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The five-year window
Elsewhere we explain the look-back for families already in a crisis. This is the other side of the same rule. If you are not in a crisis, you still have time, and timing still helps. Nothing here is advice. It is a map of what an elder-law attorney works with, so you know what to ask.
The rule, exactly
For Medicaid that pays for care in a facility, and for some waiver programs, the federal look-back is 60 months. Here is the detail 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, not the application alone.
If the person gave something away, or sold it for less than it was worth, in that time, there can be a penalty period. Its length is the amount given away divided by the average monthly cost of nursing home care in the state or area.[1] It is not always five years.
California is different, and it is in the middle of a change. This page used to say California uses a 30-month look-back and every other state uses five years. Here is the correct version. Medi-Cal, California's Medicaid, began counting assets again on January 1, 2026. The state agency, DHCS, says it looks at things given away in the 30 months before a person enters a nursing home. Gifts on or after January 1, 2026 may cause a penalty. Gifts before that date will not be counted.[2] But the check is being brought in step by step. A DHCS letter says long-term-care cases in September 2026 get an eight-month look back. That grows to the full 30 months for cases on or after July 1, 2028.[3] So "California is 30 months" is not true yet. Check the date on every statement about California, and check current DHCS guidance.
What this means for planning has not changed. Anything that involves moving money or property works only if it is done long before care is needed. The same trust, funded at two different times, can lead to opposite results. The only difference is the calendar.
The exceptions, from the law itself
These are written into the law (42 U.S.C. §1396p(c)(2)). Know that they exist before anyone tells you that giving things away is simply not allowed:[5]
- Giving things to a spouse, or to another person if it is only for the spouse's benefit.
- Giving things to a child who is under 21, or blind, or permanently and totally disabled.
- Giving the home to a son or daughter who lived in it for at least two years right before the parent went into a care facility, and who gave care that let the parent stay home. The state decides if the care counts (the law says "as determined by the State"). This is the caregiver child exemption.
- 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.
- Giving things to certain trusts for a disabled person under 65.
Notice the words "as determined by the State." The exceptions are federal, but your state decides if your facts fit them. And note what an exception does not do. Being allowed to give something away does not protect it from what the state can collect after death.
Protection for a spouse, with dates
A spouse at home keeps a share that the state works out. For 2026, CMS says the savings the spouse at home can keep (the "community spouse resource allowance") must be at least $32,532 and at most $162,660, effective January 1, 2026. The lowest monthly income amount for the spouse at home is $2,705 in the 48 mainland states.[6] These are federal lowest and highest amounts, and they change every year. What a state really protects has to be worked out. The spouse-at-home page covers it.
The warning that saves real money
The IRS lets a person give $19,000 to each recipient in 2026 with no gift tax paperwork. For a sense of scale, a person who dies in 2026 can leave $15,000,000 before federal estate tax applies.[4] Those are gift and estate tax rules. They have nothing to do with Medicaid.
The CMS rule is the one that matters for care. A person who needs long-term care "will be denied LTSS coverage if they have transferred assets for less than fair market value during the five-year period preceding their Medicaid application."[7]
So a grandparent making normal, generous gifts in those five years can build up a penalty without knowing it. "Tax-free" and "no Medicaid penalty" come from different laws. What we will not do is tell you every gift is penalized. There are exceptions, states apply them, and the amount and the reason matter. The advice is simple: before any money or property moves, ask a lawyer.
What we will not tell you about trusts
Families ask about asset-protection trusts more than any other tool. So it matters that this page was too sure of itself about them. It gave an attorney cost of $2,000–$12,000. It said the person who sets up the trust truly gives up control. And it said the trust must be fully funded five or more years before applying. We could not confirm any of that with a source we could open. The truth is that what a trust does for Medicaid depends on how it is written, the timing, the state's rules, the kind of Medicaid, and which rights the person keeps.
Here is what we will say. Some trusts that cannot be undone, and some other tools, can change how money and property are counted. What they do depends on the exact paper and the state. No one should put anything into one because of a web page, including this one. Find a certified elder-law attorney through the National Academy of Elder Law Attorneys (naela.org). We are also not going to describe aggressive plans for giving things away. They exist, they differ by state, and it is easy to get them disastrously wrong.
What only an attorney or your state can tell you
Who to ask: a certified elder-law attorney (your Area Agency on Aging can often suggest one); and your state Medicaid office for the current official limits.
What to ask them:
- With what we own and the time we have, which tools even apply to us?
- What are this state's limits right now on income, savings and home value? What are its look-back rules and its penalty divisor (the monthly cost number used to figure a penalty)?
- Would a trust make sense for a family our size? What exactly would we give up?
- Which exceptions in the law might fit us? What proof would the state want?
- If we do nothing at all, what does spending down look like for us?
