You need to consult with a Medicaid lawyer near you if:
- You are about to sell a home or receive a large sum of money, inheritance, or personal injury/medical malpractice settlement. You need to plan how to be eligible for Medicaid while preserving your assets.
- You are a parent of a special needs child. You need to plan how your special needs child will still be eligible for Medicaid when you pass away, despite leaving your child with an inheritance.
- You have been diagnosed with Parkinson’s or Alzheimer’s disease.
- You are in need of long-term care due to a sudden disability, injury, illness, stroke or heart attack.
- You are suffering from a disease or aging that will require long-term care.
- You are accused of Medicaid fraud.
A Medicaid lawyer near you will be able to help you preserve your assets and, at the same time, provide you with strategies on how you can become eligible for Medicaid benefits that can finance your long-term health care. The earlier you discuss your plan with a Medicaid lawyer near you, the better.
Medicaid vs. Medicare
Medicare is a federal government insurance program providing healthcare for persons 65 years and above or persons with disability, regardless of income. Medicaid is a joint federal and state program that provides health coverage for low-income persons. Below is a table comparing the different health benefits covered by Medicare and Medicaid:
Medically necessary services
Nursing facility services
Home healthcare for people eligible for nursing facility services
Pediatric and family nurse practitioner services
The most common use of Medicaid is funding long term care, which is not covered by Medicare and most private health insurance policies.
Because Medicaid is designed to provide health coverage for low-income people, Medicaid requires an income and asset level in order to be eligible. The income and asset level to be Medicaid eligible depends on whether the person applying is single or married, and if married, whether only one or both spouses are applying for Medicaid.
In New York, there are three types of long-term care programs: (a) institutional / nursing home Medicaid; (b) Medicaid waivers/home and community-based services for home services, adult day care, or assisted living; and (c) regular Medicaid for disabled, aged 65 years and above, or the blind.
New York asset and income levels for single and married with both spouses applying
The below asset and income levels are for the year 2022. They may change from year to year.
If you are single, your monthly income should only be $934 and your assets should not be more than $16,800. If you are married with both spouses applying, your monthly income should not be greater than $1367 and your assets should not be more than $24,600.
New York asset and income levels for married with one spouse applying
For institutional/nursing home Medicaid and Medicaid waivers, if you are married but only one spouse is applying, your monthly income should only be $934 for the applicant-spouse and the asset limit is $16,800 for the applicant spouse and $137,400 for the non-applicant spouse.
For regular Medicaid for disabled, aging, and the blind, your monthly income should not be greater than $1367 and the asset limit for both spouses should not be more than $24,600.
Certain assets are exempt from the computation of Medicaid eligibility such as the family home (equity limit of $858,000), one car, an irrevocable funeral trust, life insurance policy with a face value of $1500 or less, and household goods and personal effects.
Once again, those asset and income levels are for the year 2022. They may change from year to year.
Remember that even if your family home is considered exempt when considering Medicaid eligibility, it is not exempt from Medicaid’s estate recovery program when you die, save for certain exceptions.
What if your income and assets do not fall under Medicaid eligibility?
A Medicaid lawyer near you will be able to help you with a number of legal strategies to be eligible for Medicaid. These strategies will depend on your income and assets and when you decide to consult your Medicaid lawyer prior to availing of Medicaid.
Generally, there is a 60-month lookback period. This lookback period states that any asset you have transferred without full and adequate consideration within 60 months prior to applying for Medicaid will be considered in computing your penalty period for purposes of Medicaid ineligibility. The penalty period is computed by dividing the amount you transferred with the average private pay cost of a nursing home in your state.
For example, you are a widow with $100,000 in your bank, and you want to enter a New York City nursing home facility. Under New York nursing home Medicaid rules, your asset level should not be greater than $16,800. To fall below this requirement, you transfer $83,300 to your adult son six months before applying for Medicaid, leaving only $16,700 in your bank account. As of 2022, the New York City nursing home Medicaid regional rate is $13,415.
The Medicaid checker will review your application and discover that you have transferred $83,300 within the lookback period of 60 months. She will divide $83,300 with $13,415 to arrive at a number of 6.21. This means that from the time you apply, you are ineligible for Medicaid for an additional period of 6.21 months. After this period, you can re-apply for Medicaid and you will be eligible (provided the income and non-financial eligibility requirements are met) because you fall within the asset limit of $16,800.
Sometime July 2022, it is forecasted that the lookback period in New York will be 30 months for home and community-based services. The lookback period will initially be 18 months, increasing by one month each subsequent month until it is 30 months by April 2023. If you plan to apply for Medicaid for community-based services, this is the best time because of the shorter look back period.
How to be Medicaid eligible and still preserve your assets
A Medicaid lawyer near you will explain to you the strategies on how you can be Medicaid eligible and still preserve your assets. The strategies will depend on your marital status, whether you or both spouses are applying for Medicaid, and how long in advance you implemented your Medicaid planning prior to applying for Medicaid.
