Unlocking Hidden Benefits: How Medicaid Expansion is Changing the Game for Veterans’ Health Care

Unlocking Hidden Benefits: How Medicaid Expansion is Changing the Game for Veterans’ Health Care

Veterans of all branches of the United States military have throughout the country’s history endangered themselves and sacrificed huge amounts of time and energy to ensure that the freedoms all American citizens enjoy are protected. Committing to service in any branch of the armed forces means leaving one’s family and friends behind to fulfill contractual obligations. The United States, with gratitude for the sacrifices made by service men and women and their families, has created many organizations to provide services and benefits to both active duty and retired members of the armed forces, chief among them the United States Department of Veterans Affairs. These organizations provide a variety of services to veterans and their families, such as health insurance, mental health care, tuition subsidies, and home loans. Many veterans, however, are not aware or are not disclosed the full scope of services and benefits available to them, including those provided by the Department of Veterans Affairs. Many veterans are further unaware of the benefits available to them through Medicaid, particularly for those who struggle to find civilian employment or are unable to make ends meet. Consulting with an experienced Medicaid planning attorney will help you and your family understand the benefits available to you as a former service member and ensure that you receive the support you have earned for your many sacrifices.

Veteran Access To Medicaid

Brief Overview of Medicaid and Department of Veterans Affairs Benefits

Medicaid is a federal and state run program that ensures health insurance coverage for low-income families. Medicaid also provides health care-related services and benefits such as transportation and outpatient hospital care. The Department of Veterans Affairs, or VA, is a branch of the federal government that provides lifelong health care coverage for veterans and their families. In addition to health care services and coverage, the department provides home loans, pensions, disability compensation, tuition subsidies, life insurance, and burial services. It is important to note that VA benefits are available for both uniformed service members and veterans and their spouses, children, and parents. 

How The Expansion Of Medicaid Has Impacted Veteran Enrollment

Following the passage of the Affordable Care Act (ACA) and the implementation of the ACA Medicaid expansion in 2014, veteran access to Medicaid coverage and benefits increased, leading to better access to health care and improved outcomes. This is especially important because according to the Kaiser Family Foundation, about 10% of working-age veterans receive Medicaid, with a further 40% of those having Medicaid as their only health coverage. The 2014 ACA Medicaid expansion to include adults earning up to 138% of the poverty threshold made many adults newly eligible for the program in the 32 states that adopted the expansion, including New York. The results are staggering, as according to nine Health Care For The Homeless Projects, states that adopted the Medicaid expansion have a 55% share of veterans covered by Medicaid, as compared with a 5% share of veterans in states that did not adopt the Medicaid expansion. 

Why Medicaid Is Crucial For Veterans

According to a 2021 estimate from the Census Bureau's American Community Service, there are about 16.5 million veterans in the United States. When returning from military service, veterans must reintegrate back into civilian life, a challenge for many. Many veterans return from active service with a disability, long-term injury, or multiple crippling conditions. Over time, veterans may develop alcoholism, drug addiction, or a multitude of mental health issues relating to PTSD or other service-related injury. Most of these issues require long-term care, whether it's physical therapy to adjust to a prosthetic limb or psychiatric interventions to help combat suicidal thoughts or PTSD-related instability. In these cases, Medicaid plays a crucial role in providing coverage to veterans that might not otherwise be insured. Medicaid also helps to supplement Medicare or private, VA, or military coverage for roughly 60% of working-age veterans in order to reduce the out-of-pocket or copayment cost. According to 2022 Point-In-Time Count, 33,136 veterans lack access to other forms of coverage and tend to have higher rates of disability, chronic health conditions, alcoholism, and drug abuse.

Conclusion

Most veterans qualify for VA, however there are instances where a veteran either is not eligible for health-related VA benefits or simply lives too far from a VA facility to receive treatment. Other veterans might not apply for VA or Medicaid benefits because they do not know the potential benefits they are eligible for or believe they do not qualify. It is vital for veterans planning for health care coverage and other services and benefits upon returning to civilian life or retiring from active service to understand that there are many programs available to them to gain the coverage and services they need. One can also qualify for VA and Medicaid benefits simultaneously, so it is important to understand the process of applying and qualifying for both and how each program applies to specific expenses. With the end of the Federal COVID-19 Health Emergency 2023, yearly Medicaid renewal has resumed and changes in the eligibility and waiver process have occurred, making understanding potential Medicaid coverage and benefits more complex. In this case, having an experienced Medicaid planning attorney will help to understand what benefits are available to you and your family and how to ensure that you qualify for the program without running afoul of new Medicaid and Medicaid renewal regulations. To schedule a consultation to help ensure coverage for you and your family, call the Medicaid Fraud Attorney at (718) 333-2395.

