With the passage of New York’s 2020 budget, some rules of Medicaid for long-term care costs changed, and some stayed the same.
Medicaid is a joint federal and state program that pays for long-term care costs either at home, called “community” Medicaid, or in a nursing home. The rules differ.
One of the significant changes is the new “look-back period” for community Medicaid, effective October 1, 2020.
The look-back period means if a person applying for community Medicaid made any gifts within the past 30 months (2 years), Medicaid assesses a “penalty period” and will not pay for the person’s care for a certain length of time based on the amount of the gifts.
Under previous law, there was no look-back for community Medicaid. An applicant for community Medicaid could give assets to a child and then apply for community Medicaid without penalty.
Nursing home Medicaid has a five-year look-back period, changed by federal law from a three-year look-back rule in 2006. This is how it works. Dad gave child $100,000 in the past five years and applies for Medicaid in a nursing home. Medicaid assesses Dad a penalty period of about nine months (the penalty period varies in different parts of the state). Dad will have to self-pay the nursing home for nine months. If Dad is otherwise eligible, Medicaid will pay for his care after nine months expires.
So many people incorrectly think that giving money to their children will protect assets from nursing home costs. Now gifting causes problems for community Medicaid as well as nursing home Medicaid.
Another significant change, effective October 1, 2020, exists for certain types of community Medicaid. To qualify, the applicant must generally need assistance with three activities of daily living (ADL), such as eating, bathing, getting dressed, transferring (moving from chair to bed and back, for example) and toileting. Applicants diagnosed with Alzheimer’s or dementia now need assistance with only one ADL to qualify. The change allows dementia patients who would have previously either been denied Medicaid, or received fewer hours of care, to qualify and receive more hours of care paid by Medicaid. Caregivers of the rising number of dementia patients know well the need for more assistance in their duties.
One Medicaid provision still in force that faced termination in budget talks is “spousal refusal,” a law that allows the well spouse at home to keep assets and/or income that exceed Medicaid limited amounts if the sick spouse applies for Medicaid. Spousal refusal protects the spouse at home from impoverishment due to the cost of care for the spouse in a nursing home. New York and Florida are the only states that allow spousal refusal. Keeping spousal refusal was a big win to protect New York families from the devastating cost of long-term care.
The changes to the look-back period for community-based Medicaid care benefits make it even more important to shelter your assets ahead of time with a Medicaid Asset Protection Trust. No one wants to find themselves in the position of needing home care services that they cannot afford, but at the same time being ineligible for Medicaid benefits due to the new 30 month look-back period.
Bonnie Kraham is an attorney practicing elder law estate planning with Ettinger Law Firm, 75 Crystal Run Road, Middletown. She can be reached at 845-692-8700, ext. 119 or bkraham@trustlaw.com. This column is intended to provide general information, not legal advice.