Paying for long-term healthcare is often a struggle for families. Many people need to find additional assistance to afford long-term care facilities.

One of the most common options is to get Medicaid. However, Medicaid is a government health insurance program for low-income individuals. This means you must meet income requirements, and the government will count your assets when figuring your income.

The look-back period

The Florida Times-Union explains that Medicaid will look back on the fives year before you apply for benefits to see if you sold, traded or gifted any assets. If you let an asset go out of your name for less than the fair market value, you will face a penalty.

The reasoning

The reason for the look-back period is to prevent you from getting rid of assets so that you can meet income requirements. The government would rather you use the money from the sale of those assets to pay for your medical expenses because it has limited funds. Medicaid aims to reserve funds for those who are truly in need.

The penalties

If Medicaid discovers that you did sell, transfer, trade or gift an asset for less than fair market value, it will give you a penalty. The penalty will be a number of months that you must wait to begin receiving Medicaid benefits.

The formula to figure the penalty is rather complex. It is not easy to calculate on your own. You should just note that Medicaid will discover your financial moves during the last five years, so if you want to apply for benefits, make sure that you avoid getting rid of assets in any manner.