Medicaid can be a lifesaver for patients who need expensive long-term care, but the benefits application process is a long and frustrating road. As experienced elder law attorneys, we have helped many seniors get their benefits approved as quickly and painlessly as possible—and we want to help you, too. Keep reading to get the facts on the Medicaid program, its income and asset limits, and how to pay for nursing home care without spending your life savings.
What Is Medicaid? What Does it Pay for?
Medicaid was created as a federal health insurance program for people who had little to no income. Today, it's a joint federal and state program that allows people to receive thousands of dollars worth of healthcare benefits, as long as they can prove financial eligibility.
There are three categories of Medicaid coverage:
- Community services. This covers outpatient doctor's appointments, dentist appointments, emergency room treatment, prescription medications, and other professional clinical care.
- Home health services. Home care services can pay for in-home nursing care, personal care attendants, visiting physical therapists, and other home health aid services.
- Institutional services. Medicaid can also cover extended stays in medical facilities, such as hospitalization (inpatient stays), rehabilitation facilities, and long-term care in a nursing home.
Are Medicaid and Medicare the Same Thing?
No. Medicaid is a needs-based program primarily used to pay for long-term care, whether in a nursing home or through New York's Home and Community-Based Services (HCBS) program.
Medicare is a government-sponsored healthcare insurance program that covers adults over 65 and people with severe disabilities. While it covers regular doctors' visits, emergency treatment, and prescriptions, it won't provide enough to cover the full costs of long-term nursing care.
Who Is Eligible for Medicaid in New York?
You are categorically eligible for Medicaid if you are:
- A legal U.S. resident. While citizenship is not required, a person must be a legal U.S. resident of the state and county where the application for Medicaid is made to receive benefits. Any applicant not born in the United States must have a physical presence within the state and intend to remain permanently or indefinitely.
- Younger than 21 or older than 65. Any person between the ages of 21 and 65 will only be eligible for Medicaid if they are disabled (or expected to be disabled for at least a year), certified blind, below the public assistance income and resource levels, or already receiving Supplemental Security Income.
- Below the financial threshold. Medicaid is a "means-tested" benefit program, meaning applicants cannot have enough income or financial resources to pay for their own care.
What Is the "Look Back" Period?
New York has a 60-month "look back" period for Medicaid applicants seeking nursing home care. Officials will review the applicant's financial transactions for 60 months before the application date, checking whether any assets were sold or given away for less than fair market value.
The "look back" was created to discourage applicants from simply giving their possessions and cash to friends and family to qualify for Medicaid. If any transfers violate the fair market value rule, the applicant will endure a penalty period of Medicaid ineligibility.
Are There Any Exceptions to the Look-Back Period?
The 2019 Coronavirus pandemic has had a significant impact on Medicaid eligibility. The COVID Public Health Emergency has been extended several times, most recently in April 2022, prohibiting the government from discontinuing Medicaid or increasing the “spend-down” until August 1, 2022.
As a result, the 30-month look-back period that disqualifies many applicants from home care or minimum requirements for CDPAP services will not apply until October 1, 2022*(has not been implemented as of 9/27/2022). If applicants complete their Medicaid planning and submit their Home Care Medicaid Application before October 1, 2022*(has not been implemented as of 9/27/2022), they may not be subject to the standard 30-month look back or penalties for transfers to a Medicaid Asset Protection Trust. For this reason, anyone who needs these services now should speak with our Medicaid planning team as soon as possible.
What Are the Financial Requirements for Medicaid?
Medicaid applies both asset and income limits to all applicants. Income includes funds from all sources, such as pensions, rent from income properties, interest or dividends from investments, wages, and Social Security Income. The amount of allowable income changes each year, but it's always extremely low. For example, in 2022, the monthly income limit for an individual was $934, while a married couple with both spouses applying for Medicaid could have only $1,367 in net income per month.
Assets include any property within your control that could potentially be of value. The 2022 asset limit was $16,800 for a single Medicaid recipient and $24,600 for a couple. Essentially, the government is checking whether you could cover the costs of care out of your pocket—even if it meant selling most of what you own.
