I'm 88 years old. If I need nursing home care in the near future, will the five-year "look back" disqualify me for Medicaid until I've spent all my money on my care?

Not necessarily. You may be able to qualify for Medicaid while preserving about 45 percent of your assets for your children.

Before I explain how, let's recap the five-year look-back rule: Most gifts made within five years of applying for Medicaid trigger a penalty period during which you're ineligible for nursing home coverage. The penalty is determined by dividing the value of the gifted assets by Medicaid's regional average monthly cost of a nursing home. If the monthly cost is $10,000, for example, giving away $100,000 within five years of Medicaid application disqualifies you for nursing home benefits for 10 months. The penalty period starts when you apply for Medicaid, says Esther Zelmanovitz, a Great Neck elder law attorney.

So let's say you have $200,000, and need to enter a nursing home tomorrow.

You give your child $100,000, which will trigger a 10-month penalty period. You lend her your remaining $100,000 in exchange for a nonnegotiable promissory note whose repayment schedule matches the penalty period. Now you have no assets. Your Medicaid application is approved with a 10-month penalty period, during which the $10,000 monthly loan repayments pay for your care.

In practice, this strategy is somewhat more complicated, says Zelmanovitz, because most people have income from Social Security benefits and retirement account distributions. That income must be factored into the loan repayment schedule to ensure the schedule matches the penalty period. As a result, this method usually preserves about 45 percent of the original assets.

The bottom line

Even last-minute Medicaid planning can sometimes help you preserve assets for your children.

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