What Documents Are Required for a Medicaid Application?

What Documents Are Required for a Medicaid Application?

When applying for Medicaid, you must prove that you are within the income and assets threshold to be eligible for long-care services. Prior to applying, you must fully understand what is expected of you in proving your eligibility to submit a medicaid application.

Documents Required for Medicaid Application

Medicaid is a state-run program, so the criteria vary based on your location. It is required to prove that you are eligible for the benefits, placing the burden of proof on you rather than the state. It is your responsibility to provide standard identification of your birth certificate and proof of citizenship. However, when you apply for benefits there is far more to consider:

    • Proof of Income
      • Copy of any pay stubs, Social Security statements, and/or pension checks. Income tax returns for the past five years. Verification of any other sources of income.
    • Bank Records
      •  Copies of bank statements for the past five years. 
    • Property
      • Copy of the deed to any property you owned in the past five years and a copy of the most recent property tax bill. 
    • Retirement Accounts
      • Statements for the past five years of your retirement savings.
    • Insurance
      • Copies of all types of insurance you have.
  • Car Registration
      • Information for any cars you own.
    • Burial Arrangements
      • Copies of pre-paid funeral contracts and/or deeds to burial plots.
  • Transferred Assets
    • There are non-countable assets such as personal possessions, one vehicle, prepaid funeral plans, and principal residence. However, be prepared if the state requests information about these.

The state will verify the information. Intentionally providing falsified information is a serious legal offense. 

When you start to receive benefits, you are not done, as to maintain your Medicaid you must continue to adhere to the eligibility requirements. Verification will be needed, making the Medicaid application process long and complicated. To be as prepared as possible, you will need the help of an estate attorney.

To compile the documents required for a Medicaid application, contact the Law Office of Inna Fershteyn at (718) 333-2395.

Medicaid Lookback Period For Long-Term Home Care In NY

Medicaid Lookback Period For Long-Term Home Care In NY

Medicaid is the main source of long-term care coverage for many people. There are many factors to consider when applying for Medicaid, and this is widely due to the eligibility requirements that Medicaid has. One of the main components of qualifying for Medicaid is that they look at applicants' previous financial information for a limited period of time. This is commonly called the Medicaid Look-Back Period. In general, while determining Medicaid eligibility, any gifting of assets within the look-back period will deem the person ineligible for Medicaid for a period of time. 

Medicaid-lookback-period-update-in-NY

All states, with the exception of California, have a five-year lookback period on applications seeking Medicaid for nursing home care. However, New York State recently adopted a law imposing a lookback period for long-term home care as well. Therefore, people need to take careful consideration before deciding if they need Medicaid for nursing home care and/or long-term home care in NY. Although the lookback period for long-term home care isn’t as long as five years, it can still negatively impact people who need Medicaid benefits sooner rather than later.

For long-term home care, the Medicaid lookback period is at least 15 months. Medicaid will examine asset transfers dating back at least 15 months before your application. This new NY Medicaid transfer rule will begin on October 1, 2022. After the date, anyone applying for Medicaid long-term home care benefits will be subject to the lookback period and might have to provide records up to 2.5 years before the date of application.

