Individuals facing a catastrophic long term illness will often require Medicaid Health Insurance coverage to pay for their care. New York Medicaid is a health insurance program for people with limited assets and income, ($15,150.00 in Assets and $840.00/month of Income for the year 2018 in New York State). It also is the only insurance that pays for long term care for an indefinite period and Medicare has limited coverage for a limited period of time.
Consequently most middle class individuals facing a catastrophic long-term illness must do special planning to limit the availability of their income and assets in order to become Medicaid Eligible. This process is called “spending down,” or “transferring assets.”
There are special rules governing spend-down and transferring of assets and there are certain protections for transferring assets when applying for Medicaid if a disabled child or spouse is involved. There are also certain protections available for the non-applicant spouse. Assets and income subject to certain limitations can be protected without a transfer of assets penalty being imposed. Community spouses may also keep greater amounts of income and assets if their spouse is institutionalized. Medicaid planning requires extensive planning with a knowledgeable Medicaid advocate. An overview of this process is set forth below.
There are several types of Medicaid in New York including: Community Medicaid, Home Care Medicaid, Assisted Living Program (ALP) Medicaid and Long Term Care/Nursing Home Medicaid.
Individuals applying for Community Medicaid, Home Care Medicaid, and Assisted Living Program (ALP) Medicaid can transfer their assets without penalty in order to get their resource level down to $15,150.00. In addition, the primary residence does not count as part of the computation for eligibility up to $858,000.00 equity (2018). IRA’s in payout status are also not included in the resource computation regardless of value. However, the income will be counted as part of the income limit of $840.00/month as described above.
Mr. Smith has $30,000 in resources and requires Home Care services because he is having increased difficulty with mobility. In order to qualify for Home Care Medicaid, Mr. Smith will need to spend down the $30,000 to $15,150 or transfer $15,000 of excess resources out of his name. Because there is no penalty period for transferring assets, once the transfer or spend down is complete, Mr. Smith will be eligible for Home Care Medicaid.
Surplus Income Spend Down
In addition to the resource limit, there is also an income limit. A Medicaid applicant cannot have more than $840.00 in income (2018). If a Medicaid applicant has income greater than the $840.00 (2018) he/she can “spend down” the excess income on medically related expenses such as insurance premiums, supplies, medication, health aides, equipment, etc. If a person does not have sufficient medically related expenses or if the surplus spend down will interfere with other necessary expenses such as rent, food, mortgage, telephone, etc., it is possible to apply the excess income to these expenses through the use of a Pooled
Income Trust (The Pooled Income Trust is described in a separate section below).
The Pooled Income Trust is managed by a not-for-profit agency and the excess income is paid to the Trust. Specific bills are identified to be paid from the Trust
on a monthly basis. This type of Trust allows the Medicaid recipient to continue to pay necessary monthly bills and continue to receive Medicaid at home and in the
Note: It is important to understand that there is no limit on the transfer of resources/assets in New York State when qualifying for Home Care, Community
or Assisted Living Program Medicaid.
Pooled Income Trust
In an individual has excess income he/she can enroll in a Pooled Income Trust and have the excess income (the amount greater than $840 for 2018) applied to other household expenses such as rent, food, utilities, telephone, cable, insurance etc. This is done via a not for profit Pooled Trust organization. All expenses are identified and the excess income is paid to the Trust. The Trust then pays the expenses with the excess income. There is a fee associated with the creation and operation of the Pooled Trust and the Trust must pay over any funds to Medicaid if the Medicaid recipient dies. Medicaid applicants should discuss the Pooled Trust thoroughly with a knowledgeable advocate before establishing the Trust. It can be a useful option when there is excess income that will be subject to a spend down.
Mrs. Johnson has $1,500/month in income and she is applying for Home Care Medicaid. Her excess income totals $660/month. She needs the $660 to pay for household expenses such as rent and food. She can do this by establishing the Pooled Income Trust.
Mr. Williams has applied for Home Care Medicaid. His monthly income is $950. Therefore his excess income is $60. He may not want to create the Pooled Income Trust for $60/month since the fees to create the Trust and the ongoing cost to manage the Trust may outweigh any benefit. A financial amendment must be done.
