Pennsylvania’s Five-Year Medicaid Look-Back, Explained
If your mother or father may need nursing home care, or care at home paid for by Medicaid, the gifts they made in the last five years matter more than almost anything else in the application. Pennsylvania’s Medicaid look-back reviews that period, and a gift can stop Medicaid paying for care for a stretch of time. This page explains what the look-back covers, how the penalty is worked out, what is exempt, and why timing decides what is still possible.
What the look-back actually is
When someone applies for Medicaid to pay for long-term care, the county assistance office reviews every asset they transferred, sold or gave away during the previous 60 months (55 Pa. Code § 178.104a(a)). The 60 months are counted back from the date your parent is both in care (admitted to a nursing facility, or assessed as eligible for home and community-based services) and has applied (DHS, Medicaid and Payment of Long-Term Services).
It is not only about nursing homes. The same rules apply to Medicaid waiver services that let someone stay at home (55 Pa. Code § 178.104(a)).
The office generally asks for monthly statements covering the most recent two years of the look-back period, and it can ask for more (DHS Long-Term Care Handbook § 440.811).
How the penalty is calculated
The penalty is not a fine. It is a period in which Medicaid will not pay for long-term care. Your parent stays eligible for other Medicaid services, but the facility can charge its private rate for those days (55 Pa. Code § 178.104(b), (h); DHS Long-Term Care Handbook § 440.85).
The length of the penalty is the total “uncompensated value” of everything transferred during the look-back, divided by the Department of Human Services’ average daily private-pay rate in effect when the application is processed (55 Pa. Code § 178.104a(d)). Uncompensated value is the gap between what the asset was worth and what your parent received. For 2026 the daily rate is $421.20 (DHS Long-Term Care Handbook, Chapter 440, Appendix A). The rate is reset every January 1.
Illustration: $50,000 given away ÷ $421.20 a day = about 119 days, roughly four months, in which Medicaid will not pay for care.
Gifts are added together. There is no carve-out in the rule for small or annual gifts, and several modest transfers are totaled rather than judged one at a time (55 Pa. Code § 178.104a(d)). The federal gift-tax annual exclusion is a separate tax concept. It does not protect a gift from the Medicaid look-back.
Why the start date is the trap
Most people assume the penalty starts when the gift is made. It does not. For an applicant, the penalty begins only on the date they would otherwise be eligible for Medicaid (55 Pa. Code § 178.104a(b)). That means your parent is already in care and has spent their savings down to the resource limit. For one person in 2026 that limit is $2,000 plus a $6,000 disregard if their income is at or below $2,982 a month, or $2,400 if their income is above that (DHS, Medicaid and Payment of Long-Term Services). The penalty starts at exactly the moment the family has the least money to cover it.
Three gifts families actually make
These are illustrations to show how the rules work, not client matters.
The house put in a child’s name
Your mother deeds her home to you for $1 so it “stays in the family.” The whole equity counts as uncompensated. On a $200,000 house with no mortgage, that is about 475 days of penalty at the 2026 rate.
The painful part is that the house may not have counted against her while she owned it. For 2026, the home is not a counted resource if its value is $752,000 or less and she lives there or intends to return. It is also not counted, whatever its value, while a spouse or dependent lives there (DHS, Medicaid and Payment of Long-Term Services). Deeding it away can turn a protected asset into a penalty.
Paying a grandchild’s tuition
Your parents pay $30,000 toward a grandchild’s tuition. Generous, but still a transfer for less than fair market value. If they also gave you $20,000 toward a down payment in the same five years, the office adds the two together: $50,000 of uncompensated value, about 119 days at the 2026 rate.
Selling the house to a relative below market
Here only the gap counts. The Department’s method takes fair market value at the time of the sale, deducts the costs of sale and any liens to reach equity value, then subtracts what was paid (55 Pa. Code § 178.2; DHS Long-Term Care Handbook § 440.84). A $250,000 house, $10,000 of sale costs and a $150,000 price leave $90,000 of uncompensated value, about 214 days.