Here Are Some of The New Transfer Rules:

  • Applicants and their spouse filing after October 1, 2022, must provide all financial records within the lookback time frame (at least the last 15 months) even if the spouse does not currently need Medicaid services.
  • The lookback period will, at some point, increase to 30 months (2.5 years). The increase will be gradual. 
  • Any asset sold, gifted, or transferred below a fair market value during the lookback period could result in a period of ineligibility for Medicaid. 
  • Applicants will be required to submit a Department of Health (DOH) medical form. A licensed doctor must indicate their belief that the applicant meets the medical requirements needed to qualify for homecare.  This requirement is especially important because the DOH demonstrates that a transfer penalty can be activated in the month that an applicant is both financially and physically eligible for Medicaid home assistance. A transfer penalty is incurred during the timeframe that an applicant fails to comply with the Look Back Period. When the penalty’s duration ceases, an individual can then reapply for Medicaid. 
  • The Department of Health allows for an exception to the transfer penalty if the applicant’s circumstances fall under the definition of “undue hardship.” Denial of home assistance falls under this definition. However, this definition does not extend to community-based eligibility. 
  • Applicants who file their Medicaid applications before October 1, 2022, will NOT be subject to this lookback and will NOT incur transfer penalties. Early filing is key to getting the benefits you need for home care services.

Exceptions to the Transfer Penalty

Transfer of a Home to:

  1. Spouse
  2. Children under the age of 21 or legally blind/disabled of any age
  3. A caretaker Adult child that resided in the applicant’s home for at least two years and can prove that their care allowed the applicant to live at home rather than in a medical facility

Transfer of Property Other Than a Home to:

  1. Spouse
  2. Individual’s child who is legally blind/disabled
  3. A trust established for the benefit of an individual under 65 years old who is disabled
  4. Transfer of an asset that does not accumulate a penalty
  5. Assets were transferred for a reason other than to qualify for Medicaid nursing home costs 

If you need consulting on Medicaid eligibility for long-term home care, please contact the Law Office of Inna Fershteyn at (718) 333-2395.

How to Protect Your Home If You Need Medicaid

How to Protect Your Home If You Need Medicaid

Most people wonder how to qualify for Medicaid and if their assets will be at risk when applying. Those who need long-term care worry about the possibility of losing their home in order to qualify for Medicaid. If you or someone you love need long-term care, you don’t have to sell your house in order to qualify for Medicaid to pay for long-term care. However, Medicaid could reach out in the future to recoup the costs of treatment. Once you are approved for Medicaid, the state may put a lien (charge) on your assets during your lifetime and collect the debt once you have passed away. This process is known as "estate recovery” which can lead to losing many assets that could have been passed down to future generations, even the family home. 

how-to-keep-your-home-if-you-need-medicaid

So how can one keep the home if they need to apply to Medicaid for long-term care costs?

Adding Someone to the Deed May Not Be The Perfect Solution

People often believe that by adding another person to the deed to their home (aka a life estate), the home cannot be used to pay back Medicaid. Unfortunately, this method won’t be enough to protect the home, and here’s why:

  • If the property is sold before the Medicaid recipient passes away, the value of the home has to go towards their care. 
  • If you decide to rent out the property, the net rental income is recoverable by the nursing facility, since it technically belongs to the recipient. 
  • Although the house avoids probate after the Medicaid recipient passes away, there could be significant capital gains taxes for the beneficiaries. 

Solution #1: Transfer Ownership of The House

What if I immediately transfer ownership of the family home to another person instead of adding them to the deed? This idea is to take the home out of their countable assets. However, unless the person who receives the house is an adult child, the transfer will only lead to problems.

A basic rule of Medicaid is that if you can afford to pay for your own care then you should. If you transfer property, let’s say worth $700,000, it means that a $700,000 gift has been gifted to someone. Another basic rule of Medicaid is that there is a five-year lookback period. This means that any assets you gave away or transferred in the five years before you applied for Medicaid, you still had the asset under your control. And Medicaid will not pay for your care in that case.

The good news is that there are some exceptions to the gifting rules. The following methods are not something to be navigated without the help of an experienced elder law estate planning attorney. Here are some of the exceptions:

Your spouse. The law recognizes that your spouse needs a place to live so a transfer of the home to your spouse does not result in penalties under Medicaid rules. This is a common practice and part of Medicaid planning.

A disabled child. A parent could transfer a house to their disabled child explaining that it is needed for self-support. It is not necessary for a child to lose a home just because a parent will need Medicaid. 

Solution #2: Medicaid Asset Protection Trust 

One of the best ways to protect your assets is to place your assets in a Medicaid Asset Protection Trust. These are also commonly called “income only” trusts because the appointed trustee (normally an adult child) maintains control of the principal, while the Medicaid recipient can only access the income from a pension or Social Security benefits.

