Planning For Nursing Home Care: Medicaid Eligibility And Financial Planning Options
Nursing home and institutional care is costly, to say the least. A prolonged stay can wipe out a person’s life savings, destroying all that they have worked for and frustrating their plans to leave a legacy to their children or grandchildren. And what about the patient who has run out of money but still needs care?
Many people assume that Medicare will cover the cost of long-term care at a nursing home or assisted living facility, but that is not always the case. Medicare Part A does generally cover:
- Inpatient care in a hospital
- Skilled nursing facility care (for up to 100 days, based on certain circumstances, and subject to copayments after the first 20 days)
- Nursing home care (inpatient care in a skilled nursing facility that’s not custodial or long-term care)
- Hospice care
- Home health care
Medicare, essentially, is like any other health insurance policy for seniors and the disabled. The program happens to be provided by the Federal Government and pays expenses related to short-term illness or injury, acute care and rehabilitation. It is not intended to cover long-term care that is not for the purpose of rehabilitation.
Medicaid covers medical services and provides benefits for those needing long-term, custodial care if they are financially eligible. Medicaid will also assist people who have difficulties with basic needs such as bathing, dressing, and eating. Medicaid also covers most medical expenses that are not covered by Medicare or other insurance. As such, gaining eligibility for Medicaid is a key goal for those concerned about the huge expense of nursing home care.
Standards for Medicaid Eligibility in New York
When a person’s income falls below a certain near-poverty level, the person may become eligible for Medicaid, a government medical insurance program that pays for health services, including nursing home care, for low-income people.
Due to the income requirements for Medicaid eligibility in New York, many individuals struggle to qualify for Medicaid coverage that will pay for long-term nursing home care. Medicaid has stringent needs-based requirements and transfer of asset rules that individuals and their families must account for in their planning.
Some assets that are exempt for Medicaid eligibility in New York include:
- Irrevocable burial accounts for the applicant, children, and siblings, along with any spouses
- Burial life insurance with a face value of no more than $1,500
- An automobile and personal property
- Irrespective of how the home is titled, the personal residence (with maximum equity of $858,000) in which the community spouse or a disabled child resides
- Retirement accounts such as IRAs, 401(k) plans, 403(b) plans that are in a periodic pay status (i.e., annuity payments over the individual’s life expectancy). The retirement account of a community spouse will also be exempt if in a payout status when the income will be subject to the Medicaid income limitations. Most New York counties use the IRS tables for the required monthly distribution.
- An applicant’s business property and liquid reserves needed for the operation of the family enterprise. This includes vehicles, machinery, equipment, inventory, tools, and livestock.
For Medicaid eligibility, there is also a lookback period of 60 months, in which any gift (or “uncompensated transfer” ) made during that period other than to a spouse may be subject to review. In most New York counties, any disbursement of more than $1,000 over this period may be scrutinized.
Fortunately, it may not be necessary to spend yourself into poverty before qualifying for Medicaid assistance. With a Medicaid trust, you can transfer your valuable assets into a trust so that they are no longer counted when determining Medicaid eligibility.
Depending upon how the trust is created, you can still enjoy the income generated by the asset, whether it is a real property investment, a savings account, CD, mutual fund or other investment, while protecting the asset itself for future beneficiaries. The Bronx and Westchester elder law attorneys at Cavallo & Cavallo assist clients transitioning to nursing homes by helping them with institutional Medicaid applications.
Because the Medicaid lookback period extends 5 years before admission to nursing home care and the need for Medicaid coverage, early planning is critical and a trustworthy legal advisor with years of experience in this area can help you preserve your financial assets as best as possible.
Nobody wants to think about the prospect of aging and needing care in a nursing home. However, the time to plan is while you are healthy and long-term care remains a distant prospect. You and your family will be thankful later for detailed planning now.
Meet With One of Our Attorneys to Customize Your Estate Plan and Discuss Your Trust Options
At Cavallo & Cavallo, we understand that planning for long-term care and Medicaid eligibility is a complex and sometimes overwhelming task. We have worked with many families in this area to craft a plan that suits them and their individual circumstances. To discuss nursing home care and Medicaid eligibility options today, call or contact our Bronx & Westchester estate planning attorneys online and request a consultation with an attorney in our office.
Resource:
health.ny.gov/health_care/medicaid/
