The Complete Guide to Medicaid in New York
What is Medicaid in New York?
Medicaid in New York provides payment for institutional and community-based care for eligible persons who are treated by participating institutions and practitioners. Medicaid covers nursing home care and all other medical care including home care, acute hospital care, physicians and pharmacy.
When is a person over age 65 eligible to receive Medicaid?
Medicaid is a means-tested, needs-based program with limitations on income and resources. Anyone who meets the income and resource limitations is eligible to receive Medicaid.
Availability of income/resources (assets): What are the current asset and income levels that allow Medicaid eligibility?
INCOME: Income is broadly interpreted, and includes earned and unearned income and most government benefits.
The current monthly income limit for a family of one seeking community based Medicaid (i.e., care in the home) is $845.
The current monthly income limit for a spouse of an applicant seeking coverage for nursing home care is $2,980.50.
RESOURCES: The resource or asset limit for a family of one seeking community based Medicaid (i.e., care in the home) is $14,850 plus $1,500 in a separate burial account.
The spouse of an applicant seeking coverage for nursing home care is allowed between $74,820 and $119,220 in resources, plus $1,500 in a burial account.
Income and resource levels are subject to yearly adjustments.
- What resources are not counted when determining Medicaid eligibility?
Exempt from inclusion in the Medicaid eligibility resource limit are $828,000 equity in your family residence; irrevocable pre-paid burial expenses; personal and household property; one automobile; and any life insurance policies with a face value of less than $1,500.
The family residence must be the primary residence of the applicant, and/or his or her spouse or minor or disabled child. It may be a one, two, or three family house, and also includes any attached property. In order to qualify as the family residence (referred to by Medicaid as “homestead”), the home must be necessary and appropriate to the applicant. Therefore, if an individual with no spouse and/or no minor disabled child enters a nursing home and is not medically expected to return home, he or she would no longer have an exempt homestead due to the fact that the home would no longer be “necessary or appropriate” for that individual. It would then be treated as an available resource for Medicaid eligibility purposes.
Gifts, Payments, and Transferences
Can I Give Away $14,000 and Still Qualify for Medicaid?
Clients often confuse the federal gift tax exemption of $14,000 with Medicaid eligibility. The $14,000 that individuals are permitted to give away each year per person only refers to the US state and gift tax laws. This tax exemption has nothing to do with Medicaid in New York. These gifts may disqualify donors from receiving Medicaid, and donors may be penalized regardless of what the federal US income and gift tax rules are.
Transferring Assets to Qualify for Medicaid in New York
If assets are transferred for the purpose of qualifying for Medicaid, a person may be disqualified from Medicaid eligibility. The Social Services Department will ask for the person’s records for the past five years, and any transfers that were made for the purpose of qualifying for Medicaid in New York may disqualify the individual from receiving benefits. However, there are certain exceptions to this. If a person has a past pattern of making gifts such as for wedding gifts, gifts to a religious institution such as a church, or gifts for grandchildren’s birthdays, and the person has been in good health, then it is possible to challenge this presumption of gifts made for the purpose of qualifying for Medicaid.
When Is Real Estate Exempt for Medicaid Eligibility Purposes?
Many of my clients’ most valuable assets are their homes. There are many protections for those who own or rent property and are moving into nursing homes. If an applicant has a child caregiver, he or she may be able to transfer the house to the child without being penalized. If an applicant has a sibling who has helped the applicant with living expenses, the applicant may be able to transfer the house to the sibling. Also, applicants are be able to transfer their homes to their spouses. In order to do this, it is important that Medicaid applicants have a proper power of attorney.
Transferring Your Home to a Sibling While Still Qualifying for Medicaid
When applying for Medicaid for nursing home care, an individual may still be eligible for Medicaid in New York by transferring her or his home to a brother or sister. The requirements are that
the brother or sister must have lived in the home for one year and contributed to the expenses of the home, such as paying for the mortgage or the taxes. There is no look-back or penalty for transferring a home to a brother or sister under these circumstances.
Can I Transfer a Home to My Caregiving Child and Still Qualify for Medicaid?
