Preserving Your Assets With the New Medicaid Laws

The Medicaid eligibility requirements for long term care were drastically changed by the Deficit Reduction Act of 2005 and the 2006-2007 New York State budget bill. The two most significant changes are expansion of the look-back period to five years and changing the penalty period start date for gifts. You can preserve your assets, while accessing long term care services through the Medicaid program, by doing the following with the guidance of an elder law attorney:

Sign a Durable Power of Attorney to authorize your agent to manage your assets and income if you are unable to do so and implement Medicaid planning to protect your assets.

Sign a Health Care Proxy and Living Will in which you authorize someone to make medical decisions on your behalf and instruct your family and doctor about life prolonging medical procedures when there is no chance of medical recovery.

Update Your Will to provide that your estate will not go directly to your spouse if he or she is in a nursing home.

Create an Irrevocable Living Trust.

Protect Your Home. There are many ways to protect your home, including the $750,000 equity exclusion, transfers to certain family members, life estates, trusts, reverse mortgages and home equity loans.

New York State Partnership Long Term Care Insurance Policy allows you to access Medicaid after the insurance runs out, regardless of the amount of assets that you own.

Set-Up a Prepaid Funeral Account with a Funeral Home.

Use IRAs and Pensions.

Certain Properly Documented Gifts may not be subject to the Medicaid penalty rules.

Maximize Spousal Allowances and Transfers. If one spouse enters a nursing home, the other spouse is entitled to protect certain assets and income.

Establish Caregiver Agreements (Personal Service Contracts) to pay your relatives for helping you.

Make Transfers for the Benefit of Disabled Friends or Children.

Spend-Down Your Assets.