On April 3, 2020, New York State passed the 2020/2021 Budget, which contains a number of changes for New York residents. Among those, one of the most significant changes impacts the way New Yorkers qualify for Community Medicaid benefits. These changes have been codified in amendments to Social Services Law Section 366. Below we have summarized the new law for you in the form of a Q & A.
What is Community Medicaid?
Community Medicaid covers care and medical services that will enable an applicant to continue living on their own, as opposed to a nursing home; in other words, applicants will remain in the community. It is available to eligible New York residents who are living in their own home. Community Medicaid consists of community-based and long-term care services. The amendment defines long term care services as "home health care services, private duty nursing services, personal care services, assisted living program services and such other services for which medical assistance is otherwise available."
How is eligibility determined?
To qualify for Community Medicaid, an individual must be disabled or aged 65 or older. In addition, the individual must be financially eligible to receive benefits. Financial eligibility is determined by looking at an applicant's income and assets. In 2020, the income limit for a single person was set at $875 per month with an asset limit of $15,750. For a married couple where both spouses are applying, the total income limit was set at $1,284 per month with an asset limit of $23,100.
With regards to income, all income received from any source is counted towards the limit for Community Medicaid. This includes wages from employment, alimony, payments from a pension, Social Security Disability Income, Social Security Income, gifts, and payments from annuities and IRAs. However, excess income alone will not disqualify a person from receiving Medicaid.
In terms of assets (or resources), all of an applicant's assets are taken into account, including real property, stocks, bonds, investments and bank accounts. There are a number of assets that are considered exempt and thus are not counted toward determining the eligibility of an applicant. Some of these include IRAs and 401Ks in payout status, certain funeral and burial arrangements and an applicant's primary residence, provided the equity value is under $893,000.
What is a "look back" period?
A "look back" period for Medicaid means that from the date of an individual's application, Medicaid will "look back" at all transfers of assets by the applicant made within the preceding period of specified length. Any gifts or transfers made for less than fair market value can make the applicant ineligible to receive benefits for a determined penalty period.
Currently, Community Medicaid has no look back period. Chronic or Nursing Home Medicaid has a look back period of 5 years (or 30 months). With no look back period, an individual in need of services at home could gift or transfer their assets to someone else or a trust, thereby meeting the income and asset requirements to become eligible for Community Medicaid benefits the month after the transfers were made.
How has the 20-21 Budget changed Community Medicaid?
Until now, a look back period only applied to Chronic Medicaid for nursing home or institutional care. However, the new budget has imposed a 30 month (or 2 ½ year) look back period for individuals applying for Community Medicaid where previously there was none. This change takes effect on October 1, 2020.
Certain transfers will remain exempt. Most notably, exempt transfers will continue to include transfers to a spouse, a disabled or blind child, or a trust for the sole benefit of such a child, or to a trust established solely for the benefit of an individual under sixty-five years of age who is disabled.
How can I prepare?
Prior to the passing of the budget, preparing to apply for Community Medicaid benefits could be done within weeks of applying. The newly imposed look back period necessitates more advanced planning because all transfers made by the applicant or their spouse within the 30 months preceding the date of the application will be examined.
Along with this new change comes uncertainty. It is unclear whether the look back period for Community Medicaid applicants will be phased in or if all asset transfers prior to October 1, 2020, will be subject to review. Additionally, there is no clarity regarding the treatment of transfers of current Medicaid recipients and applicants between now and October 1, 2020.
What is certain, is that there are ways you can plan now to ensure that you will have access to benefits when they are needed. There are options, such as the creation of properly funded Irrevocable Trusts, to preserve your assets and allow you, or a loved one, to qualify for the care either of you may require in the future. At the Law Offices of Steven M. Adler, we are prepared to provide you with asset protection planning. We will help you formulate a plan tailored to your specific needs, whether you wish to apply for benefits now, 5 months from now, or 5 years from now. Another certainty is that acting sooner, rather than later, will put you in a better position to receive benefits if and when they are needed.