Can I Transfer My Home if I am on Community Medicaid?

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Given the changes to Community Medicaid, there are still a few unknowns regarding how New York State will handle certain issues. In April 2020, the State passed a new thirty-month lookback for all Community Medicaid applicants.  The law was written with an effective date of October 1, 2020.  This means any transfers or gifting from the Medicaid applicant after October 1, 2020 will result a penalty period – a period of ineligibility.  NYS has not been able to implement the new lookback period due to protections under the Families First Cares Act – likely delaying implementation until at least July 1, 2021. However, once enforced the lookback period is expected to apply to any transfers post-October 1, 2020.

Up until now, there has been no lookback for the Community Medicaid program. This meant that with minimal preplanning, an application could be prepared and submitted without a concern for transfers of assets the applicant made prior to applying. This is no longer the case. Although the State is not yet enforcing the lookback period – estate planning attorneys are unsure how Medicaid will consider transfers made after October 1, 2020 at the annual recertification for Medicaid benefits. Will transfers after that date make the Medicaid recipient ineligible and cut off care they had been receiving?

Similarly, it is unclear how the new legislation will impact transfer of the primary residence. Under Community Medicaid rules, the primary residence is exempt because the Medicaid applicant is residing there. However, it has always been advisable to transfer the residence to start the five-year lookback period for Chronic Medicaid – nursing home care. When there was no lookback period for Community Medicaid, this was often done while someone was still at home and they could receive homecare services during that five-year period without penalty. But now will the transfer of the primary residence create a penalty period?

Certainly, the Medicaid applicant can transfer the primary residence to a spouse, child under 21, disabled or blind child, caretaker child, or a sibling with equity interest who resides there.  These transfers are exempt from penalty.  But can the Medicaid recipient transfer the house to an irrevocable trust – which is treated as a gift that would normally incur a penalty period? Without further clarification, we are unsure how the new legislation will impact Community Medicaid recipients’ ability to transfer their homes to an irrevocable trust. However, there is a strong argument that the transfer of the home should not be a penalty because it is transferred for a reason other than to qualify for Medicaid.

Now more than ever it is important to consider your estate planning and the reality that if you apply for Community Medicaid in the future, you will be subject to a thirty-month lookback.  By setting up a properly funded Irrevocable Trust and getting through the thirty -month time period, you will ensure that assets held in the trust are protected. If you are considering applying for Community Medicaid for yourself or your loved one, an application should be submitted as soon as possible prior to the enforcement of the new legislation.

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Burner Law Group, P.C.

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