ÿþ<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01//EN" "http://www.w3.org/TR/html4/strict.dtd"> <html><!-- InstanceBegin template="/Templates/template.dwt" codeOutsideHTMLIsLocked="false" --> <head> <title>Bertine, Hufnagel, Headley, Zeltner, Drummond & Dohn LLP</title> <link href="style.css" type="text/css" rel="stylesheet"> </head> <body> <div id="container"> <div id="header"><img src="images/header.jpg" alt="Welcome to Bertine, Hufnagel, Headley, Zeltner, Drummond & Dohn LLP"></div> <!-- InstanceBeginEditable name="menu" --> <ul id="mainnav"> <li><a href="index.html">Home</a></li> <li><a href="who-we-are.html">Who We Are</a></li> <li><a href="practice.html">Practice Areas</a></li> <li><a href="attorneys.html">Attorneys</a></li> <li id="current"><a href="articles.html">Articles</a></li> <li><a href="faq.html">FAQ</a></li> <li><a href="links.html">Links</a></li> <li><a href="directions.html">Directions</a></li> </ul> <!-- InstanceEndEditable --> <div id="content"> <!-- InstanceBeginEditable name="text" --> <div id="content"> <h1>LONG TERM CARE AND MEDICAID ELIGIBILITY PLANNING OVERVIEW </h1> <p>The purpose of this memorandum is to acquaint you with the provisions of federal and New York law which govern eligibility for Medicaid benefits for long term nursing home care and the so-called &ldquo;transfer of assets&rdquo; rules which can render a person ineligible for Medicaid benefits based on gifts made by that individual or his or her spouse.&nbsp; </p> <h2>Medicare vs. Medicaid </h2> <p>Medicare is a federally administered health insurance program which covers individuals age 65 and over (and in some cases, disabled persons under age 65).&nbsp; Medicare recipients are required to pay premiums for their coverage and personal income is <u>not</u> a factor in determining Medicare eligibility.&nbsp; Medicare, in general, does <u>not</u> cover the cost of long term nursing home care.</p> <p>In contrast, Medicaid is a &ldquo;needs based&rdquo; medical assistance program which is jointly administered by the federal and state governments.&nbsp; For eligible recipients of any age, Medicaid covers a wide range of medical services, including long term nursing home care.&nbsp; This memorandum will focus mainly on eligibility for coverage of long term nursing home care through an award of Medicaid benefits.</p> <h2>Who is Eligible to Receive a Medicaid Award to Pay for Nursing Home Care.</u>Savings and Income Limits </h2> <p>In 2011, single individuals who reside in a nursing home (or a married individual whose spouse also resides in a nursing home) are eligible for Medicaid benefits if they have no more than $13,800 in savings and $50 per month in income.&nbsp; Savings in excess of the $13,800 allowance must be &ldquo;spent down&rdquo; before an individual may qualify for a Medicaid award.&nbsp; Any monthly income in excess of the $50 monthly &ldquo;personal needs allowance&rdquo; must be paid directly to the nursing home and will be used to reduce the monthly Medicaid award.</p> <p>For married couples where one spouse resides in the nursing home and one spouse resides at home (the &ldquo;community spouse&rdquo;), in addition to the above, the community spouse is entitled to retain a minimum of $74,820 and a maximum of $109,560 in savings and $2,739 in monthly income.&nbsp; In general, any savings or income in excess of these limits must be applied to the care of the spouse residing in the nursing home.&nbsp; The community spouse, however, may refuse to contribute savings and income in excess of the above limits to the care of the spouse residing in the nursing home.&nbsp; In such case of a &ldquo;spousal refusal,&rdquo; the New York Department of Social Services (&ldquo;DSS&rdquo;) may seek to recover the excess savings and income.</p> <h2>Exempt Assets </h2> <p>In addition to the above savings and income limits, a person may keep additional assets which by statute are declared &ldquo;exempt&rdquo; and are thus ignored when determining Medicaid eligibility.&nbsp; The most significant exempt asset is the individual&rsquo;s home, so long as the home does not have equity in excess of $750,000 and so long as the individual declares an intent to return to the home, should he or she be able to be discharged from the nursing home.&nbsp; If an individual in a nursing home cannot declare an intent to return home, the home maintains its exemption (even if its equity exceeds $750,000) if any one of the following persons resides in the home: the individual&rsquo;s spouse, or child under age 21, or any child over age 21 who is blind or disabled.</p> <p>In New York, an individual retirement account or the assets in a pension plan are generally considered resources which must be contributed to the cost of nursing home care unless the individual has begun taking his or her &ldquo;required minimum distributions&rdquo; as required by the Internal Revenue Code.&nbsp; In this case, the account assets are no longer considered available to pay for the nursing home care, but the annual distributions count as income which must be contributed towards the cost of care.</p> <p>Other exempt assets are an automobile, a pre-paid burial fund, and life insurance with a nominal cash surrender value.