Medicaid…to some this can be the dirtiest word in the English language. Why? Many people…
Medicaid eligibility rules are complicated. Many people are confused by the lookback period. And often people aren’t sure how asset transfers can make an impact when applying for Medicaid.
The Lookback Rule
New York’s law on Medicaid imposes a “look-back” period of five (5) years for Nursing Home Medicaid benefits. This means that any transfers during that period will be reviewed by Medicaid and a penalty is assessed if the transfer was for less than full consideration.
Penalty Transfer Rule
During the look-back period, penalties are assessed based on uncompensated asset transfers (i.e., “gifts”). Each NYS region derives its penalty rate based on the average cost of care (which is adjusted in January of each year). In 2021, the transfer rates are as follows:
- NYC: $ 13,037
- Long Island: $ 13,834
- Rochester: $13,020
- Central: $10,857
- Northeastern: $11,689
- Western: 11,054
- Northern Metropolitan: $13,206
By way of example, if you live on Long Island and give away $100,000, you will be ineligible for Medicaid nursing home care benefits for 7.23 months (100,000/13,834= 7.228). Basically, for every $13,000 you gift, you are ineligible for 1 month.
Luckily, there are exceptions to this rule. Medicaid allows for certain transfers to qualify as “exempt” wherein no penalty at all is imposed. The following transfers are considered exempt if made to:
- A spouse; and/or
- A blind or disabled child.
When real estate is being transferred, Medicaid has expanded the list of exempt persons to include:
- A spouse,
- A blind or disabled child,
- A caretaker child residing in the home and rendering care to the parent for a period of at least 2 years and
- A sibling with an equity interest in the property who has resided there for at least 1 year.
Medicaid Home Care
With regard to homecare or “Community Medicaid”, the Governor redesigned the program with several changes, most notably imposing a 30 month or 2 ½ year look-back period and penalties imposed on uncompensated transfers. This change became effective on October 1, 2020 but has not yet been implemented by New York State.
Under current law, an applicant was not penalized for any gifts or transfers even if such transfers took place immediately before applying for benefits. Due to the COVID-19 pandemic, the implementation of the new rule has been delayed by the Department of Health to July 1, 2021. It is also likely that there will be a further delay due to restrictions imposed by the Federal Government on any Medicaid changes that are more restrictive during this emergency period of the Covid 19 pandemic.
It is our hope that this change is tolled indefinitely or better yet, reversed.
Due to the complexity of the Medicaid laws and constantly changing rules, it is imperative that you seek the assistance of competent and knowledgeable counsel. Don’t get trapped by asset transfers when applying for Medicaid. The proper plan can protect and preserve your loved one’s hard-earned assets.