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Medicaid, a government assistance program administered at the state level, has two different types of coverage. Understanding that is important when considering an application for long-term care.
Community Medicaid pays, in full or in part, for long-term care at home and services in certain assisted living residences, while Institutional Medicaid covers the costs for a long-term nursing home placement. The eligibility rules are different for each. However, in both cases, they look at assets and at income in determining eligibility. The application process for either one can be confusing and frustrating. Speaking with an expert in this area can be beneficial before pursuing an application.
Assets: Both types of Medicaid have asset limitations and “look-back” periods, which include a review of all your financial holdings over the course of that period. The look-back for Institutional Medicaid is five years (60 months). Prior to October 1, 2020, there was no look-back for Community Medicaid in New York State. That rule has been changed and a 30-month look-back is being phased in, with penalties imposed for monetary transfers made on or after the October 1 date. Due to the Covid-19 Pandemic State of Emergency, the implementation of the look-back for Community Medicaid has been put on hold. The new target date is April 1 but it may be postponed further due to the ongoing State of Emergency.
During either look-back period, any transaction over $2,000 – deposited or withdrawn from any financial accounts – can be scrutinized by Medicaid and require additional documentation to render your eligibility. Monetary penalties can be imposed for gifts given within the look-back period.
Income: Managing your income is also different with the two types of Medicaid. For Community Medicaid, income over the Medicaid limit can be protected using a pooled income trust. For Institutional (nursing home) Medicaid, typically, all income goes to the facility.
Are you aware of all the exceptions available in order to qualify? For instance, how might the process be handled if you have a spouse? Or an adult disabled child? Are there other exceptions or strategies that can help you to better protect your assets? Here are just a few examples of how that may work:
Case 1: Mary needs a long-term nursing home placement. She has $165,000 in available assets. Most people would just start writing checks to pay the $15,000 monthly nursing home cost. However, there is a Gift-Note Strategy that could protect about half of that money from being paid to the nursing home.
Case 2: John needs a long-term nursing home placement. His daughter is collecting Social Security Disability due to an injury on the job. John can transfer all his assets to his daughter with no penalty despite the five-year look-back. Do not assume the lack of advanced planning means you will be required to use all your available assets towards long-term care.
Case 3: Susan needs long-term home care. Her husband Tom has a comfortable retirement income and they own their home as well as other assets. All assets can be transferred to Tom. Utilizing Spousal Refusal, Tom can keep his assets plus his income, and Susan still can qualify for Medicaid. This strategy requires some subsequent planning to protect Tom as the County/New York State can come after him to recoup some of the costs of care. But depending on the level of care needed, this can still be a money-saving strategy.
Working with an experienced Medicaid expert can be crucial in helping to navigate the application process and getting appropriate long-term care services for your loved one!
