Many people are familiar with the fact that there is a five-year “look back” period that is used to determine whether you are eligible for Medicaid Nursing Home benefits. The look back period starts from the date you file your Medicaid application. Medicaid “looks back” to see whether you have made an “uncompensated transfer” (in essence, a gift) at any time within the five years before you filed your application.
If you have made a transfer, and a) you are in the nursing home, b) you have filed your Medicaid application, AND c) you would otherwise be eligible for Medicaid except for the transfer, Medicaid will assess a “penalty period.” (Note: transfers/gifts to a spouse are not counted against you for the purpose of calculating a penalty period). During the penalty period, you reside in the nursing home, but Medicaid will not pay for the nursing home – somebody else will have to pay the nursing home’s cost.
To determine the length of the penalty period, you take the amount of the transfer (let’s say, $100,000) and divide it by what is known as the “regional rate” for your region. Each year, in late December, the New York Medicaid office publishes regional rates for each region of the state for the upcoming year. The publication can be found on the NY State Department of Health website. If you live in New York City, the regional rate for 2018 is $12,319. $100,000 divided by 12,319 is 8.1, so your penalty period would be 8.1 months.
The regional rate is supposed to represent the monthly cost of a nursing home in your region, but in New York City it is not uncommon for nursing homes to cost $15,000 or more per month. So paying privately for 8.1 months at $15,000 per month would cost whoever pays the nursing home $121,500 – which is $21,500 more than the gift you gave. This is why the penalty period is such a powerful deterrent to people making gifts to their children or others before they go into a nursing home.
So who pays for the nursing home, since you can not? What usually ends up happening is that the person or people to whom you gave your money – often, your children – will pay the nursing home during your penalty period. Hopefully they will still have the money you gave them. They can’t give the money back to you, or you will no longer be eligible for Medicaid. If you make a gift this way, you will not have protected any of your money, and in fact you (and/or your children) will have spent more than if you had never made the gift.
Fortunately, there are powerful and proven Elder Law tools that can, in many cases, help save a significant portion of your money, even if you go into a nursing home with little or no warning. For more information about how this works, go to “Minimizing the Nursing Home Penalty Period” on our website.
Below are updated Regional Rates for New York that will be used to calculate the penalty period for 2018. They have gone up slightly since last year.
Regional Rates January 2017
New York City $12,319
Manhattan, Bronx, Queens, Staten Island, and Brooklyn (Kings) Counties
Long Island $13,053
Nassau and Suffolk Counties
Northern Metropolitan $12,428
Dutchess, Orange, Putnam, Rockland, Sullivan, Ulster and Westchester Counties
Albany, Clinton, Columbia, Delaware, Essex, Fulton, Greene, Hamilton, Montgomery, Otsego, Saratoga, Schenectady, Schoharie, Warren, and Washington Counties
Broome, Cayuga, Chenango, Cortland, Herkimer, Jefferson, Lewis, Madison, Oneida, Onondaga, Oswego, St Lawrence, Tioga and Tompkins Counties
Chemung, Livingston, Monroe, Ontario, Schuyler, Seneca, Steuben, Wayne and Yates Counties
Allegany, Cattaraugus, Chautauqua, Erie, Genesee, Niagara, Orleans, and Wyoming Counties