While applying for Medicaid in New York for nursing home care, an individual can transfer a house to the child caregiver without penalty or a look-back period. There is one sole requirement: the child must have been the applicant’s caregiver for the two years immediately preceding the applicant’s entry into the nursing home.
Can I Pay My Caregiver Child and Still Qualify for Medicaid in New York?
It is possible to qualify for Medicaid when receiving assistance from a caregiver child, but certain criteria must be met. In order to pay a caregiver child for her or his services in helping with personal and financial matters, a caregiver agreement is required. The caregiver agreement must provide for reasonable compensation for the child’s services and define exactly what her or his duties are. However, any of these payments that are not made to a caregiver child are subject to income tax. The Social Services Department closely scrutinizes these agreements. Therefore, it is important to consult with an attorney as to preparation of a caregiver agreement, which often can avoid family conflicts among children.
Can I Qualify for Medicaid if I Make Gifts to Disabled Children?
In most instances, gifts made over the past five years may affect your eligibility for Medicaid. However, there is no limit on how much donors can give to disabled children. There will be no look-back period and no penalty.
What Is the NY Statutory Power of Attorney Gift Rider?
As a Buffalo Elder law attorney, I am often asked what is the power of attorney statutory gift rider. This rider has been around since 2009 with the major changes in the powers of attorney. The basic power of attorney now authorizes the agent to make gifts of only $500 per year. If an applicant wishes to authorize her or his agent to make gifts of more than $500 per year, then the statutory gift rider must be signed with two witnesses present.
How can an individual whose income exceeds the Medicaid limit still qualify for Medicaid?
As discussed above, the income limits are $845 for a family of one, and $2,980.50 for a community spouse of the Medicaid applicant. If the individual has otherwise met Medicaid eligibility requirements, that individual would have to contribute any income over these amounts toward the cost of the care of the institutionalized individual on a monthly basis.
What are Department of Social Services’ (DSS) requirements to determine Medicaid eligibility for long-term care?
In order to qualify for Medicaid in New York State, the following must apply:
(a) The applicant must be a resident of New York State;
(b) The applicant must meet the current monthly income limit subject to the contribution discussed above; and
(c) The applicant must meet the resource limits discussed above.
What is “spending down”?
If the value of the applicant’s resources are over the allowed amount, that individual would be expected to use his or her assets to pay for his or her long-term care, or “spend down” for care until his or her resources were depleted to the resource exemption amount applicable to that person. In other words, the individual is spending down his or her assets to meet the eligibility resource requirement.
Recommended Ways to Spend Down Money to Become Medicaid-Eligible
For Medicaid eligibility, an applicant can have only $14,850, plus a number of exempt assets. In order to become eligible, applicants have the option of spending down their assets. Medicaid recipients are entitled to have one automobile, and to reach the $14,850 threshold, applicants can make improvements to their home and pay off debts.
What are DSS transfer of asset rules?
Any asset transferred for the purpose of qualifying for Medicaid in New York is considered an impermissible transfer of assets for which a penalty is imposed. Any transfer of assets for which the transferor does not receive “fair market value” is considered a transfer for the purpose of qualifying for Medicaid unless it can be proven that the transfer was made for another purpose.
Any transfer or sale of an asset for which the applicant receives the fair market value, no penalty period will be imposed.
For transfers mad exclusively for some purpose other than qualifying for Medicaid, no penalty period will be imposed. An example of this type of transfer would be to repay an outstanding debt, or as a gift for a specific purpose, or a gift as part of a long-established pattern of gift-giving.
A period of ineligibility (“penalty period”) will be imposed for any transfers of assets which do not meet the above criteria. A period of ineligibility for Medicaid institutional services will result from these transfers. Medicaid will calculate the period of ineligibility by the following statutory formula: the dollar value of the transfer divided by the average monthly cost for one month of nursing home care equals the number of months of ineligibility for Medicaid institutional services. The average monthly cost of care for Western New York is currently $9,442.00.
For example, if Mr. Smith gives $96,300 to his son as a gift, Medicaid will calculate the period of ineligibility by dividing the gift amount by the average monthly cost of nursing home care ($9,630) to equal the number of months of penalty: $96,300/9,630 = 10 months.
