A Preliminary Guide to Understanding the 5-Year Look-Back for Medical Long-Term Care in Virginia

If you are helping a loved one prepare for long-term care, you’ve likely heard about Virginia’s Medicaid Program through the Department of Medical Assistance Services (DMAS). One of the most critical rules to understand before applying is the 5-Year Look-Back Period. In this post, we’ll break down how the rule works, why it matters, and answer some of the questions families ask us most often.

What is the 5-Year Look-Back Period?

In Virginia, when an individual applies for Medicaid to pay for long-term care (for example nursing home care or certain home-and-community-based services under a waiver), DMAS reviews the applicant’s asset transfers during a defined period prior to the application. This is the “look-back” period.

• Virginia imposes a 60-month (5-year) look-back for long-term care Medicaid eligibility.
• The look-back period begins at the date of the Medicaid long‐term‐care application (or sometimes the date one enters the facility and then applies) and reaches backward 5 years.
• During that 5-year window, DMAS will examine whether assets were transferred for less than their fair market value (i.e., gifted or sold at undervalue) which could cause a penalty period of ineligibility.

Why is this rule in place? The rule ensures that applicants don’t give away assets right before applying for Medicaid just to meet eligibility requirements. It encourages people to plan ahead rather than make rushed financial decisions in a crisis.

Who and what does the rule apply to?

Here are some clarifications on applicability:

• The look-back period applies to Medicaid programs for long-term care (LTC): e.g., nursing home care or home and community-based services where one is applying for Medicaid to cover LTC.
• It does not apply in the same way to “regular” Medicaid programs for non-LTC eligibility.
• The rule is state-specific; each state sets its own look-back period within federal guidelines, and for Virginia it’s 5 years.
• If you are married, the couple’s assets are generally pooled together and assessed (even if only one spouse is applying) for purposes of determining eligibility and transfers.

Key Questions & Answers

Below are some of the most common FAQs we encounter when working with clients.

1. What kinds of transfers trigger a look-back review?

Transfers that may trigger the look-back include:

• Gifts of cash or property to others without receiving fair value.
• Sale of assets for less than fair market value, e.g., selling a house to a child at below value.
• Paying for expenses without a clear record of what was received in return.
• Setting up and funding an irrevocable trust during the look-back period.
• Adding someone’s name to a deed or an account.
• Paying a family member for care or services received without a valid service contract.

2. What happens if a disqualifying transfer is found during the 5-year period?

If DMAS finds that an applicant made a disqualifying transfer (such as giving away assets or selling them for less than their value) within the look-back period, a penalty period will be imposed during which the applicant is ineligible for Medicaid LTC benefits.

• The length of the penalty period is determined by dividing the value of the transferred assets by the state’s “penalty divisor” (which is usually the average monthly cost of private pay nursing home care in the state).
• Importantly, after the penalty period is over, if all other eligibility factors are met, then Medicaid eligibility may commence.
• The quotient of the penalty divisor and average monthly cost for nursing home care is the number of months the applicant would then be ineligible for Medicaid LTC benefits.

Knowing how this works ahead of time can help families plan carefully and avoid stresses during a stressful period.

3. Does the 5-year clock start at the time of transfer?

No, the look-back period runs backwards from the date of application (or sometimes the date of facility admission) for LTC Medicaid. Transfers earlier than 5 years prior to application are generally not subject to penalty under the look-back rule.

4. What asset limits apply for long-term care Medicaid in Virginia?

While the look-back relates to transfers, applicants must also meet income and resource limits. Medicaid has strict asset and income limits. If your available assets are above those limits, you must spend them down to an allowable level before Medicaid will begin paying for care. Here are some of the important Virginia-specific limits and rules as of 2025 (please note these figures change annually, so it is important to stay updated on changes to such limits):

• For a single individual applying for nursing home LTC Medicaid in Virginia: countable assets must be $2,000 or less.
• Exempt vs. Countable Assets

• Exempt (non-countable) Assets- generally not subject to “spend-down”:
  • Primary Residence (if the applicant and/or non-applicant spouse lives there or certain other relatives live there)
  • One Vehicle
  • Personal Belongings and Household Goods
  • Burial Plots and Some Prepaid Burial Arrangements (if within state guidelines)
• Countable Assets- must be “spent down” before eligibility
  • Cash, checking, savings accounts
  • Stocks, bonds, mutual funds
  • Retirement Accounts
  • Additional real estate (not the primary home)
  • Cash value in life insurance (beyond small exempt limits).
• Medicaid looks at a married couple’s combined assets, regardless of whose name they’re in.
• For married couples, the spouse remaining at home as the non-applicant (referred to as the “community spouse”), may be allowed to keep a portion of the couple’s assets – the “Community Spouse Resource Allowance” (CSRA). In Virginia, the community spouse’s resource allowance is up to $157,920 (for 2025).