Establishing Home Care Services
Once an individual has been approved for Home Care Medicaid that person must obtain a Universal Assessment to establish the amount of care that is needed by the patient. This is done through the conflict free evaluation enrollment center at the New York State Department of Health. The NYS Department of Health can be reached at (855) 222-8550 (2018) or online at health.ny.gov. Look for the CFEEC Conflict Free Evaluation and Enrollment Center. After the evaluation is complete the individual must select an MLTC (Managed Long Term Care) agency. This agency will serve as the administrator of the care and select the Home Care agency to provide the care. The MLTC will also determine the number of hours of care per day and the number of days needed. The amount of hours and days is subject to review and can be modified with proper information and advocacy.
Note: It is important to have an accurate assessment of the physical needs of the patient so that the proper amount of care is provided.
Frequently Asked Questions when Applying for Home Care and Community Medicaid
Q: What is the “look back” or “penalty period” for Home Care and Community Medicaid?
A: There is no penalty period or look back period when applying for Home Care or Community Medicaid.
Individuals may transfer any amount of money out of their name and still qualify for Medicaid without
Q: If a Home Care or Community Medicaid applicant has more than $840/month in income, will he/she be
disqualified for Medicaid?
A: No. The individual can spend down excess income on medically related expenses, create a Pooled
Income Trust to pay for other monthly expenses or simply pay the excess as a “deductible” to stay in
Q: How will the scope of Home Care services be determined?
A: Once approved the individual must have a universal assessment done to determine the level of care
needed. This is done by the Department of Health. It is called a Conflict Free Evaluation.
Call (855) 222-8550 (2018) to schedule the evaluation.
For more information go to the website at health.ny.gov or call Family Care Connections at
(516) 248-9323 or (718) 470-6300.
This assessment will be used to determine how much care is needed. Individuals should consider obtaining a separate evaluation if there is a potential for disagreement about the scope of hours. The scope of care has become a very difficult phase of the process and a strong and knowledgeable professional advocate may be necessary in order to insure the proper amount of hours is approved.
Q: Is the home “exempt” when applying for Medicaid?
A: The home does not count for eligibility purposes. However, Medicaid can recover against the home
when the Medicaid recipient sells the home or if it becomes part of his/her Estate. Therefore, planning should be done with a knowledgeable Elder Law or Estate Planning attorney to prevent recovery from
Nursing Home Medicaid
Individuals who are experiencing a long term catastrophic illness may need to explore Long Term Care Medicaid as an option to finance the care because Medicare does not pay for long term care in a nursing home. In order to qualify for Nursing Home Medicaid in New York State an individual cannot have more than $15,150.00 in resources/assets (2018). Resources include savings, stocks, real estate, investments, life insurance, annuities, etc. Once an individual qualifies, all income is paid to the nursing home. If the nursing home resident has a community spouse some or all of the income may be paid to the spouse. In addition, the home may be protected (see discussion below).
If an individual has more than $15,150.00 in assets he/she must “spend down” or “transfer the assets” before being eligible for Nursing Home Medicaid. There is a (60) month look back period when applying for Nursing Home Medicaid. This means that all assets and financial activity must be reported when applying for Nursing Home Medicaid. If a transfer of assets was made during the (60) month period, it may affect the applicant’s eligibility. All transfers of assets beyond the (60) month look back will not affect eligibility.
Mr. Jones applies for Nursing Home Medicaid in the month of July 2018. He is looking for an eligibility “pick up” date of July 1, 2018. He will be required to provide all asset/financial activity on his accounts for the period of July 1, 2013 through June 2018. If there were non-exempt transfers of assets he may be subject to a period of ineligibility. This period is determined by the size of the transfer, when the transfer was made and to whom the transfer was made. The penalty period is determined by the value of the transfer divided by the average regional monthly cost of a nursing home stay. The average regional cost for a nursing home stay is established annually by the New York State Department of Health. The current average regional cost is $13,053 in Nassau County and $12,319 in New York City (2018).