There is a 60-month look-back period for all transfers of assets. For transfers made on or after February 8, 2006, the penalty period starts on the first day of the month after which assets have been transferred for less than fair market value, or the first day of the month the institutionalized individual is receiving nursing facility services for which Medicaid in New York would be available, which is later.
Any transfer of assets between spouses incurs no penalty period. However, any transfer by either spouse to a third party will create period of ineligibility for the institutionalized spouse, subject to the transfer rules stated above.
Can I give my home to my son/daughter so the nursing home won’t take it?
The transfer of a personal residence will result in a period of ineligibility unless the personal residence is transferred to one of the following individuals:
- A spouse of the individual;
- A child of the individual who is under 21 or certified blind or permanently and totally disabled;
- The sibling of an individual who has an equity interest in the home, and was residing in the home for at least one year immediately before the date of institutionalization; or
- An adult, non-disabled son or daughter who is residing in the home for at least two years immediately before the date of institutionalization, and who was providing care to the individual which permitted him or her to reside at home.
An “equity interest” is defined as having an ownership interest in the property as evidenced by being named on the deed, having paid monthly mortgage payments or having made capital improvements. “Providing care” is defined as making arrangements or actively participating in the arrangement for care, either directly or indirectly, full time or part time.
Can I sell my home to my son/daughter for less than its full value and still get Medicaid?
Any transfer for less than full value is subject to imposition of a period of ineligibility calculated on the difference between what full market value of the asset was and the amount which the individual received for the asset.
Will Medicaid in New York pay for home care?
Medicaid home care services include:
- Part-time or intermittent nursing;
- Home health aide services;
- Physical, speech, and occupational services;
- Personal care services;
- Care provided through the long-term health care program (“nursing without walls”).
To obtain these services, one must have a written order for a plan of treatment by his or her physician, and must pass a “nursing assessment” and a “social assessment”, which will assess the individual’s need for and appropriateness of the care. The plan of treatment must be approved by the provider prior to commencement of the home care services.
Most importantly, the average net monthly cost of the proposed care is then compared against the average monthly cost in a residential facility to determine if the plan of care is cost effective. If the average monthly cost of the home care exceeds 90% of the cost of institutionalization, the home care will be denied in favor of placement in a facility, subject to certain exemptions, which are stringent.
How do Medicaid rules differ for a single person and a married person whose spouse is still living in the community?
A single individual applying for nursing home coverage is allowed to keep $14,850 in resources and $50 in monthly income and be eligible for Medicaid in New York. A married person in the community is allowed to keep a maximum of $119,220 in resources and $2,980.50 in income monthly.
The residence of a single individual who will not return home will become an “available” resource for Medicaid qualifying purposes. An institutionalized married person who will never return home retains the exemption on his or her personal residence as long as the community spouse lives there.
Should I Use a Life Estate Deed to Protect my House?
I recommend life estate deeds in certain circumstances for Medicaid planning. The individual can still keep their property tax exemptions and the property will pass to their children without probate.
The Medicaid Look-Back Period
The look-back period for Medicaid eligibility is five years. When a person applies for Medicaid, it will be mandatory to provide all of her or his financial and bank records going back five years. For every $10,078 that the person has given away, he or she will be disqualified from Medicaid for one month. This is known as a penalty period.
What Is the Medicaid Penalty?
If a Medicaid applicant has made any gifts in the past five years prior to applying for Medicaid in New York, he or she will be penalized. Gifts are those that are done in anticipation of going to a nursing home. The gifts may involve gifts of cash or transfers of assets to the applicant’s children without receiving adequate consideration.
Qualifying for Nursing Home Medicaid if You Have an IRA or 401K
Currently, in order to be eligible for Medicaid for nursing home care, individuals can only have $14,850 in assets. However, if an applicant has an IRA or a 401K that is in a payout status, and he or she is at least 70 and a half years of age, the IRA itself is not considered to be an asset for eligibility purposes.