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).[8] An Area Agency on Aging does not give legal advice. To learn about the four kinds of local helpers, see Who helps me locally.
Quick answers
How far in advance do you have to plan for Medicaid?
Federal rules on giving things away look back 60 months. They apply to Medicaid that pays for care in a facility and to some waiver programs. The 60 months are counted back from the point when a person has both applied for Medicaid and is living in a care facility. California is moving to 30 months, step by step. Medi-Cal began counting assets again on January 1, 2026. Under the state's schedule, the full 30-month check applies to long-term-care cases on or after July 1, 2028. Anything that involves moving money or property needs to be done long before care is needed, and checked against current state guidance. [1, 2, 3]
Can my parents give away $19,000 a year without affecting Medicaid?
No, and this is the most costly mistake people make. The IRS lets a person give $19,000 to each recipient in 2026 with no gift tax paperwork. That is a federal gift-tax rule. It gives no protection with Medicaid. CMS says people who need long-term care "will be denied LTSS coverage if they have transferred assets for less than fair market value during the five-year period preceding their Medicaid application." (LTSS means long-term services and supports.) That said, not every gift leads to a penalty. There are exceptions, and the state applies them. That is why this is a question for a lawyer and not a rule of thumb. [4, 5]
What is a Medicaid asset protection trust?
It is a trust that cannot be undone, meant to hold money and property so they no longer count toward Medicaid limits. Beyond that, we took out what this page used to say. It gave an attorney cost of $2,000 to $12,000. It said the person who sets up the trust "genuinely gives up control." And it said the trust must be funded five or more years before applying. We could not confirm any of that with a source we could open. In truth, what a trust does depends on how it is written, the timing, the state, the kind of Medicaid, and which rights the person keeps. Ask an elder-law attorney. Do not plan from a price range or a slogan.
Sources and what they support
Sources checked 2026-09-19 using AI-assisted editorial research. This is a source check, not legal or tax 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. Guidance to states on penalty start dates for certain waiver applicants; it concerns institutional and covered long-term-care pathways rather than every Medicaid pathway.
- California DHCS, Medi-Cal asset limit FAQ. Supports that Medi-Cal began counting assets on 1 January 2026, the 30-month look at assets given away before entering a nursing facility, and that transfers on or after 1 January 2026 may cause a penalty while earlier transfers are not counted. California-only consumer guidance, superseded whenever DHCS updates it. The URL previously used on this page no longer resolves.
- California DHCS All County Welfare Directors Letter 25-18. Supports the transition under which the number of months reviewed for long-term-care applications and entries rises over time, from eight months for September 2026 cases to the full 30 months for cases on or after 1 July 2028. A county-administration instruction; read it with the consumer FAQ, and do not treat the eventual 30-month review as fully in force in 2026.
- IRS, tax inflation adjustments for tax year 2026. Supports that the annual exclusion for gifts remains at $19,000 for 2026 and that the estate tax basic exclusion amount for decedents dying in 2026 is $15,000,000. These are federal gift and estate tax figures. They have no bearing on Medicaid eligibility, which is the entire point of citing them here.
- 42 U.S.C. §1396p(c)(2), transfers of assets. Supports each listed exception: spouse and sole-benefit-of-spouse transfers; a child under 21 or blind or permanently and totally disabled; the son-or-daughter caregiver exception with its two-year residence and "as determined by the State" care test; the sibling exception requiring an equity interest and one year of residence; and certain trusts for a disabled person under 65. Statutory text — the states administer these and decide whether a given transaction qualifies, and none of these is an estate-recovery exemption.
- CMS informational bulletin, updated 2026 SSI and spousal impoverishment standards (27 April 2026). Supports the community spouse resource allowance minimum of $32,532 and maximum of $162,660 effective 1 January 2026, and the $2,705 minimum monthly maintenance needs allowance for the 48 states. Federal minimums and maximums only; states apply their own procedures within them and the next annual bulletin supersedes these figures.
- CMS, Medicaid eligibility policy. Supports the quoted rule that beneficiaries who need long-term services and supports will be denied that coverage if they transferred assets for less than fair market value in the five years before applying, and that 36 states and DC operate spend-down programs. A federal overview; it does not list state exceptions or limits.
- Administration for Community Living, Eldercare Locator. Supports the referral route to a local Area Agency on Aging. It does not give legal advice or determine eligibility.
Corrected in this pass: "five years in every state except California" was an overbroad national comparison, and California's 30-month framework is now dated and given with its phase-in to 1 July 2028; the look-back start date now follows CMS's definition rather than "before the application"; the trust cost range, the "genuinely gives up control" claim and the universal five-plus-year funding rule are removed as unverified; and two commercial Medicaid-planning sites no longer carry claims on this page.