Nursing Home Medicaid Penalty Rates
Mary sold her Buffalo, New York home to her daughter, Donna, in 2015 for $50,000, although it was actually worth $150,780. Mary is in a nursing home now and wants to know if she will qualify for Medicaid since she has no assets. Mary, like many senior citizens, is concerned about the New York Medicaid Nursing Home “look-back”.
A period of Medicaid (not Medicare) ineligibility or delay in qualification (“penalty period”) is imposed on donors for any transfers of assets for less than fair market value (gifts) for the past five years. Any asset transferred for the purpose of qualifying for Medicaid 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. Mary sold the home for $50,000 which was $100,780 less than its fair market value. Therefore, she made a gift of $100,780 to Donna.
For transfers made exclusively for some purpose other than qualifying for Medicaid, no penalty period will be imposed. Examples of permissible transfers are repayment an outstanding debt or gifts for an ongoing-established pattern of period gift-giving. A period of ineligibility (“penalty period”) will be imposed for any transfers of assets which do not meet the above criteria.
The period of ineligibility will be calculated by a 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 2017 regional rate (average monthly cost of nursing home care) for Western New York is $10,078. Medicaid will calculate the period of ineligibility by dividing Mary’s gift amount by the Western New York regional rate to equal the number of months of penalty: $100,780/10,780 = 10 months. Therefore, Mary will have to private pay the nursing home for ten months.
The 2017 regional rates for the rest of New York State are as follows: Central New York is $9,511.Northern Metropolitan New York is $12,198.Northeastern New York is $10,242. New York City is $12,157.Long Island is $12,811. Rochester is $11,237.
With proper advance Medicaid planning, Mary could have avoided this harsh result. But all may not be lost. Donna should consult with a New York elder attorney about Emergency Medicaid Planning using a promissory note. Hopefully, Mary executed a durable power of an attorney with the Statutory Gift Rider which will enable Donna, as her agent, to implement Emergency Medicaid Planning.