Medicaid, the need-based, state-run program that provides medical assistance for those with limited income and resources, often enters the lives of senior citizens when it comes to paying for nursing home care. Why would anyone need Medicaid planning?
Many believe that Medicare and private insurance will pay for long term care. This is not the case, and Medicaid has become the major source of financing for long-term care; in fact, it pays nearly half of all nursing-home bills after residents run out of resources.
New York Medicaid requires nursing home residents to “spend down” nearly all of their assets before they qualify for benefits, although married couples have higher resource and income allowances when one spouse is healthy enough to remain at home.
New York Medicaid law allows the program to “look back” over a 60-month period from the date of application for Medicaid benefits. If an individual gives away money or property or transfers an asset during that five year timeframe, it triggers a penalty period which makes them ineligible for government aid.
This look back period makes Medicaid planning an important aspect of a senior citizen’s life, as something as innocuous as taking out a home equity loan may have an adverse impact on Medicaid eligibility. Why? Your primary residence in which a spouse resides, is exempt as a “countable asset,” as New York Medicaid law allows up to $750,000 in home equity as a resource to not be “countable.” On the other hand, the proceeds from the home equity loan would not be exempt as a resource.
We are faced with a convoluted set of regulations used to determine eligibility for Medicaid benefits. It is not as easy as reviewing bank statements, instead, there are look-back periods, resource limits, transfer penalties and waiting periods. Even an asset is not just an asset; it is either countable or not countable.
A Medicaid planning attorney can present options for families to restructure assets to qualify for benefits while preserving wealth for the remaining family members and the applicant. Because of the look-back periods, it is best to begin Medicaid planning sooner, rather than later.