Spending down countable assets
One way to fall within the asset limit is by spending down your countable assets. Remember that what is prohibited is gifting or transferring assets without full and adequate consideration. You can, however, spend your money when you receive an adequate consideration in exchange, and this will not be considered in computing the penalty period.
In spending down your assets, you can purchase an irrevocable funeral trust and pay off your mortgage and credit card debt. You can also pay a family member who took care of you and compensate such family member for the caregiving services.
Medicaid Asset Protection Trusts (MAPT)
You can transfer your assets (bank accounts and house) in an irrevocable trust where you are entitled only to the income. The trustee should be someone else other than you or your spouse, possibly an adult child, and you cannot access any of the principal.
If you establish the trust more than five years prior to applying for Medicaid, all the assets in the trust are protected, not only from determining countable assets for purposes of Medicaid eligibility and computing the penalty period, but also from the Medicaid estate recovery program. Assets in the MAPT cannot be used to reimburse Medicaid for your nursing home costs after you die.
If you apply for Medicaid less than 5 years prior to transferring the assets to the trust, however, the entire amount you transferred to the MAPT might be considered for purposes of determining the penalty period. For this reason, it is advisable that if you need long-term care less than 5 years after transferring your assets to the MAPT, your family members can pay for this interim care, instead of applying for Medicaid, so that you will not be subjected to the penalty period.
Purchasing a Medicaid-compliant annuity
You can also purchase a Medicaid-compliant annuity as a way of spending down your countable assets. By purchasing an annuity, you lower your assets in exchange for a monthly income stream. This income, however, is counted towards the monthly income limit required to be Medicaid-eligible. A Medicaid-compliant annuity is based on the life expectancy of the applicant, immediate, irrevocable, non-transferable, and fixed.
For example, if you purchase an annuity for $50,000 with a life expectancy of 10 years, you will likely receive $416.67 (computed at 50,000 divided by 120 months) plus a small interest, which will be counted towards your monthly income limit for purposes of Medicaid eligibility.
Modern half a loaf strategy
Another way of spending down assets is the modern half a loaf strategy. This involves gifting half of your assets to a family member (which would then be subject to the penalty period) while using the remaining half to purchase a Medicaid-compliant annuity (which is not subject to the penalty period).
In the same example above, if you have $100,000 and you want to fall below the $16,800 asset limit, you can implement the modern half a loaf strategy to the amount of $83,300, which would leave you with only $16,700 as assets. The $83,300 is divided into two: $42,678 is gifted to a family member and will be subjected to the penalty period, while the remaining $42,678 can be used to purchase a Medicaid-compliant annuity. In this case, since only $42,678 was gifted, your penalty period will only be 3.2 months, assuming you intend to enter a nursing home facility in New York City (which has an average cost of $13,415).
Gift and loan transaction
The gift and loan transaction is similar to the modern half-a-loaf strategy, but instead of purchasing a Medicaid-compliant annuity, you lend the money to a family member, payable in equal monthly installments based on your life expectancy. This gives you a lower penalty period, while the monthly equal payments made by your debtor-family member can be used to pay the nursing home facility you immediately need while waiting out the penalty period.
Pooled income trust
Pooled income trusts are for disabled persons who have excess income. Putting their money in a pooled income trust that is administered by a non-profit organization allows the Medicaid applicant to spend down income in order to be covered by Medicaid because excess income transferred to a pooled income trust is not considered countable income for purposes of Medicaid eligibility. The money in the pooled income trust cannot be withdrawn after your death, so it is advisable to use the money in the trust to consistently pay bills without accumulation.
Spousal impoverishment rules
In cases where only one spouse is applying for Medicaid, Medicaid spousal impoverishment rules also allow the income of the applicant spouse to be transferred to the healthy spouse as a spousal income allowance. The maximum income amount that can be transferred to the healthy spouse is based on a Minimum Monthly Maintenance Needs Allowance (MMMNA) that is federally set annually every July.
A Medicaid lawyer near you will be able to prepare a Medicaid plan based on your assets and income. The sooner you discuss your plans with a Medicaid lawyer, the better, in order for you not to be imposed with the penalty period of Medicaid ineligibility.
When you meet a Medicaid lawyer near you, it is important you already have an idea of your assets, which should include your house, car, bank accounts, investment accounts, life insurance policy, retirement accounts, and the like. Having this information will allow the Medicaid lawyer near you to properly evaluate your situation and recommend an effective Medicaid strategy that can be implemented immediately.
Although there are Medicaid specialists who can perform the service of assessing your assets for purposes of Medicaid eligibility, it is always better to get the services of a Medicaid lawyer near you, since a Medicaid lawyer near you can provide the whole service, including the establishment of a trust to protect your assets.
Should you need a Medicaid lawyer in New York, we at the Law Offices of Albert Goodwin are here for you. We have offices in New York, NY, Brooklyn, NY and Queens, NY. You can call us at 718-509-9774 or send us an email at firstname.lastname@example.org.