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Changes To Community Medicaid Begin Soon – Act Promptly To Avoid Costly Consequences

The New York State budget enacted in April made dramatic changes to the state’s Medicaid Program.  Two key, and extremely consequential, changes are (a) a new 30-month “look back” for Community Medicaid services, and (b) new requirements to qualify for Medicaid personal care services.  These changes are going to be costly – and in some cases, very costly – to those who need home care or assisted living care, who do not act quickly.

The budget left open many important questions, but the Department of Health is starting to provide guidance on how these changes will be implemented, with the caution that the rules have not yet been finalized.

Until now, and for just a few more months, New Yorkers who apply for Community Medicaid are not subject to any disclosure or review of gifts or transfers of their assets made prior to their application.  Starting January 1, 2022, applications for Community Medicaid will be subject to the new “look back” for gifts or transfers made on or after October 1, 2020, and will be much more complicated. Many applicants will wind up spending far more of their own money before they become eligible for Medicaid.

What is the new look back?

For the first time, people who apply for Community Medicaid needing home care or assisted living will be required to provide complete financial records for themselves and their spouses for a period of months preceding the date of their application. This period, called the “look back,” commenced on October 1, 2020, and will phase-in to a period of 30 months by April 1, 2023.

Any “uncompensated transfers” (gifts or transfers to family members or to a trust, for example) made during the “look back” period will subject the Medicaid applicant to a “penalty period” of ineligibility for services. The length of the penalty, according to the Department of Health, will be calculated in the same manner as for nursing home care. There is an explanation of how to calculate the “penalty period” on our website that you can find here.

What is the timing of the phase-in?

The change will apply to applications for Community Medicaid services filed on or after JANUARY 1, 2022.  This deadline has been pushed back several times.  Not surprisingly, Medicaid needs time to work out the rules and logistics as well as to train its staff to handle what will be a far more complex application. Systems will need to change as well.  The timing of the changes is also affected by restrictions on changes to Medicaid, that were instituted because of the coronavirus pandemic.

The “look back” will apply to transfers made on or after October 1, 2020. So if you transferred money or property prior to that date, you will not be subject to a “penalty period” for Medicaid home care or assisted living. There was initially some trepidation that the “look back” would apply 30 months prior to October 1, so this is good news – but only for people who act soon.

The effect of this decision means that the “look back” will be phased in.  Since the “look back” looks only as far back as October 1, 2020, applications filed during January, 2022, only need to include fifteen months of financial information.  From February 1, 2022, applications will need to include sixteen months of data, and so on, until April 1, 2023, at which point and thereafter 30 months of data will be required.

The “start date” of the penalty, according to the Department of Health, will be from the month that the applicant is both financially and medically eligible for Medicaid home care.  So if it takes Medicaid three months to process your application, but you were eligible at the time you applied, three months of the “penalty period” will already have passed when your application is approved.

Other important issues

    1. One worry for those considering Community Medicaid was whether New York State would permit the continued use of Pooled Income Trusts to protect monthly income.  Fortunately, it appears that transfers of monthly income into a Pooled Income Trust will not be treated as an uncompensated transfer. However, it is still an open question whether any income that is not spent from the trust in the month that it is deposited will remain protected.
    2. Personal Care Services – Requirements and Timing.  New York State has proposed regulations (128 pages of them!) regarding the new restrictions on eligibility for personal care and Consumer-Directed Personal Assistance Program (“CDPAP”) services.  Those regulations are still under review. None of the changes will occur before October 1, 2020, and some will be implemented after that.  Read more about them in our April 22nd article here.

The above issues and other important questions remain on the table, as Medicaid works its way through the logistics of implementing the new rules. What has become crystal clear, however, is that now is the time for those who need Community Medicaid services to prepare and submit their applications. The window of opportunity to apply under the current, more generous rules is closing very soon.

Consulting with an Elder Law attorney will give you the best possibility to secure your financial future and your peace of mind.  Our firm works hard to help our clients, and these developments make planning now even more urgent.

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