Quick answer: Alabama Medicaid reviews the 60 months (5 years) before an application for nursing home or waiver care. A transfer for less than fair market value causes a penalty: the uncompensated value divided by Alabama's average monthly private-pay nursing facility cost.

At a glance (2026)

How far back does Medicaid look?
60 months (5 years) before the application
Which care does it apply to?
Nursing facility care, equivalent institutional care, and home and community-based waiver services
What triggers a penalty?
A transfer for less than fair market value; the penalty is based on the uncompensated value
How is the penalty figured?
Uncompensated value ÷ the average monthly private-pay nursing facility cost in Alabama, as determined by Alabama Medicaid
When does the penalty start?
The later of the month of transfer or the month the person would otherwise be eligible and receiving care
Hardship request deadline
60 days from the date the notice is mailed

How Alabama's look-back rule works

When someone applies for Alabama Medicaid to pay for nursing home care or a home and community-based waiver, the Agency reviews the 60 months before the application. It checks whether the applicant or a spouse gave away or sold anything for less than it was worth. The rule is Alabama Administrative Code Rule 560-X-25-.09.

What counts: the Agency looks at the uncompensated value, which is the difference between what an asset was worth and what the person received for it. Typical examples include cash gifts to children or grandchildren, selling a car or land to a relative for less than market value, adding someone to a deed, or paying family for care without a written agreement.

How the penalty is calculated: the total uncompensated value is divided by the average monthly cost of private-pay nursing facility care in Alabama, a figure set by Alabama Medicaid at the time of application. The result is the number of months Medicaid won't pay for nursing facility or waiver care. Any partial month is converted to a dollar amount and added to the person's liability. Alabama's rule doesn't print the current divisor, so ask the Agency or an elder-law attorney for the figure in use when you apply.

When the clock starts: the penalty starts with the month of the transfer, or the first month the person is otherwise eligible and would be receiving institutional-level care, whichever is later. In practice, that means the penalty usually begins when the person already needs care.

Transfers that federal law allows: some transfers don't cause a penalty, including:

  • transfers to a spouse
  • transfers to a child who is blind or permanently disabled
  • transferring the home to a child under 21, or to a sibling with an equity interest who lived there for at least a year before the move to care
  • transferring the home to a child who lived there for at least two years and provided care that kept the parent out of a facility

Hardship: if a penalty would cause undue hardship, the person can ask Alabama Medicaid for an exemption. The written request must arrive within 60 days of the date the notice is mailed.

Example

Doris, 80, gave her grandson $40,000 toward a house three years before she applied for nursing home Medicaid. The gift falls inside the 60-month look-back. If Alabama Medicaid's divisor were $8,000 a month (an illustrative figure only, not the official one), the penalty would be $40,000 ÷ $8,000 = 5 months without Medicaid payment for her nursing home care, starting when she's otherwise eligible. Her family would have to pay privately for those months.

Illustrative example; names and figures are hypothetical.

Common mistakes

  • Assuming the IRS annual gift-tax exclusion protects a gift. Medicaid's look-back is a separate rule with no such exclusion.
  • Paying a relative for care without a written caregiver agreement and records.
  • Adding a child to the deed of the home without checking the exceptions first.
  • Not keeping records. Applicants should be ready to document deeds, trusts, annuities and loans for the full look-back period.

Questions and answers

How far back does Alabama Medicaid look?

60 months (5 years) before the application, for nursing facility care and home and community-based waiver services.

Does the look-back apply to home care waivers?

Yes. Rule 560-X-25-.09 applies the transfer penalty to home and community-based waiver services as well as nursing facility care.

How is the Alabama transfer penalty calculated?

The total uncompensated value is divided by the average monthly private-pay nursing facility cost in Alabama, as determined by Alabama Medicaid when you apply. The result is the number of penalty months.

Can a transfer penalty be waived?

You can request an undue hardship exemption. The written request must reach Alabama Medicaid within 60 days of the date the penalty notice is mailed.

Sources

← Back to the full Alabama guide