What is Medicaid?
Medicaid is a joint federal and state program that covers nursing home costs for people who meet both the financial and health eligibility requirements. Medicaid in New York covers long term care (custodial care) at home, in an assisted living facility (with restrictions), and in a nursing home.
New York Medicaid Eligibility
New York, like most states, allows a single applicant to own only $15,450 (in 2019) in non-countable assets (a primary residence and some other assets don’t count) in order to be financially eligible for Medicaid. Other examples of assets that don’t count toward the $15,450 are certain life insurance policies and prepaid funeral and burial plots.
There are several important areas where New York Medicaid eligibility is very different than other states. For example, assets such as IRAs and qualified pension plans and life estates have been treated much more favorably in New York than in some other states.
There are several Medicaid planning techniques that can work for you in New York, but the results can vary county by county. Because Medicaid rules vary from state-to-state, it is important to work with a Medicaid lawyer who is very familiar with the workings of Medicaid in the state where you will receive Medicaid.
Medicaid Asset Protection Trusts vs. Living Trusts
Not all trusts protect assets against nursing home costs. A living trust does not protect the assets inside the trust, and so it does not help you qualify for Medicaid. In order to protect against nursing home costs, a pooled trust must be properly drafted, and must be an irrevocable trust. A living trust (sometimes called a “loving trust”) is not an irrevocable trust and hence does not protect against nursing home costs. As one of the leading law firms in the country in the practice of Medicaid planning, we often help undo the damage done by plans that were made to protect assets, but failed to do so.
Medicaid planning is the legal process of arranging your property so that your assets go to your family (or other people or organizations that are important to you), rather than to pay the nursing home bills that Medicaid is set up to cover. The best time to do Medicaid planning is well before entering the nursing home, when time is on your side and choices abound, but it’s never too late to plan.
It is Never Too Late to do Medicaid Planning
It is almost never too late to protect some of your hard-earned money for your family or favorite charity. Even if you are already in a nursing home, we can usually help. One of the most common misconceptions of Medicaid planning is that it must be done well in advance of going to the nursing home.
Medicaid rules vary from state to state. Unfortunately, it’s easy to make a mistake or get well-intentioned but bad advice. Whether you work with our firm or not, please don’t try to do-it-yourself when it comes to Medicaid applications.
Medicaid Applications and Financial Catastrophes
A mistake on a Medicaid application can be a financial catastrophe. For example, if you transferred assets or sold your home to a child for less than fair market value, a Medicaid application submitted a week too early could knock you off the Medicaid program for months or even years. This is according to the Medicaid rules (specifically, look-back rules), which can change. For example, the look-back rule has recently been expanded to five years for all transfers made on or after February 8, 2006. Medicaid rules can and do change. That’s why it’s so important to get advice from an experienced Medicaid lawyer before you submit a Medicaid application.
For Those Who Need Care, But Not in a Nursing Home
Most people want to live in their own home as long as possible. There is Medicaid planning that can be implemented to access Medicaid home care services in New York. In addition, there are legal techniques such as life estate and caregiver agreements that can help accomplish this goal, while making the Medicaid application process easier and quicker, if nursing home care is ever needed in the future. Even if you don’t ever expect to receive nursing home care, it’s important that you understand how Medicaid works and seek professional advice. You can be penalized in the future for decisions that you make with the best of intentions today.