New Medicaid Home Care Rules Will Severely Curtail Applicants Ability To Protect Assets
It is now more important than ever for clients to engage in Medicaid planning in advance of the need for Medicaid benefits because of changes that were implemented in the 2021 fiscal budget by our state’s legislature and signed by Gov. Cuomo in early April 2020. In the Special Edition of this newsletter in April, we alerted our readership to the change in the Medicaid rules. Many of our clients heeded our advice and took advantage of the “grace period” before the implementation of the new rules. Unfortunately, many people have been unable to focus on this deadline during the pandemic. Only a short time remains before it will be too late to take advantage of the much more lenient asset protection strategies that have always been available in New York.
Until the new budget was enacted, Medicaid eligibility rules for nursing home and home care benefits were radically different. For nursing home applicants, Medicaid employs a fiveyear look back period to determine eligibility for benefits. As part of the application process, it is necessary to identify all uncompensated transfers made in the five years preceding the date benefits are to start. Depending on the value of the transfers identified, the period of ineligibility could extend for as much as five years, during which time the applicant is responsible to pay for all of the costs of nursing home care. These costs can exceed $18,000 per month just for custodial care. In contrast, prior to the new budget, uncompensated transfers had no impact on home care applications. This means that an applicant could transfer all of their assets and still become financially eligible for Medicaid home care benefits as of the first day of the following month – with no imposition of a penalty period.
With the passage of the 2021 budget, beginning on October 1, 2020, a 30-month look back period will apply in determining eligibility for home care benefits. Hypothetically, an applicant having a home valued at $500,000 and other assets of $250,000 could transfer all of the assets in September and qualify for Medicaid home care benefits as of October 1 without penalty. If the same applicant delays the transfers until October 1 or later, those same transfers will result in a “penalty” that will render the applicant ineligible for benefits for as long as 30 months. Instead of having Medicaid pay the costs of home care, all of the costs for the aide(s) are borne by the applicant until the penalty period expires.
It is imperative that Medicaid planning, which includes the transfer of assets, be implemented immediately to avoid these severe consequences. Remember, transferring assets is more than just going into a bank and closing an account. One or more trusts may have to be created. Brokers may have to be instructed to transfer stock accounts. Deeds may have to be prepared, signed and recorded. Ownership of insurance policies or annuities may have to change. Each task takes time and unless each is successfully completed before the end of September, the new rules will apply. Forewarned is forearmed. Help us to help you. Call now before it is too late.