A Medicaid Asset Protection Trust may be a better method for protecting the home if you:

  • Wish to continue living in the home. These trusts offer little to no disruption to a recipient’s life since they keep the exclusive right to use and occupy the home during their lifetime (and continue to receive all the tax exemptions on the home).
  • Are not going directly into care. Any assets transferred into a Medicaid trust are subject to a lookback period of up to five years. After five years, you can still live at home but if you need to go into a nursing home, the full value of your assets in the trust are protected. However, even if you end up needing long-term care earlier than you thought (before the five years) you get credit for any time that has passed since the creation of the trust. For example, if you created the trust today but need nursing home care after four years, then you would only have to pay for the remaining one year out of pocket.
  • Are contemplating selling the house. You will always have the option to sell your house without a Medicaid penalty because the money is paid to the trust. The trustee can also buy a new property (such as a smaller home) in the name of the trust so it remains protected.

If you need consulting on qualifying for Medicaid and how you can protect your family home, please contact the Law Office of Inna Fershteyn at (718)-333-2395.

Millions Could Lose Medicaid When Pandemic is Declared Over- How to Protect Your Coverage?

Millions Could Lose Medicaid When Pandemic is Declared Over- How to Protect Your Coverage?

While the decline of COVID-19 cases is a relieving sign of progress, the end of the pandemic could mean the end of Medicaid coverage for millions. Federal law prevented states from stopping Medicaid benefits until the pandemic is declared over. As we near the end of the health emergency, it is vital you understand how to protect your coverage.

Congress passed a law providing that the state could not terminate the benefits of Medicaid recipients who were enrolled as of March 18, 2020. It states that the coverage must continue through the end of the month that the Secretary declares the pandemic has ended. Although the public health emergency has not officially ended yet, the Biden administration intends it to some time in 2022.

Protecting Medicaid Coverage After the Pandemic

The impact this could have on your Medicaid is not fully defined, but it is estimated that about 15-million non-elderly people could lose their coverage. Further, it is important you understand your options for maintaining your long-term care. Planning in advance is required for protecting your future health needs. Below are four different strategies you could adopt to help keep your Medicaid coverage.

1. Asset Protection and Income Trusts

Asset protection trusts allow your wealth to be distributed to the same people when you die so your loved ones don’t have to pay capital gains tax on the amount your assets have increased in value during your lifetime. Assets transferred to an asset protection trust don’t belong to you. Be sure to note that transfers to trusts that occur within five years of when you need the Medicaid will be subject to the look-back period, so you must plan well in advance of when you need the care.

When applying for Medicaid, the income limits are strict. If your income surpasses the qualification threshold, it must be adjusted accordingly. A method to do this is establishing a qualified income or pooled income trust. A qualified income trust is irrevocable and can be established to hold the amount of income that exceeds your Medicaid limits. In some states, you can spend down the amount of income that is excessive so you can meet eligibility requirements, while in others you cannot. A pooled income trust is another type of irrevocable trust that holds excess income, designed for people who are disabled. Moreover, you can decide which of these types of trusts is the best fit for your individual needs.

2. Promissory Notes and Private Annuities

Make sure you are not giving away your assets and money during the look-back period, as you will be penalized. A promissory note or private annuity allows you to create a cash flow from your other assets so you can use it to pay for your nursing home care during a shorter penalty period.

3. Caregiver Agreement

A caregiver agreement may provide access to services that otherwise would not be included in Medicaid. Under this, a trusted family member may leave his or her job to care for the elderly individual. Services may be paid for in advance to reduce the countable income for Medicaid eligibility. For a caregiver agreement to be accepted by Medicaid, you must do the following:

  • Define hours and services in the contract
  • Maintain a daily log of hours and services
  • Pay to Medicaid the unearned amounts that remain upon your death
  • Calculate lump sum payment using market rates for services and reasonable life expectancy

4. Spousal Transfers

Transfers of assets between spouses are both permitted under the law and not subject to the look-back period, making it an appealing means of healthcare coverage protection. This makes the ill spouse eligible for Medicaid, while Medicaid reserves the right to ask for monetary contributions from the healthy partner. Note that in states that don’t allow spousal refusal, both spouses' resources are counted towards the eligibility requirement, defeating the purpose of this strategy.