</p> <h2>Transfer of Assets Rules </h2> <p>The general rule is that you must &ldquo;spend down&rdquo; your non-exempt assets (presumably on nursing home care) before you can become eligible for a Medicaid award.&nbsp; The transfer of assets rules, contained in New York Social Services Law &sect;366, prevent you from gifting away your assets (exempt and non-exempt) for the sole purpose of obtaining a Medicaid award.</p> <p><u>The &ldquo;Look Back&rdquo; Period</u>.&nbsp;&nbsp;&nbsp; When an individual applies for Medicaid, Department of Social Services (&ldquo;DSS&rdquo;) servicing the County in which the applicant resides will review the individual&rsquo;s records for a period of time to determine whether any gifts were made.&nbsp; That period of time is commonly referred to as the &ldquo;look back&rdquo; period.&nbsp; For applications for Medicaid benefits made after February 8, 2006, the look back period is five years for all transfers.</p> <p>If there were any gifts made during the look back periods which were for the purpose of Medicaid eligibility planning (which is determined on a factual basis), a &ldquo;penalty period&rdquo; will be imposed and the individual will be declared ineligible for Medicaid benefits for the duration of the penalty period. </p> <p><u>Calculation of the Penalty Period</u>.&nbsp; The length of the penalty period is always measured in months and it is calculated by dividing the amount of the gift by the average monthly cost of nursing home care (as determined by DSS regulations for the area in which you live).<br> <strong>Example</strong>: A makes a gift on October 15, 2006 of $50,000 to his daughter.&nbsp; On December 1, 2006, A goes into a nursing home and applies for Medicaid benefits.&nbsp; The average monthly cost of a nursing home in the Northern Metropolitan region (which includes Westchester County) is $8,724. $50,000 &cedil; $8,724 = 5.73.&nbsp; A is therefore ineligible for Medicaid benefits for 6 months.</p> <p><u>Commencement of the Penalty Period</u>. &nbsp;For gifts made after February 8, 2006, the penalty period begins to run only after A begins to reside in the nursing home, applies for Medicaid benefits and would have otherwise been eligible for such benefits if it were not for the gift.&nbsp; Thus, in the example above, if the $50,000 gift he made to his daughter was his only asset, A would have been eligible for Medicaid benefits when he applied on December 1, 2006, but for the gift.&nbsp; However, because of the gift, A is ineligible for Medicaid benefits for a period of 6 months, which begins to run on December 1, 2006 and is not eligible for Medicaid benefits until June 1, 2007.&nbsp; </p> <p><u>Transfers Which Do Not Cause a Period of Ineligibility</u>.&nbsp; Certain transfers do not trigger the ineligibility rules.&nbsp; Any transfer to a spouse is exempt from the transfer rules because the community spouse is required to use his or her assets to support the spouse residing in the nursing home (see above).&nbsp; A transfer of an individual&rsquo;s residence to (i) a child who has resided in the home for at least two years and acted as a caretaker to the individual, (ii) a sibling who is part owner of the residence, or (iii) a transfer of the residence to a blind or disabled child also do not affect eligibility for Medicaid.</p> <p>Also, if it can be shown that the asset was transferred for a purpose other than creating Medicaid eligibility, or if the gifted asset is returned, the ineligibility rules will not apply.</p> <h2>Liens for Medicaid Benefits Paid </h2> <p>In some instances, DSS can put a lien on the property of a Medicaid recipient for the purpose of recovering benefits paid.&nbsp; DSS can also recover benefits from the estate of a Medicaid recipient who has died and from other assets, not part of the recipients&rsquo; estate, in which the recipient had an interest when he or she died.</p> <h2>Planning </h2> <p>In recent years, federal and state legislatures have made it more difficult to shelter assets from the cost of long term care, while at the same time making it easier for DSS to recover Medicaid benefits from the estates of deceased recipients.&nbsp; It is imperative that long term care planning be addressed early.&nbsp; It is also important to note that actions that you may take to plan for your long term care may be inadvisable from an estate tax or income tax planning perspective. &nbsp;Therefore, if you are considering long term planning for yourself or a loved one, it is important to discuss and understand the benefits and drawbacks of all the options that are available.</p> <p class="small"><strong>PLEASE NOTE THAT THIS NARRATIVE IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE ADVICE.&nbsp; EVERY SITUATION IS UNIQUE AND IF YOU ARE CONFRONTED WITH A MEDICAID OR OTHER ELDER LAW ISSUE, WE ENCOURAGE YOU TO MEET WITH US SO THAT WE CAN GIVE YOU ADVICE SPECIFICALLY TAILORED TO YOU AND YOUR FAMILY&rsquo;S NEEDS.</strong> </p> </div> <!-- InstanceEndEditable --> </div> <div id="footer"><!-- InstanceBeginEditable name="advertising" --><!-- InstanceEndEditable --></div> </div> </body> <!-- InstanceEnd --></html>