There has been an important change to a new rule regarding Medicaid. If you or someone you know is affected by this change, it is crucial that you learn about this and know your options.
You may not know this, but in New York, there are two types of long-term-care Medicaid programs. There is Nursing Home Medicaid and Community Medicaid.
Nursing Home Medicaid can cover the cost of a patient in a nursing home. Community Medicaid can pay for the expenses of a home health aide. In order to qualify for either program, a person needs to be medically and financially eligible. Some people need Medicaid to pay for these expenses, while others intentionally plan for the possibility of needing Medicaid in the future. This latter type of planning is designed to give them options, to avoid spending everything they own, and to protect themselves and their loved ones financially.
To meet the financial eligibility criteria for Nursing Home Medicaid, all financial transactions, dating back five (5) years from the date of an application (this five-year period is called a “look-back period”), are reviewed by Medicaid for qualification purposes.
For Community Medicaid, however, in the past, there has not been a look-back period. Recently, though, New York State decided to institute a 30 month look-back period and that was scheduled to begin October 1, 2020.
The good news is that, now, the October 1 date has been postponed, and the new deadline for Community Medicaid applications has been pushed off until March 1, 2021. So, what that means practically is, for those who are looking to shelter their assets, plan for the possibility of needing Community Medicaid in the distant future, or wanting to be able to apply for Community Medicaid sooner than later, you have until March 1, 2021, to transfer your assets to trusts, or perhaps others, and then complete the application before March 1, 2021.
If you, or your parent, may be eligible for a nursing home, or home health aides, Medicaid has specific financial limitations. The Medicaid agency realizes that the thought of having the government pay for your long-term-care can be a much more attractive proposition, compared to draining all of your assets so you have barely anything left, in order qualify for Medicaid. To prevent people from giving their money away, or transferring it into trusts, to qualify for these Medicaid coverages, the government instituted a look-back-period. This established look-back-period of time is used for reviewing all financial transactions and transfers made during that period. If Medicaid views the activity as a violation of their rules, a penalty will be assessed, based on the value of assets in question. Then, the applicant would not be qualified to receive Medicaid benefits. Benefits could be denied for months, or even years. So, the applicant would need to spend their own funds to pay for their cost of care during that period of denial.
Currently, there are some exceptions for an applicant who transfers their assets. For instance, if a husband is an applicant, and transfers all of his money to his wife, that would not trigger the dreaded penalty period. However, here in New York, this year (2020), because spouses are legally obligated to support each other, the wife would only be allowed to keep up to $128,640 of the couple’s assets. This is known as the Community Spouse’s Resource Allowance. The wife would then have to spend the excess funds, in certain ways, until the applicant spouse qualifies. And, for those who are single, this year, that single person would not be allowed to maintain more than a combined total amount of $15,750. You can see, to qualify for Medicaid, you need to be financially impoverished.
Considering the high cost of long-term-care, it is important to proactively plan, often years in advance, so you have options. With the right planning, you can avoid these financial constraints. There are different estate planning strategies we utilize, which can include irrevocable trust planning, before the look-back-period begins, which are beneficial for many people.