The look back period is the amount of time that Medicaid can look back at your financial documents to determine your eligibility for coverage. Certain activities, like gifting large assets, can cause you to be disqualified from Medicaid coverage for a penalty period. Before the DRA, the look back period varied from state to state, but was typically no more than three years. Now the look back period is a full five years.
Penalty periods are a set time frame in which you are not able to receive Medicaid, most commonly because of issues found in the look back period. An amount of time is calculated regardless of whether the state has adopted the DRA or not, but the important change post-DRA is when that penalty period begins.
Before the DRA went into affect, the penalty period began on the day you gave the gift. So if you had a one year penalty period that began five years ago, you could be eligible to receive Medicaid when you apply. Now the penalty period does not begin until your first day in the nursing home, which can cause financial hardship if not planned for in advance.
