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- There are TWO Categories of Medicaid in New York – Community Medicaid and Nursing Home Medicaid – and Community Medicaid Has No “Look Back.”
Many people do not realize that the Medicaid system in New York has two different categories. If you begin needing long-term care and want to remain in your home, Community Medicaid can be the way to help you do just that. There are different rules for Community Medicaid and Nursing Home Medicaid; the rules for Community Medicaid are less restrictive. Being aware of the differences can be crucial.
- No “Look Back” for Community Medicaid Means You Can Achieve Eligibility Quickly
Community Medicaid includes care in the home, or in an assisted living facility. New York’s Medicaid program is far more generous than programs in other states. For Community Medicaid in New York, there is no five-year “look back.” If the assets in your name are below Medicaid’s eligibility level, even if you transferred them out of your name recently, you can become eligible for Medicaid very quickly.
Nursing Home Medicaid does have a five year “look back,” which means that if you transfer assets within the five-year period before you enter a nursing home and apply for Medicaid benefits, Medicaid imposes a “penalty period” of ineligibility.
- For Medicaid Eligibility, If You Are Over 65, Only Assets Are Counted. Your Income Does Not Affect Your Eligibility
Many seniors think, “Oh, with my Social Security, pension and IRA distributions, I make too much money to be on Medicaid.” Wrong! Medicaid does not ignore your income, but to become eligible, they only look at your assets (what they call “countable resources”).
- For Community Medicaid, A Pooled Income Trust Will Protect Your Income
Once you’re on Community Medicaid, the rules require you to contribute every dollar of income you receive over $862 per month (in 2018) to your health care provider, to help pay for your care. Could you pay your rent/mortgage, food, utilities, TV, phone, transportation, entertainment, and every other expense you have with $862 per month? For most people, that would be impossible. That’s why Pooled Income Trusts are essential for most Community Medicaid applicants.
A Pooled Income Trust works as follows: each month you deposit your “surplus income” (monthly income over $862) to your own personal account at the trust. The trust administrators use that money to pay bills and expenses for you (but only you; they cannot pay anyone else’s expenses). Pooled income trusts are operated by non-profit institutions; they earn a fee for administering your account, and when you pass on, any money left in the account goes to charity.
- If You Plan Ahead, All of Your Assets Can Be Protected
To become eligible for Community Medicaid, your “countable resources” (defined by Medicaid) must be below $15,150 (again, 2018 figure). In most cases, the best way to achieve this result is to transfer most of your assets into a special type of trust that is designed to facilitate your Medicaid eligibility and protect your assets. Elder Law attorneys usually call this type of trust a “Medicaid Trust” or an “Asset Protection Trust.”
Could you transfer the assets to your children? The answer is yes, definitely, but there are important advantages to placing your assets in a trust, most notably the following two. First, if the assets are in your child’s name, a divorcing spouse or your child’s creditors will have a claim against them, but if the assets are in a trust, they are protected against future creditors. Second, if you own a house that has appreciated in value, and transfer it to a child, your “tax basis” in the house is also transferred to the child. If the child sells the house, he or she will pay capital gains on the increase in value since your original purchase (adjusted for capital improvements). If your house is in a trust and passes to your child after you die, the child’s tax basis is reset to the fair market value of the house on the date of your death.
There are many Elder Law strategies available to New Yorkers that can help them access high-quality long-term care, and also protect them against the devastating costs of that care. To find out more, visit our website, www.lamson-cutner.com, or call us at (212) 447-8690 today.