Demystifying Chronic Care Medicaid

DemystifyingChronicCareMedicaid3643

*Updated September 2020

“What does look-back mean? What is spousal refusal? Will Medicaid take my house if my husband has to go to a Nursing Home?”

All too often these are the questions we hear from our clients who are faced with navigating the Medicaid landscape once a crisis occurs. In New York, the Medicaid program can provide a source of payment for those who are financially eligible and require care, either in a nursing facility or in their own home.

Chronic Medicaid

In order to be eligible for Chronic Medicaid (payment for nursing home care) an individual must meet certain income and asset requirements. Community Medicaid, in contrast to Chronic Medicaid, is the Medicaid program that covers care at home and has different eligibility guidlines.

To start, applicants may have no more than $15,750.00 in liquid non-qualified (non-retirement) assets in their sole name. They may have qualified (retirement) assets in an unlimited amount, provide that they are taking a monthly distribution. When applying, the Department of Social Services will require a full financial accounting from the applicant, and spouse if applicable, for the five years immediately prior.

This is what is often referred to as the “look-back.” The purpose of this investigation is to determine among other things whether any transfers were made during this time period which would affect eligibility. The rule is that for every $13,407.00 ($12,844.00 in NYC) that was transferred, a one-month penalty will be imposed. For example, if in the financial review it is discovered that the applicant gifted $40,000.00 to his children during that “look-back” period, a determination will be made which imposes a penalty for almost three months. What this means is that Medicaid will not pay for the first three months of nursing care and the family will be responsible to pay privately. The aggregate result of this type of penalty is roughly a dollar for dollar penalty, meaning that for each dollar transferred you will have to pay a like amount in nursing home care should the need arise.

Exempt Transfer of Assets

This rule applies unless the transfer is considered an exempt transfer. Transfers which are exempt do not create a penalty and therefore do not affect Medicaid eligibility. It is important to note that the transfer of a home is treated very differently than a transfer of cash or any other type of asset in that it is an exempt resource to a broader class of people.

A house is an exempt transfer when given to the spouse, a minor, blind or disabled child, a sibling who has lived in the home during the year preceding the applicant’s institutionalization and has an equity interest in the home, or a “caretaker child’ who has lived in the house for at least two years prior to the institutionalization and whose care during that period provided allowed the applicant to avoid a nursing home stay.

In New York, transfers of liquid assets to spouses are exempt as are transfers to a sole benefit trust for a disabled child under 65 years of age. However, since a spouse is considered a legally responsible relative, he or she is expected to pay for the cost of the applicant spouse’s care if the spouse’s assets exceed $128,640.00.

Spousal Refusal

The term “spousal refusal” is used when the community spouse (the spouse who is not institutionalized), has assets above the maximum level, and chooses not to contribute to the cost of care for an institutionalized spouse. The institutionalized spouse cannot be denied Medicaid because the community spouse refuses to contribute. The refusing spouse must still provide any and all financial information and cooperate fully with the Medicaid application. Moreover, once Medicaid is approved, the county does have the right to seek recovery against the community spouse.

With respect to income, an applicant for Chronic Medicaid may only keep $50.00 of his or her income monthly, his spouse may retain the greater of (1) all of his or her own income or (2) all of his or her income and enough of the institutionalized spouse’s income to bring them to $3,216.00.

As you can see from this brief overview of Chronic Medicaid, make sure you are seeking advice from those knowledgeable in the area to avoid unnecessary delay and expense. Contact our office to learn how an irrevocable trust can protect assets.

By Nancy Burner, Esq.

Posted in

Burner Law Group, P.C.

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