usually isn’t counted while you, your spouse or a dependent relative lives there. Giving it away is another matter. It can go to these people without a penalty:
- Your spouse.
- A child under 21, or a blind or disabled child.
- A sibling who owns part of it and lived there at least a year before you entered care.
- A son or daughter who lived there at least two years before you entered care and gave care that kept you at home.
Two more rules to know:
- Home equity limit. If no spouse, child under 21, or blind or disabled child lives there, you can’t get nursing home Medicaid with home equity over your state’s limit. In 2026 that is $752,000, or up to $1,130,000 in states that chose the higher limit.
- Estate recovery. After death, states must try to recover what Medicaid paid for care after 55, often from the house. They have to wait while a spouse is alive or a child under 21 or a blind or disabled child survives.
Thinking of selling instead? See downsizing your home in retirement.
5. If you’re married
Medicaid doesn’t make the spouse at home go broke. The couple’s savings are added together, and the spouse at home keeps a share set by the state:
| 2026 figure | Amount |
|---|---|
| Savings the spouse at home keeps (state sets it in this range) | $32,532 to $162,660 |
| Most monthly income the spouse at home can be allowed | $4,066.50 |
The spouse at home keeps their own income. If it’s below the state’s minimum, part of the other spouse’s pension can be shifted to make up the difference. The home, one car and household goods are usually not counted.
This is where a survivor annuity choice matters years later: if the spouse in care dies, a survivor benefit is often what keeps the spouse at home afloat. See caregiving for a spouse.
6. Your pension, TSP and Social Security
- Pensions and Social Security are income, not savings. A FERS, CSRS or military pension doesn’t disqualify you, but once you’re on Medicaid in a nursing home, most of your income goes to the home each month.
- You keep a personal needs allowance. Federal law sets the minimum at $30 a month; most states set more. Health insurance premiums, including FEHB, are generally taken out before your share is set.
- The TSP and IRAs are where states differ most. Some count the whole balance as savings. Others don’t if you’re taking regular payments. Check your state’s rule before moving anything.
7. Planning ahead
- Start early. Gifts made more than five years before you apply don’t count, so the earlier you plan, the more choices you have.
- Insure the risk. Long-term care insurance pays first. In most states, a “Partnership” policy lets you keep extra savings equal to what it paid. See long-term care costs and the FLTCIP suspension.
- Don’t move the house or savings on your own. State rules vary and mistakes are hard to undo. An elder law attorney in your state can set this up correctly.
- Veterans: VA pension, including Aid and Attendance, has its own 3-year look-back with a penalty of up to 5 years. See VA pension and Aid and Attendance.
Have your documents ready too: see estate planning basics.
8. Frequently asked questions
How long is the Medicaid look-back period?
Five years (60 months) before the date you apply for Medicaid long-term care coverage. Any gift or below-value sale in that window can trigger a penalty.
Do gifts under the IRS $19,000 limit count for Medicaid?
Yes. The IRS gift exclusion is a tax rule and has nothing to do with Medicaid. Birthday checks, help with a grandchild’s tuition and similar gifts can all count.
When does the Medicaid penalty period start?
On the later of the month of the gift or the date you would otherwise qualify: already needing nursing home care and already spent down. That is why the penalty usually lands when you have the least money left.
Can I give my house to my children?
Only certain transfers are exempt: to a spouse, to a child under 21 or a blind or disabled child, to a sibling with an ownership share who lived there a year, or to a son or daughter who lived there two years and provided care that kept you at home. Other transfers of the home count as gifts.
Does my federal pension count for Medicaid?
Yes, as income. Most of a nursing home resident’s income, including a FERS, CSRS or military pension and Social Security, goes toward the cost of care, after a small personal needs allowance and allowed deductions such as health insurance premiums.
This is general information, not legal advice. Medicaid rules vary by state; check with your state Medicaid office or an elder law attorney before moving assets.