When a parent may need nursing home care, families often ask the same question: can we give away or move assets now to protect them? Before anyone signs a deed or writes a check, it helps to understand the Medicaid look-back period. Medicaid reviews certain transfers made in the five years before someone applies for long-term care coverage. A transfer made for less than fair value can delay coverage for months. This guide explains how the rule works, how the delay is calculated, what is exempt, and what to do before moving anything.

Quick answer
What is the Medicaid look-back period?

The Medicaid look-back period is the 60 months (five years) before a person applies for nursing facility coverage. If they gave away assets or sold them for less than fair market value during that time, Medicaid can impose a penalty period during which it will not pay for that care. The length depends on the amount transferred and your state's average monthly nursing home cost.

  • The five years are counted back from the application, not forward from the transfer.
  • The penalty is a delay in coverage, not a fine.
  • Exceptions exist, including transfers to a spouse and certain transfers of a home.

What the Medicaid Look-Back Period Is

Medicaid is the main public program that pays for long-term nursing home care. It is means-tested, which means a person must have limited income and assets to qualify. To stop people from giving everything away just before applying, federal law looks at what they did with their assets beforehand.

Under 42 U.S.C. §1396p(c), a state must treat an institutionalized person as ineligible for nursing facility services if they dispose of assets for less than fair market value on or after the look-back date. For most transfers made on or after February 8, 2006, that date is 60 months before the first day the person is both institutionalized and has applied for Medicaid. Certain trust payments use a 36-month period.

Two points surprise families. First, the clock runs backward from the application. A gift made four years ago still counts if your parent applies today. Second, the rule is about what your parent transferred, not about gifts you receive later. Our guide to Medicaid estate recovery covers a separate rule that applies after death.

What Counts as a Transfer for Less Than Fair Value

The statute covers any disposal of assets for less than fair market value. In practice, that includes:

  • Gifts of cash to children, grandchildren, or charities
  • Selling a home or car to a relative for less than it is worth
  • Adding a child to a deed or bank account in a way that gives them a share
  • Moving assets into certain trusts
  • Forgiving a loan someone owes your parent

Paying fair prices for goods and services is not a transfer for less than fair value. Spending on your parent's own needs, such as medical bills or home repairs, is different from giving money away. If there is any question, ask an attorney before the money moves. Documentation matters, so keep receipts and records for anything unusual.

Some states also apply similar transfer rules to home- and community-based care, not just nursing facilities. Ask your state Medicaid agency or an elder law attorney how your state treats care at home.

How the Penalty Period Is Calculated

The penalty is a number of months during which Medicaid will not pay for nursing facility care. Federal law sets the formula: the total value of the assets transferred for less than fair value is divided by the average monthly cost to a private patient of nursing facility services in your state. States may not round down or disregard a fractional month.

The penalty starts on the first day of a month during or after which assets were transferred, or on the date the person would otherwise be eligible for coverage, whichever is later. This is why the penalty usually hits at the worst moment: your parent is already in a nursing home and eligible apart from the transfer, but coverage is on hold.

An illustration, not real figures. Suppose a state's average monthly nursing home cost used for this purpose were $10,000, and a parent gave away $50,000 within the look-back period. Dividing $50,000 by $10,000 gives a penalty of five months. During those months the family would need another way to pay. Your state publishes its own divisor, so ask the state Medicaid agency for the current figure.

Exceptions to the Rule

Federal law lists transfers that do not cause a penalty. The statute describes these, and states apply them with their own procedures:

Transfers of the home

A person is not penalized for transferring the home to:

  • A spouse.
  • A child under 21, or a child who is blind or disabled.
  • A sibling who has an equity interest in the home and lived there for at least one year before the person entered an institution.
  • A son or daughter who lived in the home for at least two years before institutionalization and provided care that allowed the parent to stay at home. The state determines whether the care qualifies.

Other exceptions

  • Transfers to a spouse, or to another person for the spouse's sole benefit.
  • Transfers to a disabled child, or to a trust for that child, and to a trust for a disabled person under 65, as the statute defines.
  • Intent. The person shows that they intended to dispose of assets at fair market value or for other valuable consideration, that the transfer was for a purpose other than qualifying for Medicaid, or that all assets transferred for less than fair value have been returned.
  • Undue hardship. The state may waive a penalty under its procedures if denying eligibility would work an undue hardship.