Mr. Jones transferred $120,000.00 in June of 2017. The regional cost in Mr.Jones’ area (Nassau County, NY) is $13,053. $120,000.00 divided by $13,053 = Approximately 9.2 months of a penalty.
Note: Individuals who have excess resources should consult with a Medicaid expert before making significant transfers of assets because these transfers can result in significant penalty periods.
Spend down – an alternate approach to excess resources. This is accomplished by paying for care or other medical expenses until the individual has “spent down” the resources to $15,150.00.
Mr. Jones is in need of Nursing Home Care. He has $100,000 in savings. He has to spend down the excess funds of $84,850.00 ($100,000-$15,150 (resource limit) on his care at the nursing home then apply for Nursing Home Care Medicaid.
Note: There are options for transferring assets even within the (60) month look back period. Consult with a knowledgeable advocate in order to maximize the protection of the excess assets/resources.
Community Spousal Rights under Nursing Home Medicaid
When an individual enters a nursing home the spouse who remains in the community is considered a community spouse. The spouse has specific rights with respect to the marital assets plus income and assets. All transfers to spouses are exempt from the (60) month penalty period.
Mr. Jones enters a nursing home. He and his wife jointly own a home valued at $500,000.00 and they have a savings account valued at $200,000.00. All of these assets are transferred to Mrs. Jones. This transfer will not affect his Medicaid eligibility because they are spousal transfers. Mr. Jones will be eligible for Nursing Home Medicaid once the transfers are complete. The (60) month penalty period will not apply.
In addition, the community spouse can claim a significant portion of the household income (up to $3,022.50/month (2018)), even if the source of the income is from the spouse residing in the nursing home.
Mr. Jones enters the nursing home and is in need of Medicaid. His income consists of Social Security and Pension totaling $3,500.00/month. Mr. Jones’ wife does not have any income of her own. Therefore she will keep $3,022.50 (2018) of the $3,500.00/month once Mr. Jones is on Medicaid.
In addition to income, the community spouse can keep title to the house as well as up to $120,900 (2018) of assets. The community spouse can keep more assets under a “spousal refusal” law. This law allows the community spouse to keep all marital assets. However, the Department of Social Services reserves the right to sue the community spouse for support contribution for any excess amount above the community resource allowance as described above. The criterion is usually based on ability to pay and other circumstances such as the health and other needs of the community spouse. The practice of pursing spousal contribution varies from county to county. Individuals facing a potential spousal support proceeding should consult with a knowledgeable attorney.
Protecting the Primary Residence
When an individual applies for Medicaid the home is also exempt up to $858,000 (2018) for eligibility purposes. However, it can be a source for recovery. When theMedicaid recipient is no longer in the house or the recipient dies. Therefore certain steps must be taken to protect the home. The home may be transferred to certain individuals without creating a penalty for Medicaid eligibility. The transfer can be made to the following:
1. To any person or Trust if the application is for Community Medicaid/Home Care Medicaid;
2. To a spouse;
3. To an adult disabled child;
4. To an adult child who has lived in the home for at least two years and is the primary caregiver for the
5. To a sibling who holds an equity interest in the house and has lived there for at least one year.
Mr. Johnson needs Nursing Home care. He and his wife own a home. Mr. Johnson can transfer his interest in the home to his wife and the transfer will not be a penalty for Medicaid eligibility.
Mr. Johnson owns a home with his sister who also lives in the house. He needs to go to a nursing home. Mr. Johnson can transfer his half to his sister without penalty for Medicaid eligibility.
Mrs. Smith needs to go to a Nursing Home. Her daughter Susie has been living with Mrs. Smith for the past three years because she came home to care for her. Susie can document that she has lived at the home through driver’s license and vehicle registration. Mrs. Smith can transfer the house to Susie without penalty under Medicaid eligibility rules. (Exception to above)
Note: It is important to try and protect the home when planning for Medicaid. Comprehensive planning might include the transfer of the home to an exempt individual or a Trust. This will help protect the primary residence from recovery down the road. Always consult with an expert who is knowledgeable about
Medicaid planning and recovery.
