Unlike Medicare, Medicaid is a government program which pays medical costs and long-term care costs. The rules can be a bit different if you live in Wilton or in Pound Ridge since it is a federal and state program.
Medicaid an Overview
Medicaid is designed as a payor of last resort and to qualify you basically need to impoverish yourself. You must meet strict financial and eligibility requirements.
Essentially, when you are on Medicaid, the American Taxpayer is paying your nursing home costs. The rules are designed to ensure that the Taxpayer doesn't foot these bills unless you can't.
Without proper planning, all assets and income above certain levels must be spent on care (paid to the Nursing home until you get down to the limits) or on exempt items before Medicaid will pick up the tab.
The rules governing Medicaid are complex, and frequently change, requiring great care in the planning and application for benefits.
Medicaid is a joint federal state program so the laws in Fairfield County Connecticut will vary from the laws in Westchester County NY.
A Simple Example of Medcaid
Grandma lives in Norwalk CT and is getting along well, independent, and living at home at 87. Then one day, she falls and breaks her hip.
She goes into the hospital home for surgery and recovery in Newtown CT. Unfortunately, while she is there her muscles atrophy so much she cannot walk any longer and she can't go home. She has to go to a nursing home.
Grandma has $300K squirreled away in a bank account for her use and to give to the grand kids when she moves on. Its the combined savings of her and Grandpa.
So, instead of using the money or passing it to the grand kids, Mom pays $15K (estimate for Fairfield County CT and Westchester County NY) per month to the nursing home or $180K per year. In 20 months, she has spent all her money and goes on Medicaid for the rest of her time.
When she passes away in Newtown CT she doesn't have a dime to her name. While she was in the nursing home, after she was on Medicaid, her kids had to pay for all her additional services out of their own pockets.
If she had moved her money into a Medicaid Asset Protection Trust (more on this later) 5 years earlier, she could pass the entire $300K to her grand kids....A little planning goes a long way.
What Assets Can I Keep Under Medicaid?
Basically, under Medicaid you lose all your assets except the very limited ones listed below.
When we say lose, we mean that you have to private pay for your care in the Nursing home ($12K per month or $144K per year) until you have used all your money except these amounts.
In Westchester County NY, the Income & Resource Limits an individual applying for Medicaid in a nursing home can have only $4,350 in total assets, plus a burial fund and certain exempt assets.
What About Income and Medicaid
If you are on Medicaid, you lose your income too and all of it in excess of the allowance is used to pay for your care.
Income must also be contributed toward the cost of care, and an individual in a nursing home is entitled to keep only a $50.00 per month allowance.
Can I Keep My Home Under Medicaid
The general rule is you cannot keep your home in Fairfield County CT and Westchester County NY under the Medicaid rules.
However, there are some exceptions. If the individual owns a home that is occupied by his or her child who is under the age of 21, or certified blind or disabled, the home is not included in the total asset calculation and is not subject to a Medicaid lien. If the individual owns a home that is not occupied by one of those people, and the individual's equity interest in the home is greater than $750,000, the amount of excess equity is counted towards the total amount of assets that can be kept.
If the Medicaid applicant is married and in Fairfield County CT, and enters a nursing home while the other spouse remains in the community, the “community spouse” may keep $74,820.00 (or one-half of a couple's resources up to a maximum of $104,400.00) in assets, in addition to the home. The spouse in the nursing home is entitled to keep only a $50.00 per month allowance while the “community spouse” is allowed a minimum income of $2,610.00 per month, with adjustments for certain items.
Does Medicaid Cover Assisted Living Facilities?
Unfortunately, Medicaid does not pay for an assisted living facility, just skilled nursing (Nursing Home). However, in some states there are special programs which can help with assisted living and Medicaid may cover the medical portion.
Does Medicaid Cover Home Care?
Generally, Medicaid does not pay for home care which must be paid for privately, with some exceptions.
Individuals seeking to obtain Long-Term Care services at home in Fairfield County CT or Westchester County NY in places like Bethel, Brookfield, Mount Kisco, or Somers need to meet a different set of Medicaid eligibility rules, depending on the type of services required. One of the primary goals expressed by our clients is to remain in their own homes or at least in the most independent setting possible.
Navigating the maze of community care which provides in home care, requires an in-depth knowledge of the services available in the home, and in adult homes and assisted living facilities, and an ability to manage income and resources to maximize their value, while utilizing Medicaid services wherever available to supplement the care provided by the individual and their family.
Community-based Medicaid services are available through several programs, including the Personal Care Aid program, the Consumer Directed Assistance program and traditional home care.
In order to access community-based Medicaid care, an individual is allowed to keep the same $4,350 in total assets, but he/she may also retain the home in which they live along with the other exempt assets listed above; recipients of Medicaid home care are allotted an income allowance of $725.00 per month. Income over the $725.00 limit will have to be spent on medical care. However, an alternative is to contribute the excess income to either a First Party Supplemental Needs Trust or a “Pooled Trust”, which can then be used to pay other expenses necessary to live in the community.
When one member of a married couple seeks community-based Medicaid, the couple is subject to tough rules in order to obtain those services. In order to qualify, the married couple can only have a total asset allowance of $6,400 in combined assets, along with the home and other exempt property, and an income allowance of $1,067 per month combined.
Transfer of Asset Rules Under Medicaid
What if an individual living in Fairfield County CT or Westchester County NY gives assets away in order to qualify for Medicaid?
In general, if it is within the last 5 years, you have to get it back.
