New York State Has Published the 2020 Medicaid Regional Nursing Home Rates
How the ‘Regional Rate’ is used to calculate the Medicaid Nursing Home Penalty Period
If you are about to enter a nursing home, and you have made large gifts or transfers within the five years before you apply for Medicaid, you are likely to be subject to a so-called ‘Penalty Period’ before Medicaid will begin to pay for your nursing home. Here’s how Medicaid calculates the penalty period, using the newly-published 2020 ‘regional rate’ for each geographic region in New York State.
For a single person, you can apply for Medicaid services if your assets are below $15,750 (the limit in 2020). Once you are over 65, the amount of your income does not affect your eligibility.
Once you are in the nursing home, and you have less than $15,750 in assets, and your Medicaid application is filed, Medicaid then “looks back” at all your financial statements and all your assets for the prior five years. They are looking to see whether you made any “uncompensated transfers” (usually, gifts or transfers to a trust or family member) within the prior five years. If you did, the transfer or transfers will trigger a delay as to when Medicaid will start paying for your nursing home. The delay is called the “penalty period.”
The length of the delay depends on how much you transferred, and where you live. In theory it is at least equal to the length of time during which you could have used the money you transferred, to pay for your own care. In practice, you can end up paying significantly more for your care than the amount you gave away or transferred.
If you transferred $128,440 within the look back period, how long would your penalty period be? To calculate that, you need the ‘regional rate’ in your region. Since nursing home costs vary significantly within the State, New York assigns a regional rate that is supposed to correspond roughly to the monthly cost of care in the geographic area where you reside.
If you live in Manhattan, for 2020, the regional rate is $12,844. Medicaid divides the amount you transferred, $128,440, by the regional rate, $12,844, and the result is your penalty period – 10 months. That means that for the first 10 months that you are in the nursing home, you are responsible for figuring out how the nursing home will get paid.
You already have less than $15,750, because otherwise you wouldn’t have been able to apply for Medicaid, and you’re already in the nursing home, so you can’t escape the bills. So how will you pay? Good question.
You could ask the person to whom you transferred the money to pay, for example – but whatever you do, it’s up to you to find the money. Medicaid won’t pay until 10 months have elapsed. That’s why this is such an effective strategy for Medicaid to use with people who are contemplating moving to a nursing home, and who have not done any planning. (Don’t panic, though – last-minute Elder Law planning can still help in this situation.)
Your penalty period – 10 months – will be identical, whether you transferred that amount one week ago, or 4 years and 11 months ago. That’s why if you’re close to the end of the 5-year period, depending on your situation, it may make more sense to pay privately for a shorter period, and wait to apply for Medicaid until you have passed the 5-year window.
Even if you are “trapped” in the look back period, there are proven, legal Elder Law strategies that can help you save a material portion of your money – usually, 40-50%. That’s why consulting with a qualified Elder Law attorney is so important when you start needing long-term care – and why it can be extremely cost-effective.
Below are the Regional Rates for New York Nursing Homes for 2020:
New York City: $12,844
Long Island: $13,407
Northern Metropolitan: $12,805