If you are about to enter a nursing home, or are in a nursing home, and apply for Medicaid, Medicaid will review all your financial holdings and transactions over the past five years. If you would be eligible for Medicaid except that you made uncompensated transfers (gifts) within the five year look back period, Medicaid will assess you a penalty period during which time the nursing home cost must be paid by someone else (such as the person to whom you gave the money). The penalty period is supposed to represent approximately the number of months you could have paid for yourself if you hadn’t given your money away. Calculating the penalty period is straightforward: take the amount or value of the assets that you transferred (gifted) to someone else, and divide it by the regional rate that Medicaid has established for the county in which you reside. The result is the number of months that you are ineligible for Medicaid benefits in the nursing home.
The regional rates have changed slightly for 2016. In New York City, the regional rate is now $12,029. In Westchester, Putnam, Rockland, Orange, Dutchess, Sullivan and Ulster Counties, the regional rate is $11,768. In Nassau and Suffolk Counties on Long Island, the regional rate is $12,633.
Are you worried about using up all your money paying for a nursing home? Unfortunately, you should be. Nursing homes often cost significantly more than the regional rate that Medicaid NY uses, so gifts without planning can backfire. Fortunately, there are proven Elder Law strategies you can use that can usually protect 40-50% of your income and minimize the penalty period, even if you are about to enter a nursing home and still have a significant amount of assets. Find your situation and what Lamson & Cutner can do to help you here.