For more information on how to protect your Medicaid coverage, please contact the Law Office of Inna Fershteyn at (718) 333-2395.

What to Do If Your Medicaid Application Is Denied

What to Do If Your Medicaid Application Is Denied

If your Medicaid application is denied, you may initially feel hopeless, but you have the opportunity to appeal the decision. While the requirements of Medicaid are strict for low-income individuals, there is the potential to gain great benefits. Qualifying for medicaid is a complicated process, so if you are denied at first, do not panic.

What To Do If Medicaid Denies Your Application

Medicaid is a federal and state program that assists with the cost of healthcare for those who cannot afford it. It is comprehensive health coverage that covers a number of circumstances. Eligibility varies, but in New York, you must be either pregnant, responsible for a child 18 years old or younger, blind, disabled, live with a disabled family member, or be 65 years or older. The income threshold ranges based on the household size. You can apply by phone, via a written application, or by going to your local department of social services, or on the New York State of Health website.

Upon receiving a Medicaid decision, rejection is fairly common, even if you are eligible. Below are common reasons why your Medicaid application may have been declined.

1. Missing or Incomplete Documentation

You must have a complete packet when filing your Medicaid application. While in the past they would wait for supplemental documentation if they knew you were in the process of obtaining additional information, now they are quick to deny if you do not follow up. Be sure to provide the correct documentation and fill out the entirety of the application.

2. Excess Assets

In order to be eligible, there are strict caps on the number of assets one may have. Review the income and countable assets requirements for your given state. In New York, the asset limit is $15,900, while just about every other state's cap is $2,000.

3. Transferred Assets

If you transferred assets within five years of applying for Medicaid for less than market value, you may be subject to a penalty. If a transfer of assets is to a disabled or legally blind child, you are exempt from asset transfer penalties in New York.

You will be issued a denial notice within 45 days of the application or 90 days if you filed for benefits because of disability. Upon receiving your denial notice, review it carefully and follow the directions on how to file an appeal.

Before this, you can attempt to informally ask the agent to reverse the decision. If you were declined because you made a mistake, this is the easiest and most efficient way to proceed. Escalation to a supervisor or a formal appeal may be unnecessarily complicated depending on the reason you were rejected.

The deadline to appeal may be as short as 30 days or as long as 90 days following the denial notice. Regardless of if it is requested, be sure to submit your request for appeal in writing so there is a record of it. You must be diligent about submitting by the deadline. 

After you submit, the Medicaid agency will set a hearing date. Applicants must attend the hearing or else their case will be dismissed. You have the right to have witnesses testify at the hearing and to question the witness of the Medicaid agency. 

An attorney can ensure you have all of the correct documentation and materials to present at your appeal hearing. If you win, you will receive your rightful benefits. If you lose, the notice will outline how to appeal your decision, which usually involves written arguments. You must have the assistance of an attorney for this step.

To hire a medicaid planning attorney, contact the Law Office of Inna Fershteyn at (718) 333-2395

Upcoming Changes to NY Medicaid 2022-23

Upcoming Changes to NY Medicaid 2022-23

Medicaid is operated on both federal and state levels, which provides a range of benefits in medical and health. Medicaid primarily is for individuals who suffer from chronic illness, are in cognitive or physical decline, injured/disabled, and require consistent medical treatment. Laws surrounding who qualifies for Medicaid change constantly, meaning it’s necessary to stay informed on the latest changes to be aware of your eligibility status. Below are some new and upcoming changes to Medicaid.

Upcoming Changes to Medicaid

Upcoming Changes to Medicaid in 2022:

Independent Assessor for Home Care - In Effect May 1, 2022

As of May 1 2022, Medicaid applicants over the age of 18 applying for Personal Care or Consumer Directed Personal Assistance Program (CDPAP) services will need to go through nurse assessments conducted by New York Independent Assessor (NYIA). The NYIA will conduct nursing assessments for “Immediate Need” applicants and others who apply to the local Department of Social Services, which is the Human Resource Administration (HRA) in NYC for personal care or CDPAP.

