Quick answer: The Medicaid look-back period is 5 years (60 months). When you apply for long-term care Medicaid, the state reviews all asset transfers you made in the prior 5 years. Gifts or below-market transfers create a "penalty period" — months during which Medicaid won't pay for care. The penalty is calculated by dividing the total gifted amount by the average monthly nursing home cost in your state (approximately $6,000–$7,000/month in Texas).
How the Penalty Calculation Works
Here's a concrete example: You gave $120,000 to your children over the past 3 years, then need nursing home care and apply for Medicaid. Texas's average monthly nursing home cost for penalty calculation is approximately $6,000. Your penalty period = $120,000 ÷ $6,000 = 20 months during which Medicaid won't pay. You (or your family) must cover those 20 months of care — $120,000 in costs — out of pocket, defeating the purpose of the gift. The penalty period begins when you enter a nursing facility and would otherwise be Medicaid-eligible.
What Transfers Are Exempt From the Look-Back
- Transfers to a spouse (but spousal assets are still counted in eligibility)
- Transfers to a blind or disabled child
- Transfers of a home to a child who lived with you for at least 2 years and provided care that kept you out of a nursing home
- Transfers to a sibling who has an equity interest in the home and was residing there for at least 1 year
- Gifts made for a purpose other than Medicaid planning (though hard to prove)
The Right Strategy: Plan Early
The only reliable way to protect assets from Medicaid spend-down is to transfer them to an irrevocable Medicaid trust or another exempt structure at least 5 years before you need care. This requires anticipating a potential need for long-term care well in advance — ideally in your 50s or 60s, not after a diagnosis or health crisis. Texas elder law attorneys can advise on Medicaid-compliant strategies, and a qualified elder law planner can help you avoid costly mistakes. Half-measures made close to the need almost always backfire.
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Kyle Ellison is a licensed financial professional in TX, CA, NV, MT, UT, NM helping families protect and pass on what they've built.