lookback period - Trust and Estate Planning Law Office

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.

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:

Spouse
Children under the age of 21 or legally blind/disabled of any age
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:

Spouse
Individual’s child who is legally blind/disabled
A trust established for the benefit of an individual under 65 years old who is disabled
Transfer of an asset that does not accumulate a penalty
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

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.

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?

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.

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.