The NYIA will be conducting a clinical assessment in addition to a standard nurse assessment by either a doctor, physician’s assistant, or nurse practitioner. With these tests, the NYIA will determine if an applicant is eligible for personal care or CDPAP. If the applicant is deemed ineligible, they have Fair Hearing rights, meaning they can appeal their decision.

If the NYIA deems the applicant eligible, they are referred back to their local Medicaid office. The previous assessments will then be used to determine how many hours of personal care or CDPAP should be authorized. If you are approved for over 12 hours of personal care a day, the Medicaid Office or plan must refer the case back to the Independent Assessor for a third assessment, which is an Independent Medical Review (IMR). An IMR is used to determine whether the proposed plan of care is safe and can maintain the health of the applicant when they are home.

Increases in Medicaid Eligibility of Applicants 65+ and Blind/Disabled Individuals - In Effect January 1, 2023

New York Governor Hochul and State Legislature passed four increases in Medicaid eligibility for New Yorkers who are 65+ blind, or disabled in the NYS budget. Below are the four changes that will go into effect:

  • Medicaid Asset Limit has increased by nearly 50%
  • Medicaid Income Limit has increased to the same amount used for Modified Adjusted Gross Income (MAGI) Medicaid for younger people (138% Federal Poverty Line or “FPL”)
  • Medicare Savings Program: Qualified Medicare Beneficiary limit increased from 100% to 138% FPL. Individuals with higher incomes not exceeding 186% FPL will be eligible for QI-1.
  • Undocumented Immigrants Age 65+ will not be eligible for full Medicaid benefits as opposed to only “emergency” Medicaid

New Medicaid Limits in 2023 for 65+, Blind, & Disabled

Benefit Federal Poverty Line % SINGLES COUPLES
2022 2023 2022 2023 2022 2023
Income Limit Per Month
Medicaid 82% 138% $934 $1,563 $1,367 $2,106
QMB 100% 138% $1,133 $1,563 $1,526 $2,106
QI-1 135% 186% $1,529 $2,107 $2,060 $2,838
Medicaid Asset Limit $16,800 $28,134 $24,600 $37,908

Public Health Emergency - Extended Through July 2022

The Biden administration extended the COVID-19 Public Health Emergency on April 13, 2022 for 90 days. This means that the government is prohibited from discontinuing or cutting funding for Medicaid through July 2022. 

This means restrictions on eligibility cannot be implemented before October 1, 2022, which would include the 30-month “lookback” that would disqualify applicants from obtaining home care benefits, or require applicants from needing physical assistance with 3 activities of daily living or two if diagnosed with dementia in order to qualify for CDPAP.

For more information on NY Medicaid changes from 2022 to 2023, contact the Law Office of Inna Fershteyn at 718-333-2395.

Can I Give My Assets Away To Qualify for Medicaid?

Many individuals are forced to consider applying for Medicaid for a host of reasons, all mainly to help alleviate the cost of medical care. Medicaid is a joint federal and state public health insurance program for people with low income. The program covers 1 in 5 Americans, many with intricate and expensive needs for medical care. Medicaid is the principal source of long-term care coverage for many Americans. The majority of Medicaid enrollees lack access to other affordable health insurance. Medicaid covers a broad array of health services and helps limit out-of-pocket costs.

can-i-give-my-assets-away-for-medicaid-eligibility

There are many factors to consider when applying for Medicaid, and this is widely due to the eligibility requirements that Medicaid has. If an individual has too many assets, they won’t be able to qualify for Medicaid. However, there are many legal ways to move your assets, which can allow you or a loved one to be eligible for Medicaid.

1) What qualifications do you need to have to become eligible for Medicaid? 

To be eligible for New York Medicaid, you have to be a resident of New York State, a U.S. national, citizen, permanent resident, or legal alien, in need of health care/insurance assistance, whose financial situation would be characterized as low income or very low income. You must also be one of the following:

  • Pregnant, or
  • Be responsible for a child 18 years of age or younger, or
  • Blind, or
  • Have a disability or a family member in your household with a disability, or
  • Be 65 years of age or older.

But the primary concern regarding Medicaid qualifications for many Americans is what is considered low income.  

2) How does Medicaid know what assets you have?

