How Connecticut is Phasing in the New 5-Year Look-Back Period

By now a lot of people who are interested in Medicaid planning are well aware that the Federal government recently overhauled the Medicaid eligibility rules in a very big way.  The changes instituted by the Deficit Reduction Act of 2005 (DRA), which President Bush signed into law on February 8, 2006, were the most dramatic since the Omnibus Reconciliation Act of 1993 (OBRA 1993).  Suffice it to say that the DRA will provide a lot of material for future posts.  In this post I will summarize how Connecticut is addressing one of the most significant changes made by DRA (but not the most significant).

Whenever a Medicaid application is filed with the Connecticut Department of Revenue Services (DSS), a caseworker is assigned to the application and he/she will conduct an audit of what was done with the aplicant's money during the "look-back" period.  The look-back period is a period of time leading up to the date that the Medicaid application is submitted to DSS.  The pre-DRA rule was that the look-back period was 3 years in length, but it was 5 years for transfers involving trusts.  The new post-DRA rule is that there is a 5-year look-back period for all applications, regardless of whether or not a trust was involved.

But here's what most people don't realize...DSS is still using a 3-year look-back period until February 8, 2009.  So applications filed today, and every day until 2/8/09 are only required to submit financial information going back 3 years, not 5 years.  Starting on 2/8/09, the look-back period grows by one month as each month passes.  This means that on 3/8/09 the look-back period will be 37 months, on 4/8/09, the look-back is 38 months, and so on.  Therefore, Connecticut will not have a true 5-year look-back period until February 8, 2011, at which point the look-back period stops increasing.

This "phase-in" policy imlpemented by DSS is certainly good news for those of my clients who are anticipating the need to file a Medicaid application fairly soon since they won't have to worry about the extra 2 years of accounting to the State.  But for my other clients who are in the process of Medicaid planning, the advice is to anticipate a 5-year look-back period and to start saving those bank statements!