• If the community spouse remains in the home, the home is generally exempt for Medicaid eligibility. However, after both spouses pass away, Medicaid may try to recover costs from the estate (Medicaid Estate Recovery), depending on how the home is titled.
• The community spouse can keep up to $157,920of the countable assets (for 2025).
• The institutionalized spouse (the spouse in care) must reduce their countable assets to $2,000 (Virginia’s Medicaid Limit for an individual).
• The rest of the couple’s remaining countable assets must be “spent down” on care or other allowable expenses before Medicaid eligibility (e.g., paying off debt, home modifications, purchasing an exempt asset like a car for the benefit of the community spouse, prepaying funeral/burial expenses, paying for medical or long-term care costs, purchasing certain household items or clothing), thereby reducing countable assets for qualification of Medicaid long-term care coverage. The spend down must be completed and documented before Medicaid eligibility begins. Applicants must show bank statements, receipts, and proof of how assets were used. The goal is to demonstrate that assets were spent on the applicant or spouse’s benefit, not transferred away.
• There are other ways to “spend down” a couple’s resources without actually spending them down, such as converting assets into income for the community spouse through a Medicaid-compliant annuity or promissory note. It is important to work with an experienced elder law attorney regarding these asset-to-income conversions.
• For a married couple where both spouses apply for LTC Medicaid: countable assets combined are $4,000.
  • Home equity may be exempt up to certain limits. For example, home equity limit in Virginia for LTC programs is $730,000 (as of 2025) for the home to be exempt.
  • Income Rules: Medicaid treats income separately for spouses
• The institutionalized spouse’s income (Social Security, pension, etc.) generally goes towards the cost of care, less a small personal allowance.
• The community spouse can keep their own income and may also receive a portion of the institutionalized spouse’s income through a Monthly Maintenance Needs Allowance (MMNA) if their income is low.

5. Can small gifts still be made without causing a penalty?

There may be limited allowances, especially if the gifting is consistent with a pattern (such as annual birthday/holiday gifts) and has documentation. But importantly, federal gift tax rules (e.g., annual exclusion amounts) do not override or replace Medicaid transfer rules. Just because a gift is under the federal gift tax exclusion does not mean it is safe from Medicaid look-back scrutiny.

6. Can planning be done before the look-back period?

Yes, in fact, asset protection strategies typically involve planning well in advance of a Medicaid need so that the transfers fall outside the look-back window. For example:

• Setting up an irrevocable trust or making certain asset transfers more than 5 years prior to anticipated application can avoid the look-back penalty.
• Planning early also allows one to preserve more of one’s legacy and reduce risk of unintentional disqualification.

7. What about documenting legitimate transactions?

Proper documentation matters. Some issues that arise are:

• If an asset was sold for fair market value, but there’s no documentation to prove the sale or value, the Medicaid agency may treat it as a gift (and therefore trigger a penalty).
• Jointly held assets, transfers to spouses, and certain home exemptions must be clearly documented.
• It’s wise to keep records of all transfers, sales, valuations, and trust documents.

8. Does this apply if someone just needs help with in-home care rather than a nursing home?

Yes, if the individual is applying for Medicaid to cover long-term services and supports (LTSS), whether in a nursing facility or through a home and community-based services (HCBS) waiver, the look-back rule typically applies.

9. What should you do if you think you violated the look-back rule?

If you discover a potential disqualifying transfer:

• Meet with an experienced attorney who practices elder law and/or Medicaid planning.
• Depending on the timing and nature of the transfer, you may still qualify but you’ll need to account for the penalty period or “reverse” the offending transaction.
• It’s better to plan proactively than attempt emergency “crisis” transfers right before care begins.

Why Engage with an Elder Law Attorney?

Since the look-back rule is not intuitive and the stakes are high (penalties, loss of benefits, asset risk), working with an experienced attorney ensures:

• You tailor a plan to your unique assets, health status, and family circumstances.
• You handle transfers, trusts, income streams, and asset titling correctly and well before a long-term care need arises.
• You maximize the protection of legacy assets, while ensuring eligibility for Medicaid when needed.
• You avoid unintended consequences (such as triggering a penalty or disqualifying for other benefits).
• You are introduced to other planning strategies to protect more assets, such as caregiver agreements, irrevocable trusts (if done well before the 5-year look-back), annuities that convert assets to income for the community spouse, and other planning considerations.
• Because laws change and each situation is different (marital property laws, ownership, and titling of assets, etc.), it is strongly advisable to work with an elder law attorney.

Final Thoughts

The 5-Year Look-Back Period under Virginia’s Medicaid program (administered by DMAS) is a central concern for anyone considering how to plan for long-term care. By understanding how it works, what triggers penalties, and by proactively planning, families can protect assets and preserve eligibility.

If you’re concerned about your situation, perhaps due to aging, experiencing a chronic medical condition, or simply wanting to ensure best practices in advance, feel free to reach out to our firm for a consultation. We can walk you through the details specific to Virginia law, your asset portfolio, your family situation, and help craft a plan you feel comfortable with.

Disclaimer: This article provides general information and does not constitute legal advice. Each individual’s situation is unique and you should consult with a qualified attorney for your particular needs.

Beth Norton, Norton Health Law, P.C., Estate Planning and Elder Law Attorney