It is important to remember the Medicaid eligibility rules when planning for long term care.  In order to qualify for Medicaid to cover a stay in a skilled nursing facility, a single person can have no more than $15,750 in countable assets at the 2020 asset levels published by New York State.  However, there is more to qualifying for Medicaid than just this number.

One of the first considerations to take into account when thinking about a Medicaid application is the five-year look-back period. To complete an application for Medicaid coverage of a skilled nursing facility stay, the Department of Social Services (“DSS”), the county agency normally responsible for processing Medicaid applications, will require five years of the applicant’s financial statement history.  That means that if you apply for Medicaid effective on 1/1/2020, DSS will be investigating your bank accounts for any asset transfers dating back to 1/1/2015. The case workers at DSS will review for transfers that are for “less than fair market value”.  In simpler terms, the case worker is looking to see if the applicant tried to gift away their assets in the previous five years in an attempt to shield the assets from Medicaid calculations.  

If the case worker determines that there was a transfer for less than fair market value, the applicant will be subject to a penalty based upon the value of that transfer.  The penalty assessed will be a certain number of months the applicant must privately pay before Medicaid will provide coverage for the nursing home stay.  In Onondaga County, for example, the case worker will divide the value of the transfer by $10,451.00 (the average cost of nursing home care per month in the Central New York region) to determine number of months the applicant will have to privately pay for their care.  If there have been gifts equaling $104,510.00 in the five-year look-back period, DSS will issue a 10 month penalty period wherein the applicant must privately pay before Medicaid coverage kicks in ($104,510.00 divided by $10,451.00). 

In April 2020, New York State passed several laws intended to reform Medicaid and cut costs.  One of these laws institutes a look-back period for Medicaid coverage for community-based services.  Starting on October 1, 2020, applicants for community-based Medicaid coverage will be subject to a thirty-month (2.5 year) lookback period.  Prior to the institution of this law, there was no lookback period for community-based Medicaid.  The penalty period divisor will remain the same as with nursing home Medicaid coverage, $10,451.00 for the Central region for instance.  There are many open questions with regard to this new law which will need to be addressed by the Department of Health leading up to the start date of this new rule.

Given the potential length of time, and the severity of the penalty, many options for planning are best employed prior to needing nursing home care or community-based care.  There are multiple options for individuals, including placing their home in a Medicaid Asset Protection Trust to protect the value of their home for future generations.  So when do you start planning?  As previously stated, it is never too early to start planning or having a conversation about planning.  Speaking with a qualified estate planning and elder law attorney will help guide you down the path to asset preservation.