When you are determining if you are eligible for Medicaid, the Department of Social Services (“DSS”) will evaluate the Medicaid applicant or recipient’s income and assets that actually or will potentially exist. However, only such income and/or assets that are actually found to be readily available to the applicant may be considered in determining eligibility for Medicaid. In 2021, an individual can have no more than $17,131 in income to be eligible for Medicaid. 

Can I Give My Assets Away As A “Gift” To Qualify for Medicaid?

In general, while determining the Medicaid eligibility, any gifting of assets made by the applicant within the look-back period will render the person ineligible for Medicaid for a period of time. Currently, the look-back period is five (5) years prior to the date of application.

Everyday common gifts can be considered by this vague word, “gift.” For example, paying for your grandchildren’s college education or contributing to your local church can all be considered gifts for purposes of determining Medicaid. A common myth is that you are allowed to gift $17,131 each year without incurring a penalty for Medicaid eligibility purposes. But as the word myth suggests, this is incorrect. In 2021, the annual gift tax exclusion for federal gift tax purposes is $15,000. That means that you can open the phone book and give everyone in the phone book $15,000 this year without filing a gift tax return. However, federal tax law has nothing to do with Medicaid eligibility rules. If you are gifting $15,000 each year, those gifts will still be evaluated for Medicaid eligibility purposes.

When is a gift not a gift (or in Medicaid terms a “transfer”) for Medicaid eligibility purposes? New York State law states that a person will not be ineligible for Medicaid if they transferred assets unless it was transferred exclusively for a purpose other than Medicaid eligibility. Ok, that seems easy enough. For example, you obviously didn’t pay for your grandchildren’s college education because you were specifically trying to qualify for Medicaid. However, as a matter of policy, DSS has historically been reluctant to accept this argument from applicants who have made significant gifts of assets like paying thousands of dollars for college. The result is that many individuals are denied Medicaid eligibility despite making regular (and necessary) gifts during the look-back period. However, there have been instances where applicants successfully argued that gifts made during the lookback period were for purposes other than to qualify for Medicaid and therefore, eligible for Medicaid. While determining the applicant’s intention, the DSS will consider things such as the applicant’s physical and mental condition at the time of the gift, the applicant’s use of the gifted funds, and the applicant’s financial security. The DSS may also evaluate whether the applicant gifted their own funds or if they received the funds through inheritance or windfall. To add, the DSS may check to make sure how much time passed between the gifting and the applicant’s institutionalization and whether this applicant lived alone when they made the gifts. Finally, the DSS may review whether the applicant had considered institutionalized care when the gifts were made.

3) Do assets disqualify you from having Medicaid?

No, not necessarily. Having assets won’t automatically disqualify you from having Medicaid. For example, in New York, a single applicant who is blind, disabled, or 65 and older is allowed to retain $15,900 in liquid assets. And for married couples, asset limits vary by the state, the Medicaid program, and if one or both spouses are applying for Medicaid.

However, just because a senior’s assets exceed the general limits listed above it does not mean they are automatically ineligible for Medicaid. States implement different rules and resource limits, and an elder can create a personalized asset spend-down plan to meet their state’s eligibility criteria. States also have varying laws regarding trusts and how they are counted, or not counted, when determining Medicaid eligibility. 

There are also many other guidelines for calculating income and figuring out one’s medical need for care and assistance. Also, different financial rules apply to married couples. It is recommended to familiarize yourself with these eligibility requirements early on in case you ever need to help an aging loved one apply for Medicaid (or file an application yourself).

4) How can an Elder Law Attorney help?

Given the economic environment, it is common for lawyers to encounter situations where applicants gift their children or grandchildren during the look-back period which makes the Medicaid application process more complicated. And in most cases, handling the application process without any professional assistance can result in a determination of ineligibility and even a costly Medicaid penalty period. The assistance of competent counsel practicing in the area of elder law is imperative. It is important to work with an experienced elder law attorney with Medicaid planning experience. 

For further Medicaid planning, please contact the Law Office of Inna Fershteyn at (718) 333-2395 to receive the most highly qualified legal advice.

How Does A Medicaid Asset Protection Trust Work?

Today we are going to learn about what a Medicaid Asset Protection Trust is and how it works. We also going to discuss when it should be used, it’s benefits and how an elder law attorney can help you through the process.

