Note: This article has been updated to include Medicaid figures for 2020. There is a…
Elder Law in New York City, Westchester County, Long Island and Beyond
Applying for Medicaid when you are in a nursing home, or about to enter one, involves the dreaded “five year look back.” When evaluating your application, Medicaid reviews all your financial transactions and financial holdings for the prior five years. Medicaid will note any “uncompensated transfers” (gifts) you made during that period.
If you would otherwise be eligible for Medicaid except for those gifts, Medicaid won’t deny you benefits forever – but they will refuse to pay benefits for a period of time known as the “penalty period.” The penalty period does not begin until you are living in the nursing home and otherwise would be eligible for Medicaid (in other words, when almost no money is left in your name). During the penalty period, you are living in the nursing home, but someone else – such as the person or people to whom you made the gifts – will need to pay your nursing home bill.
The penalty period is supposed to represent approximately the amount of time you could have paid the nursing home yourself, had you not made the gifts. Calculating it is straightforward. Total up the amount of gifts you made over the five year period before you applied for Medicaid, and divide that total by a number – the “regional rate” – that Medicaid publishes for the county in which you reside. The result is the number of months that you are ineligible for Medicaid nursing home benefits.
In a few circumstances, uncompensated transfers are not penalized. The most common situation occurs when you transfer assets to a spouse.
New York Medicaid just updated the regional rates for 2018, increasing them slightly over the 2017 level. For the five boroughs of New York City, the 2018 regional rate is $12,319. For the Northern Metropolitan region, which includes Westchester, Putnam, Dutchess, Rockland, Orange, Sullivan, and Ulster Counties, the rate is $12,428. For Long Island, which includes Nassau and Suffolk counties, the regional rate is $13,053. The full list of regional rates is on the Medicaid NY website.
The slightly higher regional rates will reduce your penalty period a bit. Unfortunately, however, most nursing homes are also raising their rates too. The net result is that Medicaid’s penalty is as strong as before, if not even stronger.
Are you concerned about using up all your money to pay for a nursing home? Regrettably, you should be. New York State nursing home care is extremely expensive. Usually, it costs significantly more than the regional rate Medicaid NY will use to calculate your penalty period. That means that making gifts without planning can backfire and end up costing you and your family even more than you would have paid, had you not made the gifts.
Fortunately, planning ahead, or even at the last minute, can help – even if you are about to enter a nursing home and still have a significant amount of assets. In most cases, there are steps you can take that will usually protect about 40-50% of your assets. These are proper and proven Elder Law strategies that have successfully helped many thousands of New Yorkers.
Click on Find Your Situation and learn about how Lamson & Cutner’s Elder Law strategies can help in your particular circumstances.