If a person gives money or property away, that individual and their spouse will be ineligible Medicaid for a certain number of months, known as the “penalty period.” Basically, you have to private pay for this time period.
Exceptions are made for transfers to a spouse or a disabled child and for certain transfers of the home to siblings or caretaker children.
The transfer of asset rules do not currently apply to Community Based Medicaid, leaving open the possibility of transferring assets and qualifying for Medicaid immediately; however, if the individual later needs “institutional” Medicaid, the prior transfers may cause a penalty period for such Medicaid services.
The “look-back” period for transfers is 60 months or 5 years. A thorough analysis of all transactions within the look-back period must be undertaken prior to filing for Medicaid. They will do an investigation and request copies of all bank statements for the 5 years.
How is the penalty period calculated for Medicaid?
The penalty period for Medicaid is calculated by dividing the total value of all property transferred by the average monthly cost of nursing home care in your area.
The State determines this “average” each year for different regions across New York State. For example, if a New York City resident transferred $96,360.00 and applied for Medicaid in 2008, the penalty period for that transfer would be 10 months ($96,360 divided by the average monthly cost of $9,636 in the New York City region).
Average costs in other regions are $10,555 in the Long Island area; $9,316 in the Northern Metropolitan area; $7,066 in the Western (Buffalo) area; $7,431 in the Northeast (Albany) region; $8,089 in the Rochester area and $6,696 in the Central New York (Syracuse) area.
When does the penalty period begin to run under Medicaid?
The penalty period does not begin to run until the applicant meets three conditions: (1) he or she needs nursing home care; (2) he or she has $4,350 or less in assets; and (3) he or she applies for Medicaid. For example, an individual from Westchester County New York makes a nonexempt transfer of $38,544.00 in April of 2007. On January 1, 2008, the individual is living in a nursing home, has $4,350 in assets, and files a Medicaid application. At that time, a four month penalty period is imposed ($38,544.00 divided by the regional rate of $9,636 = 4.0 months).
The individual now has to wait 4 months before he or she is eligible for Medicaid, even though he or she no longer has the assets to pay for the nursing home expenses.
Without proper planning, anyone could fall into this situation.
How does Medicaid treat jointly held assets?
Generally, the presumption is that Joint Assets are your assets and can be used to pay for your care.
If assets are held in an account by a Medicaid applicant and another individual as “joint” owners, and funds are withdrawn by either individual, it will count as a transfer against the Medicaid applicant. For example, withdrawal of funds from a “joint” bank account by the child of a Medicaid applicant will be treated as though the Medicaid applicant parent had transferred the funds to the child.
In addition, funds held in a joint account in a bank or similar financial institution will be presumed to be owned entirely by the applicant. Each asset must be evaluated to determine ownership and ownership rights prior to filing a Medicaid application.
How does Medicaid treat Trusts?
If assets are held in a revocable trust, they will treated as your assets and used to pay for your care
On the other hand certain irrevocable trusts (otherwise known as a “Medicaid Asset Protection Trust") are not treated as your assets and will not be used to pay for your care.
However, the transfer has to occur 5 years before you go into the nursing home. A quick bit of math says that the average age is 82 and the average stay in a nursing home is 1 year. So you'd have to do the transfer by 76 to be safe. The earlier the better.
Income generated by assets held in an irrevocable trust will be paid to the nursing home.
Therefore, a Medicaid Asset Protection Trust is a great tool to protect your assets, yet let you qualify for Medicaid. While you will lose the income, at least the assets will be available for your children.
These are complex trusts which have to be carefully drafted to ensure Medicaid qualification.
Decisions regarding the use of a trust as part of a Medicaid plan require careful review of an individual's circumstances. In addition, the laws vary in Westchester County NY and Fairfield County CT, so your lawyer must take into account the unique laws.
What are the rules for Home Care Benefits under Medicaid?
Under current law, transfers do not count against an applicant who is seeking only Medicaid benefits under New York's home care program. New York can change this rule at any time, and in fact, the state came close to doing so at the beginning of 2006.
Can Medicaid Recover from Your Estate?
Yep, they can. So if Medicaid pays for your care, they will go after the assets in your Estate to pay them back. It is called Medicaid Payback or Medicaid Estate Recovery in legal parlance.
States are required to seek recovery of benefits paid to a Medicaid recipient from his or her estate. It has been left to each individual state to determine what assets will be included in the “Medicaid estate,” which could conceivably include assets held in trust, and other partial transfers, such as deeds with retained life estates.
Are there any Exceptions to the Medicaid Eligibility Rules?
The good news is there are hardship exceptions to Medicaid in Fairfield County CT and Westchester County NY. The bad news is they are almost never granted.
The states have established rules for “undue hardship”? Generally, if an individual makes transfers “innocently,” which disqualify him or her from receiving Medicaid, the state may waive the eligibility requirements if: (1) the applicant meets the other eligibility requirements; (2) the applicant or his or her spouse is unable to get the transferred assets back, despite his or her best efforts; and (3) the applicant cannot get appropriate medical care that would endanger his or her health or life if Medicaid did not pay for nursing home care or the penalty period would deprive the applicant of food, clothes, shelter or other necessities of life.
As a practical matter, these Medicaid hardship exceptions are difficult to prove and are not often granted.
Of course, Fairfield County Connecticut and Westchester County New York often have unique laws which require special planning. So if you live in Easton CT the results can vary from those of someone living in Lewisboro NY.