Many seniors may need the services of a nursing home or at-home care at some point in their lives. You might assume that government assistance or health insurance will step in and cover the cost if you cannot afford these services. Unfortunately, neither health insurance nor Medicare covers long-term care. Long-term care insurance is an important option that should be fully explored, but if it is too expensive, or a person can no longer qualify, then Medicaid could become your only option.

Understanding Medicaid Qualification

Medicaid coverage is not a given. If you have assets or recently transferred assets, Medicaid may determine you do not qualify for coverage until a certain amount of time has passed. If this happens, you and your family can face significant medical bills. If you cannot pay, nursing homes may take you to court to get reimbursed.

What steps can you take to avoid this? First, before applying for Medicaid, get a better understanding of the timelines in your state — known as lookback periods — that can affect your eligibility. Then you can engage in proper Medicaid or asset protection planning in advance of these timeframes. A good age to begin planning is around age 65, although everyone’s situation is different.

Individual states run Medicaid programs, and every state has different rules regarding Medicaid eligibility. These programs were designed as a payor of last resort — in other words, to qualify, you must meet strict requirements. There are two primary types of Medicaid benefits: home care and nursing home care.

Lookback Periods

You must submit an application to your local Medicaid office to qualify for benefits. As part of this process, the state will look at any money or property you may have transferred within a certain lookback period. In New York State, although there is currently a law on the books that calls for a 30 month lookback for Medicaid home care, it has not been implemented and the earliest it may be implemented is currently estimated for sometime in 2025. However there is a 5 year/60 month lookback period for nursing home (Institutional) Medicaid.

Lookback periods can have serious consequences. If you have not engaged in appropriate asset protection planning, you may not be able to qualify for nursing home care for a significant period of time. The result is that many elderly individuals must then spend down their savings and liquidate their assets to pay privately for their nursing home care before they receive Medicaid coverage. If a person has transferred assets and is subject to a penalty period at the time they need nursing home care, family members may have to step in and bear these costs on their own.

So, what can you do? The answer is to start planning as soon as possible.

Options to Explore

Speaking with our elder law attorneys can help you and your loved ones explore options to limit your financial exposure for long term care costs.

• Medicaid Asset Protection Trust — One common approach is placing assets in a Medicaid Asset Protection Trust. You may be able to use this to shelter various assets such as stock accounts, savings, a home with unprotected equity, and much more.
• Long-Term Care Insurance — Long-term care insurance can cover nursing home bills, assisted living fees, and in-home care, providing financial support if you require assistance with daily living when you get older.
• Promissory Note and Gift Planning — This is another option you may explore if no planning has been done prior to an admission to a nursing home. Promissory note and gift planning allows one to protect approximately fifty (50%) percent of their assets if properly implemented.
• Spousal Planning — Your spouse may also have options that can help you qualify for Medicaid. One such option includes exercising a right of spousal refusal — a process available in some states allowing the income and assets of your spouse to be removed from consideration for Medicaid eligibility.

Finally, an attorney can help you understand if certain transfers are permissible under Medicaid rules without triggering a penalty period.

Without proper planning, individuals with assets and income exceeding specific state-set thresholds would have to spend this income and their assets on their care or exempt items before they can receive Medicaid benefits. For assistance in Medicaid planning, consult with the elder law attorneys at Kommer Bave & Ciccone LLP.

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