These exceptions have technical conditions. Do not assume one applies without checking the details with an attorney.

Common Situations Families Ask About

Adding a child to the house deed

This can count as a transfer. It may also expose the home to the child's creditors and affect taxes. Our guide to estate planning for aging parents covers why to speak to an attorney first. If the child lived in the home and provided care, the caregiver-child exception may apply, but the conditions are specific.

Putting assets in a trust

Medicaid counts the assets in a revocable trust as yours. Transfers to an irrevocable trust can be penalized within the look-back period. See revocable vs. irrevocable trusts for how the two differ.

Giving away money in small amounts

Splitting a gift into smaller pieces does not avoid the rule. The penalty formula uses the total uncompensated value of the assets transferred, so smaller gifts add up.

Transfers after Medicaid has started

Once someone is on Medicaid, the rules about assets and recovery continue. Medicaid estate recovery can claim against the estate after death, with limits. See our estate recovery guide.

What to Do Before Moving Anything

  1. List what has already moved. Write down any gifts, sales, or deed changes in the last five years, with dates and amounts.
  2. Gather records. Bank statements, deeds, and receipts help show what happened. Be ready to document your parent's finances if an application is made.
  3. Talk to an elder law attorney first. The rules are technical and differ by state. An attorney can explain exceptions, how your state applies the penalty, and what might lawfully protect your parent and a spouse.
  4. Ask your state Medicaid agency. It can tell you the current penalty divisor and what it requires on an application.
  5. Do not undo transfers on your own. The statute allows a penalty to be avoided if all transferred assets are returned, but how and when to do that is a legal question.
  6. Keep the legal documents in place. A durable power of attorney and health care directive let someone act if your parent cannot. See power of attorney and health care proxy vs. power of attorney.

The Eldercare Locator (1-800-677-1116) connects families with local aging services, which can point you to free or low-cost legal help for older adults.

Frequently Asked Questions

What is the Medicaid look-back period?
It is the 60 months (five years) before a person applies for Medicaid nursing facility coverage. Medicaid reviews transfers of assets made during that time. If assets were given away or sold for less than fair market value, the person can be ineligible for coverage for a period of time. Certain trust payments use a 36-month period.
How is the Medicaid penalty period calculated?
Federal law divides the total value of assets transferred for less than fair market value by the average monthly cost to a private patient of nursing facility services in the state. The result is the number of months of ineligibility, and states may not round down a fractional month. The penalty starts on the later of the transfer month or the date the person would otherwise qualify.
Does the 5-year rule apply if I gave money away more than five years ago?
Transfers made more than 60 months before the person applies for Medicaid and is institutionalized generally fall outside the look-back period. The five years are counted back from the application date, so a gift's timing relative to the application is what matters.
Can I give my house to my child to avoid Medicaid?
Be careful. A transfer of a home for less than fair value can trigger a penalty. The statute exempts transfers of a home to a spouse, to a child under 21 or a blind or disabled child, to a sibling with an equity interest who lived in the home for at least a year, and to a son or daughter who lived there at least two years and provided care. Talk to an elder law attorney before any transfer.
Does the look-back period apply to home care?
Federal law requires the look-back rule for nursing facility services. Some states apply similar transfer rules to home- and community-based care, and the details vary. Ask your state Medicaid agency or an elder law attorney how your state handles care at home.
Is there a way to avoid a penalty if a transfer was a mistake?
The statute includes exceptions: a person can show they intended to transfer at fair value or for a purpose other than qualifying for Medicaid, or that all the assets transferred have been returned, and states can waive a penalty for undue hardship. These depend on the facts and the state's process, so get legal advice before acting.
Next step: Visit the Plan Ahead hub for the documents most families need, and read our guide to estate planning for aging parents for the full conversation. After a death, our complete guide covers what comes next.
Reviewed October 16, 2026
Official and primary sources used for this guide

We reviewed this page against the federal statute below. Medicaid rules for long-term care vary by state and by type of care; consult a licensed elder law attorney or your state Medicaid agency for guidance specific to your situation.

Page last reviewed: October 16, 2026