What is a Medicaid Asset Protection Trust?

A Medicaid Asset Protection Trust, sometimes called Pooled Income Trust, is a tool to protect your assets and allow people to qualify for Medicaid long-term care.

how-a-medicaid-asset-protection-trust-works

When should a Medicaid Asset Protection Trust be used?

To protect your assets, the trust has to be created 2.5 years before home care Medicaid is needed or 5 years before nursing home care is needed. This is because Medicaid inputs a “look-back” period when someone applies for Medicaid. The reason a certain period of time has to pass before your assets are protected is that the transfer of assets into a Medicaid Asset Protection Trust is considered a “gift.” Medicaid also enforces strict income and asset guidelines. In order to qualify for Medicaid, you cannot have more than $2,000 of liquid assets. Liquid assets are assets that can be easily converted to cash in a short amount of time. Examples include cash, checking accounts, and saving accounts. Once you meet the guidelines, Medicaid looks into what happened to your assets which is why you need to prepare years beforehand. The applicant still has to report the existence of the Medicaid Asset Protection Trust – it is not hidden from the government in any way.

How Does a Medicaid Trust Work?

A Medicaid Asset Protection Trust is an irrevocable trust which means once it has been made, it cannot be changed or terminated without the permission of the grantor’s beneficiary. Assets placed in the trust are considered gifts to the beneficiaries, which protects the assets from Medicaid. In New York, an irrevocable trust can be revoked as long as the beneficiaries and the grantor consent to it. But, beware that once a Medicaid Asset Protection Trust is revoked, the assets are no longer protected by this trust. 

The Grantor of a Medicaid Trust has to name someone other than themselves or their spouse as the Trustee. This means that the Grantor is giving up control. However, the Grantor still has the power to remove and change any trustee as well as the power to change the beneficiaries of the Trust. If the Grantor owns a home, they can maintain the right to live in that home rent-free for their entire life, and their spouse can do so too. This “life estate” lets the grantor continue to obtain any property tax exemptions.

The Grantor is not entitled to the principal of any assets placed in an Irrevocable Trust which means that they are not entitled to any of the property that can generate ordinary income.
However, they can receive all income (interest, dividends, rental income, etc.) that the Trust assets may generate. The Trustee’s role is to invest the assets held by the Trust. However, because the Grantor maintains some control over assets in the Medicaid Trust, it is considered a grantor trust, and they are still taxed on any income.

When an Irrevocable Trust is created, assets that the Grantor wants to protect will be retitled in the name of the Trust, which is known as “funding the trust.” Assets can include anything from a checking or brokerage account to property. However, Individual Retirement Accounts do not get retitled into the name of the Trust because they are already protected for Medicaid purposes by law – as long as the required minimum distribution is taken. 

Usually, Grantors will place their home and some liquid assets in the trust and name a child as trustee then not think about it for years. Most trusts provide that after the death of one of the spouses, the income interest continues for the surviving spouse. Then, after the death of the remaining spouse, the assets are distributed to beneficiaries as they would be in a will. 

What are the benefits?

The main benefit of a Medicaid Asset Protection Trust is the ability to receive Medicaid. In general, with trusts, you can protect your and your family’s assets and pass on any valuable assets, like property. Some other specific benefits have been mentioned above such as property tax exemptions, uninterrupted income, and the ability to still use the assets after the grantor’s death. Some other benefits include:
● Avoidance of probate court
● Maintenance of privacy
● Avoids the hassle of multi-state probate proceedings- in case trustees do not reside in the state that the grantor did
● Provides planning for mental disability- should the grantor ever not be sound of mind, they cannot amend the trust
● Keeps assets in the immediate family
● Keeps assets out of surviving children’s divorces
● Keeps money out of creditors’ reach

How can an elder law attorney help?

An elder law attorney can help you decide whether a Medicaid Asset Protection Trust is right for you. A host of factors goes into the decision, such as the client’s available funds, relationship with intended beneficiaries, and timing. It is important to meet with a knowledgeable and experienced elder law attorney to assess which plan best achieves your goals and relieves any of your concerns.

For further Medicaid planning, please contact the Law Office of Inna Fershteyn at (718) 333-2395 to receive the most highly qualified legal advice.