Health & Benefits

When a person applies for Medicaid coverage for long-term care services, the state will look back to see if they or their spouse transferred assets Anything a person owns that has financial value for less than fair market value The price that a normal buyer would pay during the "look-back period." The look-back period is five years or 60 months before a person applies for Medicaid. The state will look at any assets transferred during that time. A Medicaid applicant, or their spouse, who transferred assets for less than fair market value during the look-back period, will not be able to get Medicaid for a time known as a "penalty period."

The penalty period will begin on the later of the following dates:

• The date of the transfer,
• The date the applicant entered a nursing home and was found Medicaid eligible, including meeting any spenddown requirement, or
• If a prior penalty period has not expired, the day following the day the prior penalty period ends.

The Illinois Department of Healthcare and Family Services (DHFS) decides the length of the penalty period based on the amount transferred, which is then divided by the average cost of nursing home care in Illinois. The average cost in 2025 is $7,012. That will give DHFS the number of months the penalty is in effect. 

The DHFS will notify someone if they are subject to a penalty period. They will have the right to appeal A request to change a court's decision the decision. The appeals deadline is usually short, about ten days, so appealing quickly is important.

Transferring assets will not always trigger the penalty. For example, there is no penalty for transferring one’s home to certain people, such as a spouse, a child under age 21, or a child who is blind or has a disability. A substantial impairment that functionally limits a person in carrying out major life activities, such as walking, lifting, seeing, or learning. There is also no penalty for other asset transfers to a person’s: 

• Spouse,
• Child under age 21,
• Child of any age who is blind or has a disability as determined by the Social Security Administration or the DHFS Determination Review Unit,
• Sibling who has an equity Amount that is left after a person pays off their loan interest in the homestead property. The sibling must have been living in the home for at least one year immediately before the date the person entered the long-term care facility. The sibling also qualifies if they lived in the home for one year before the date the person applied for or received Illinois Department on Aging (DoA) home- and community-based waiver A document that gives up a legal right or excuses a requirement services (HCBS), or
• Child who provided either nursing care or support care for the person. The child must have been living in the home for at least two years immediately before the date the person entered the long-term care facility. The child also qualifies if they lived in the home for at least two years before the person applied for or received DoA HCBS.