Recovery of Assets
When an individual receives Medicaid it is important to also exercise the potential for recovery from the Estate. Recovery is a recoupment for services provided to a Medicaid recipient. This is particularly true when there is a surviving spouse. Once the spousal transfers have been completed and the spouse has been approved it is important to create an Estate Plan for the non- Medicaid spouse. Otherwise Medicaid will recover against the non-Medicaid spouse in the event he/she predeceases the Medicaid spouse. This type of planning should be done with a knowledgeable Estate Planning/Elder Law Attorney because there are certain strategies that can be implemented to protect the non-Medicaid spouse’s Estate from recovery from the Medicaid spouse’s Medicaid bill. Under current New York Medicaid Law there is no right of recovery on an Estate that does not pass under the Probate/Administration Process. This means via Surrogate’s Court by either Last Will and Testament (Probate) or no Will (Administration).
If the non-Medicaid spouse leaves his/her assets to individuals other than the Medicaid spouse outside of the Probate Estate the right of recovery is limited. All assets passing directly to another individual or individuals outside of the Probate Estate are not subject to recovery. Examples include named beneficiaries under life insurance, IRA accounts, annuities, joint accounts with right of survivorship, ITF (In Trust For) accounts, and beneficiaries under an Intervivos Trust. It is important to be mindful of the recovery issue; otherwise Medicaid will recover from the Estate for services provided to the Medicaid spouse. Proper planning will avoid or minimize the recovery.
Mr. Smith is a Medicaid recipient. He transferred all of his assets to his wife Mr. Smith when he applied for Medicaid. His wife never changed her Last Will and Testament which left all assets to Mr. Smith. She predeceased him and Medicaid made a claim against her Estate for the services Mr. Smith received.
Because Mr. Smith was the beneficiary Medicaid could collect.
Mr. Smith received Nursing Home Medicaid. He transferred his assets to Mrs. Smith when he applied for Nursing Home Medicaid. Mrs. Smith then put all of assets into a Trust and did not provide for Mr. Smith under her Trust. She predeceased Mr. Smith. However, there was no right of recovery because Mrs.Smith changed her Estate distribution and her Estate did not pass under a Last Will and Testament or by administration. Medicaid had limited ability to collect against Mrs. Smith’s Estate.
Frequently Asked Questions when Applying for Nursing Home Medicaid
Q: What is the look back period for Nursing Home Medicaid?
A: The look back period is (60) months. This means that assets transferred within (60) months of a
Nursing Home Medicaid application may result in a period of ineligibility. There is no look back beyond
(60) months and there is no look back or penalty period for applications for Community Medicaid,
Home Care Medicaid or Assisted Living Medicaid.
Q: What is the resource limit for Nursing Home Medicaid eligibility?
A: The current resource limit is $15,150.00 (2018). The home does not court for eligibility up to $858,000
in value. IRAs and other tax deferred assets do not count if they are in “payout” status.
Q: Can a Medicaid applicant protect his/her spouse in the community?
A: Yes, there are special provisions of the Medicaid Law designed to protect the community spouse. The
community spouse can receive all assets from the Medicaid applicant without penalty. He/she can
also keep up to $3,022 (2018) of income belonging to the Nursing Home applicant under certain
circumstances. The home can also be transferred to the spouse without penalty.
Q: If assets are transferred to a community spouse should additional planning be established?
A: Yes, the community spouse should create a new Estate Plan that limits recovery fee services provided
to the Nursing Home spouse and to begin to protect assets if the community spouse becomes ill
because the (60) month rule will apply to the community spouse.
Q: What if the Nursing Home applicant has a disabled spouse or child?
A: There are special provisions of the law that protect disabled spouses and adult children.
A knowledgeable Estate/Elder Law Attorney can help with this special planning including a
Special Needs Trust which can protect assets from Medicaid and insure that loved ones are protected
and provided for.
For more information on Medicaid planning and the application process call Family Care Connections at (516) 248-9323.