Qualifying for Medicaid if You Have a Prepaid Funeral Account
In order to be eligible for Medicaid in New York, an applicant can only have $14,850. However, a prepaid funeral account is not considered as an asset. In order to take advantage of this, it is advisable to consult with a funeral director and do a preplanned funeral arrangement account.
- What is a Medicaid trust?
A Medicaid trust is a trust established by an individual usually for him/herself or for the individual and spouse which contains terms that make the assets transferred to it “unavailable” to pay for the individual and/or his spouse’s home care or nursing home care.
- Why create a Medicaid Trust?
Transferring assets to a Medicaid Trust is an effective strategy for protecting an individual’s assets from the high cost of home care and nursing home care.
- Can I change my mind after I create a Medicaid Trust?
Generally, no. A Medicaid Trust is an irrevocable trust. Except in rare cases, it cannot be revoked or amended, nor can assets be transferred from it back to its creator.
- How are assets managed when part of a Medicaid Trust?
Assets are managed by a person chosen by the creator of the trust known as the “trustee”. S/he has a duty to act in the best interest of the trust beneficiaries. The creator of the trust may give the trustee very broad or very narrow powers. The trustee has the duty to invest the trust assets wisely.
- Who can be a trustee for a Medicaid Trust?
- The creator of the trust may name anyone to be a trustee, however, an individual under age 18, incompetents, nondomiciliary aliens, and felons are not eligible.
- The trustee should be someone that the creator of the trust feels is a mature and responsible person. He or she should also have at least some business and investment experience.
- The creator of a Medicaid trust may not be its trustee.
- Are Medicaid Trust assets considered when Medicaid eligibility for Long-Term Care is evaluated?
If at least 60 months has passed since the assets were transferred to the Medicaid Trust, the assets are not considered. However, the income earned by the assets is considered.
- What are the advantages of creating a Medicaid Trust?
- Transferring assets to a Medicaid Trust is an effective strategy for protecting assets.
- The trustee must act in the best interest of the trust beneficiaries and must invest the trust assets wisely.
- Outright transfers may not be appropriate because there are no children or close relatives, or a person may not completely trust an ultimate beneficiary or may doubt his maturity, wisdom or ability to manage the assets.
- The use of a trust may reduce the time and expense associated with the administration of a person’s estate.
- The use of a trust may save income, gift and/or estate tax.
- What are the disadvantages of creating a Medicaid Trust?
- A Medicaid Trust is irrevocable. Once it is created it cannot be revoked or amended, nor can assets be transferred from it back to its creator.
- The creator of a Medicaid Trust is generally entitled to only the income generated by the trust assets, not the assets themselves.
- The transfer of assets to a Medicaid Trust is subject to a 60-month look back period.
- IRAs and certain pensions cannot be transferred to a Medicaid Trust.
- The drafting of a Medicaid Trust is more expensive that outright transfers. There are also certain ongoing administrative responsibilities.
Long-Term Care Under Medicaid
Understanding Long-Term Care Insurance
Long-term care insurance is highly recommended for a number of reasons. Medicaid laws are constantly changing, and eligibility requirements are often tightened. Because of these regular changes, individuals should obtain this long-term care insurance while they still qualify and are healthy. Also, while long-term care insurance covers in-home care, assisted living, and nursing home care, Medicaid in New York does not cover most types of assisted living, and it is limited to in-home care. Under the New York Partnership Program of Long-Term Care Insurance, after the benefit has run out after three years, eligibility for Medicaid in New York is automatic regardless of the amount of one’s assets. Discussing long-term care insurance with one’s legal advisors can help to prepare in case of significant medical need.
Eligibility Requirements to Receive Medicaid for Nursing Home Care
A client recently asked me about the eligibility requirements for Medicaid for in-home care or for nursing home care. In order to be eligible for Medicaid, an individual can have assets of no more than $14,850. However, there are various exceptions to that rule. For in-home care, one’s income cannot exceed $845 per month.
Preserving Your Assets from Medicaid with a Trust
One method of nursing home planning under Medicaid in New York is to transfer assets into a living or inter vivos trust. In order to protect assets, the trust must be irrevocable, and the assets would have to be transferred five years prior to the application for Medicaid.
