Where to start › When the money runs out › The look-back
The five-year look-back
When someone applies for Medicaid to pay for long-term care, the agency checks their recent money history. It is looking for things that were given away in order to qualify. This is the look-back, and it catches families who were trying to do the right thing.
How it works
Federal rules look back 60 months, which is five years. Here is the detail that matters, and that most summaries get wrong. CMS counts back from "the date that precedes by 60 months the point at which an individual has both applied for Medicaid and is an institutionalized individual."[1] In plain words: the person has applied and is living in a care facility. Both must be true. The application alone does not set the date.
This rule is also only about Medicaid that pays for care in a facility, and some waiver programs for care at home. It is not about Medicaid in general.[1]
Say that in those 60 months the person gave something away, or sold it for less than it was worth. Money to a grandchild. A house signed over to a child. A loan that looks like a gift. Any of these can create a penalty period. During it, Medicaid will not pay for long-term care, even though the money is gone. To get the length, the state divides the total given away by the average monthly cost of nursing home care in the state, or in the area where the person is.[1] Each state sets that monthly cost number. So the very same gift leads to a different penalty in different states. When the penalty clock starts is its own technical question. A 2018 CMS letter was written mostly to answer it for some people applying for waiver programs.[1]
The exceptions are written into the law
The law has written exceptions (at 42 U.S.C. §1396p(c)(2)). There is no penalty for giving things to a spouse, or to someone else if it is only for the spouse's benefit. There is no penalty for giving things to a child who is under 21, or blind, or permanently and totally disabled. Some trusts for a disabled person under 65 are also allowed.[4]
Two more exceptions are about the home itself. Families reading this section should know them:
- Giving the home to a son or daughter who lived there for at least two years right before the parent went into a care facility, and who gave care that let the parent stay home instead of moving to a facility. The state decides if the care counts. This is the caregiver child exemption, and it has its own page.[4]
- Giving the home to a brother or sister who is a part owner and lived there for at least one year right before the person went into a care facility.[4]
Does your own case fit one of these? That is a legal question about your facts, and each state runs the rules itself.
California is different, and it is changing
Medi-Cal is California's Medicaid. It began counting assets again on January 1, 2026. The state agency, DHCS, says that for a person entering a nursing home, Medi-Cal looks at things given away in the 30 months before entry. Gifts made on or after January 1, 2026 may cause a penalty that delays coverage. Gifts before that date will not be counted.[2]
DHCS also gives limits on what a person can own. Through June 30, 2027: $130,000 for one person, plus $65,000 for each other person in the household. From July 1, 2027: $21,000 for one person, $31,000 for two, plus $1,550 for each other person.[2]
The 30-month check is being brought in step by step, not all at once. A DHCS letter sets out the steps. For long-term-care applications and nursing home entries in September 2026, the state looks back eight months. That grows over time to the full 30 months for cases on or after July 1, 2028.[3] So if you live in California and read "30-month look-back" today, that is not fully in force yet. Check the date on every statement about California, including this one, and check current DHCS guidance.
Why this matters so much
The look-back is why the urge to give the house to the children before applying backfires. It is also why families who deal with this early have more legal choices than families who deal with it in a hospital hallway. Either way, talk to an elder-law attorney before anything is given away, not after.
What only your state can tell you
Does a past gift create a penalty? How long? That depends on your state's monthly cost number and how your state runs these rules. Here is who knows.
Who to ask: an elder-law attorney who knows your state's Medicaid rules; and your state Medicaid office for the official steps and its current monthly cost number (often called the "penalty divisor").
What to ask them:
- What is this state's penalty divisor right now? What date did it start?
- We gave something away in the last five years. Does it count? Is there anything we can do now?
- Which exceptions fit our situation? What proof does the state want?
- When would a penalty period start in our case?
- With the time we have, can we still plan?
Free local help. Your Area Agency on Aging will talk through your choices with you for free. Find yours through the federal Eldercare Locator at 1-800-677-1116 or eldercare.acl.gov (run by the Administration for Community Living).[5] An Area Agency on Aging does not decide who gets Medicaid. To learn about the four kinds of local helpers, see Who helps me locally.
Sources and what they support
Sources checked 2026-09-19 using AI-assisted editorial research. This is a source check, not legal advice.
- CMS State Medicaid Director Letter SMD#18-004, 17 April 2018. Supports the quoted definition of the 60-month look-back running from the point at which a person has both applied and is an institutionalized individual, and the penalty calculation dividing the amount transferred by the average monthly cost of nursing facility services in the state or locality. The letter's own subject is penalty start dates, chiefly for certain waiver applicants, so it addresses transfer penalties for institutional and covered long-term-care pathways rather than every Medicaid pathway, and it does not set any state's practice.
- California DHCS, Medi-Cal asset limit FAQ. Supports that asset counting began 1 January 2026, the 30-month look at assets given away before entering a nursing facility, that transfers on or after 1 January 2026 may cause a penalty while earlier transfers are not counted, and both sets of asset limits with their dates. This is California-only plain-language guidance for consumers, it does not describe the phase-in detail in the letter below, and it is superseded whenever DHCS updates it. The URL this site previously used for it no longer resolves.
- California DHCS All County Welfare Directors Letter 25-18. Supports the transition table under which the number of months reviewed for long-term-care applications and entries increases over time, beginning with eight months for September 2026 cases and reaching the full 30 months for cases on or after 1 July 2028. It is a county-administration instruction; read it with the consumer FAQ rather than instead of it, and do not read the eventual 30-month rule as being fully in force in 2026.
- 42 U.S.C. §1396p(c)(2), transfers of assets. Supports the listed exceptions: spouse or sole-benefit-of-spouse transfers; a child under 21 or blind or permanently and totally disabled; certain trusts for a disabled person under 65; the son-or-daughter caregiver exception with its two-year residence and state-determined care test; and the sibling exception requiring an equity interest and one year of residence. Statutory text only — the states administer these rules and decide how they apply to a given transaction.
- Administration for Community Living, Eldercare Locator. Supports the referral route to a local Area Agency on Aging for free options counseling. An Area Agency on Aging does not determine Medicaid eligibility or advise on transfers.
Corrected in this pass: the look-back was described as running from the application, which is not how CMS defines it; California was described as having a settled 30-month look-back, which omits the phase-in; and the page cited an undated Medicaid.gov homepage and a DHCS URL that no longer resolves.