Medicaid may count all of the following as assets:
- Retirement accounts. Even if an IRA is cashed out, the net proceeds will be considered an available resource, and the income will be counted. However, applicants may be able to avoid penalties by placing their retirement accounts into "payout status" and begin taking the minimum required distribution.
- Annuities. Annuities are fixed periodic payments to an investor in return for their contribution to specific investments. Annuities won't affect the period of eligibility as long as the purchase of the annuity is considered a compensated transfer—in other words, the annuity payment is proportionate to the investment. The monthly annuity payment will still be counted as available income.
- Real estate. The total value of any real property in your name, such as second homes, vacation homes, shared investments, and income-producing properties, may be counted as assets.
Are There Any Assets Not Counted Under the Means Test?
Yes, but they must meet specific requirements. The following exempt resources are not counted for purposes of Medicaid eligibility:
- Your primary residence. Your family home is exempt if it's occupied by you, your spouse, or a minor or disabled child. While the home's value may not be counted as an asset during your lifetime, the New York Medicaid agency will attempt reimbursement of your care by filing a claim against your estate after your death. Your house may be sold to reimburse Medicaid rather than passed down to your family.
- Your car. You may keep one automobile regardless of its value without incurring a Medicaid penalty.
- Burial allowance. If your life insurance includes a burial allowance, you may keep up to $1,500 cash or the face value of burial on the policy.
- Irrevocable Burial Trust. In addition to the $1,500 burial allowance, any pre-paid burial space such as a casket, grave, headstone, crypt, or mausoleum owned using an Irrevocable Trust will not affect Medicaid eligibility. While there is no limit on the amount that can be held in a burial trust, any funds left over after funeral and burial costs are paid must be turned over to Medicaid.
- Personal property. The majority of your personal belongings and furnishings are not counted toward Medicaid eligibility. However, if your belongings are worth a considerable amount (such as works of art or valuable heirlooms), they may be counted as investments rather than personal property.
- The first $20 of income. Medicaid will not count the first 20 dollars of income the applicant makes each month, whether earned or unearned.
What If I'm Over the Financial Limit?
If your available resources are too high to qualify for Medicaid, you have a few options. The first is to pay for nursing home costs out of your own pocket, exhausting your assets until you become eligible for benefits. Unfortunately, many people will do just that because they aren't aware of better alternatives.
Our Medicaid and life care planning attorneys can help you qualify for benefits without sacrificing everything you've worked hard for over the years. Depending on your circumstances, we may be able to secure your benefits through:
- Spend down methods. One of the best ways to reduce assets is to reduce your "countable" resources. Also called "spending down," this involves applying excess funds to past medical bills, home modifications, in-home care, mortgages, or credit card debt. This must be done carefully to ensure that all costs and transfers don't fall below fair market value.
- Medicaid planning. Medicaid planning is a series of legal strategies used to become Medicaid-eligible without losing their home to Medicaid's estate recovery program. This combination of estate planning measures and financial products can give you peace of mind that both you and your family will be able to live comfortably.
- Medicaid Excess Income Program. Some people need care immediately and don't have the time to wait out a period of ineligibility. Fortunately, New York's Medicaid Excess Income Program allows applicants with high medical bills to become eligible even if they exceed the Medicaid income limit. The program requires recipients to use their excess income to cover doctor visits, medical supplies, prescriptions, and other medically-necessary expenses. Once the patient has paid the difference between their monthly income and the Medicaid income limit, Medicaid will pay their medical costs for the rest of the month.
Early Planning Is Key to Getting Medicaid When You Need it
At Landskind & Ricaforte Law Group, P.C., we know the difference Medicaid benefits can make to people who need care as soon as possible. We guide you through all steps of the process, getting you the care you need without sacrificing your loved ones' inheritances. Call us today at (718) 333-5007 or contact us through our online form to learn how we can be of assistance.