Preserving Your Assets with a Healthcare Proxy and Living Will
I recommend a healthcare proxy and a living will to all my clients for estate planning and Medicaid planning. In case of emergency, people of all ages should have a healthcare proxy and living will. Two of the most famous healthcare proxy cases were women in their 20s: Karen Ann Quinlan lapsed into a coma from drug and alcohol use, and Terry Schiavo languished for eleven years while her family fought over discontinuing life support. When choosing a healthcare proxy, a person will appoint an agent and an alternate agent to make healthcare decisions on that person’s behalf. In combination with this, for extra security, we recommend filling out a living will, which clearly states a person’s wishes in case he or she is in a coma, battling a terminal illness, or even coping with non-terminal illness such as the later stages of Alzheimer’s. It is also important in a living will to stipulate whether one wants tube feeding or artificial hydration. A living will can further provide for donation of organs and authorizing an agent to have access to a person’s HIPAA-protected documents.
Protecting Your Home if You Enter a Nursing Home and Are Receiving Medicaid in New York
There are a number of protections for a person’s home if he or she has to move into a nursing home and receive Medicaid in New York. First, a person can transfer the home to her or his spouse, and there is no penalty or look-back period for this. Alternatively, the home could be transferred in trust to one’s minor or disabled children. There is additionally an $840,000 equity exemption, even if a person is unmarried, as long as he or she intends on returning to the home.
If there is concern about preserving one’s home prior to moving into a nursing home, or a Medicaid recipient is selling her or his home and moving in with children, there are two options that are available. A seller can funnel the proceeds of the sale of the house into buying a new home with her or his children and obtain a life use of that house. As long as an individual has lived in the house for at least one year, it will be preserved in the event that he or she has to move into a nursing home. If an individual sells her or his home, the individual can use the proceeds of the sale of the home to give to her or his children to add an in-law apartment onto their home. As long as the person lives with her or his children for one year with a life estate, that home will be protected in the event that the person needs to go into a nursing home. The home will not be considered as an asset for a Medicaid recipient to be eligible for nursing home care.
Preserving Your Assets with a Power of Attorney
The New York power of attorney is one of the most important planning devices for nursing home Medicaid planning. I strongly recommend that all my clients have a power of attorney, including the statutory gift rider. The power of attorney itself only authorizes gifts for up to $500 per year, but my clients can also sign a statutory gift rider that would allow them to make gifts and do other Medicaid planning. This is especially necessary if my clients need to do emergency Medicaid planning, in which they can preserve half of their assets with a gift rider.
Should I Update My Will if My Spouse Enters a Nursing Home?
If one’s husband or wife is in a nursing home and receiving Medicaid in New York, consulting with an attorney about updating one’s will can offer protection later on. Disinheriting a spouse in a nursing home can prevent assets from being paid to the nursing home in the event that one dies before the spouse.
What Are Living Trusts?
Whether someone should have a living trust depends on that person’s particular circumstances. There are a few benefits to having a living trust: Medicaid planning, planning for second marriages, and planning for those who are incapacitated. A living trust can be revocable or irrevocable. After I review all of my clients’ financial information and determine their goals, I can recommend to them whether or not a living trust is appropriate in their situation.
Emergency Medicaid Planning
What Is Emergency Medicaid Planning?
Emergency Medicaid planning can be utilized if someone has signed a power of attorney with a statutory gift rider or if he or she has had a guardian appointed by the Supreme Court. This essentially allows someone to preserve half of her or his assets and use the other assets for personal care.
Preserving Your Assets with Emergency Medicaid Planning
There is a method for preserving assets if a person has never done any prior Medicaid planning and finds him- or herself in a nursing home. This method is known as a promissory note, which allows the person preserve half of her or his assets so that only half of the assets are used for nursing home care. This is a generally accepted principle that can be accomplished if one has a power of attorney with a statutory gift rider, or if a guardian is appointed. In either case, the court order may provide that this emergency Medicaid planning can be utilized to preserve assets for the individual’s family.