A note on bank accounts: adding your name to your parent’s account is not automatically a transfer if they can still withdraw everything. It becomes one when you take money out, or when adding your name limits their right to use the funds (55 Pa. Code § 178.104(f); Handbook § 440.87).
What is exempt
A home can be transferred without penalty to (55 Pa. Code § 178.104(e)(1)):
- A spouse.
- A child under 21, or a child who is blind or permanently and totally disabled.
- A brother or sister who has an equity interest in the home and lived there for at least one year immediately before your parent went into care.
- A son or daughter who lived in the home for at least two years immediately before your parent went into care and provided care that let your parent stay at home.
The caregiver-child exception is narrow. It applies only to sons and daughters. A written statement from a doctor, visiting nurse or other health professional must confirm that the care over those two years allowed your parent to live at home rather than in a facility, and companionship alone does not qualify (55 Pa. Code § 178.103(f)(4)(ii); Handbook § 440.812).
Any asset can also go without penalty to a spouse or to someone else for the spouse’s sole benefit, to a blind or disabled child or a trust solely for that child, or to a trust solely for a disabled person under 65 (55 Pa. Code § 178.104(e)(2)).
If a transfer has already happened
- Explain it. The office sends written notice that it presumes the transfer was made to qualify. You have 15 days from the mailing date to say you will contest it, then 10 calendar days to produce convincing evidence. If qualifying for Medicaid was any part of the reason, even alongside another purpose, the rebuttal fails (55 Pa. Code § 178.105).
- Give it back. Returning the asset avoids or ends the penalty, but returned money then counts as your parent’s resource again (55 Pa. Code §§ 178.104(e)(3)(iii), 178.105(g)(3)).
- Ask for a hardship waiver. A written request on form PA 1827, with supporting documents, must reach the office within 30 calendar days of the mail date of the notice. The nursing facility can file it with the written consent of the resident or their representative (55 Pa. Code § 178.104b(b)-(c); Handbook §§ 440.89, 440.892).
Why timing matters more than the tool
Transfers made before the look-back date, meaning more than 60 months before the date your parent was both in care and had applied, are not reviewed at all (55 Pa. Code § 178.104a(a)). That single fact is why planning years ahead, sometimes with an irrevocable trust as part of long-term care planning, is a very different conversation from planning in a crisis. It is also why a power of attorney that allows or limits gifting deserves careful drafting.
Sometimes it is too late for a trust. Even then, there are protections for a spouse who stays at home, and the exempt transfers above still apply. Our page on asset protection planning in Pennsylvania and our post on other asset protection strategies for families cover the wider picture.
This is not the same as Pennsylvania’s separate one-year rule for inheritance tax. A gift can be fine for one and a problem for the other.
Common questions
Does the look-back apply to care at home?
Yes. It applies to Medicaid home and community-based waiver services as well as nursing facility care.
Can Mom give each grandchild a small gift every year?
She can, but the gifts are added together. The Medicaid rule has no small-gift exception.
Is the five years counted from the gift or from the application?
From the date your parent is in care and has applied. Gifts made before that 60-month window are not reviewed. The penalty itself starts only once they are otherwise eligible.
Talk to us before anything else is signed
If a deed, a check or a new account is on the table, the most useful conversation happens before it is signed. We can look at what has already been given and what can still be protected.
Joseph F. Leeson III trained and practiced as a CPA before he practiced law, with four years in tax accounting at an international public accounting firm and a large financial corporation. He holds a JD from Indiana University Maurer School of Law and an MBA in accounting from DeSales University, and was named to MSN’s Legal Powerlist: 2026’s Most Respected Lawyers. He was born and raised in Bethlehem.
Call 610-691-3350 or request a 30-minute conversation. Before any work begins, Leeson & Co. gives you a written fee proposal.
This page explains general principles of Pennsylvania law and is not legal advice for your situation. Rates, limits and deadlines change; figures shown are those in effect for 2026. Please speak to us before acting on anything here.