The NYS Governor’s budget cuts from the Medicaid program directly affect the aged and disabled individuals in need of community and in-home care Medicaid benefits. These changes are being implemented effective January 1, 2021. Subject to exemptions, these changes will create a 30-month Medicaid look-back penalty for non-exempt transfers (a/k/a gifts) made on or after October 1, 2020.
What is a Medicaid penalty?
A Medicaid penalty is simply a period of time where a Medicaid applicant is unable to receive Medicaid benefits as a result of the transfer of assets (gifts). It is important to note, Medicaid penalties do not start running until the applicant applies (and is approved) for Medicaid benefits.
What does this mean for you and your family?
Prior to October 1, 2020, any non-exempt gift made did not impose a Medicaid penalty for community Medicaid and in-home care Medicaid recipients. Meaning, those Medicaid applicants did not suffer any penalties as a result of gifts made at any time prior to applying for these two programs provided the gifts were made prior to October 1, 2020. Now, penalties will be imposed if gifts were made in the prior 30 months seeking Medicaid benefits. However, do not overlook the chronic care Medicaid rules. If the community Medicaid applicant then required a permanent stay in a nursing home, which is often the case, those gifts will be reviewed over a 60-month period1. Those gifts may now impute transfer penalties and through proper planning, may require the donee to return the gifts to the donor. At this point, the Medicaid applicant will hope the prior non-exempt gifts are available to return to the donor. From my experience, often times that is not the case.
The best way to understand the impact of these changes is to understand the various Medicaid programs. For illustration purposes only, let’s review four of the Medicaid programs by looking at the chart attached briefly outlining some general requirements to become eligible for these benefits, under the rules today and under the rules effective 10/1/20.
In the year 2020, if a non-exempt gift is made by someone receiving chronic care Medicaid services in Monroe County, the penalty for a $50,000 gift will yield a 4.01 month penalty. That means the Medicaid applicant will not receive Medicaid for just over four months, if otherwise Medicaid eligible and the applicant will have to privately pay for care for those four plus months. The cost of 24/7 in-home care can be in excess of $20,000/month ($20,000 x 4 months = $80,000) and the cost of a skilled nursing facility in the Monroe County area can be $15,500/month ($15,500 x 4 months = $62,000). The penalties are greater than the gifts. It is unsure what penalties will be imposed for community Medicaid recipients, but it likely to be equivalent to chronic care Medicaid penalties.
IN SUMMARY
It is not recommended to navigate Medicaid rules without the counsel of an elder law attorney. An unexpected Medicaid penalty can cost you or your family hundreds of thousands of dollars. In applying for Medicaid, the county in which you reside will assign a caseworker. Although in my experience these caseworkers work diligently, your particular caseworker may not review your case for 6 to 12 months depending on the County. During that time, the nursing home obligation will still be due and owing in the majority of cases.
Further, due to the new rules, funding of pooled trusts during the lookback period by those over the age of 65 may be considered as a transfer of assets but there may be some planning opportunities available, subject to review of anticipated new regulations.
HOW INCOME IS TREATED FOR COVID-19 BENEFITS
Due to the Coronavirus, the CARES Act was enacted directing the Medicaid agencies to disregard the $600 weekly Pandemic Unemployment compensation when determining eligibility for Medicaid. However, the regular Unemployment Insurance Benefits received are still counted as income. The stimulus payments of $1,200 for single adults, and $2,400 for married couples filing jointly and $500 for children under the age of 17 are not taxable income and therefore not countable in MAGI-based eligibility determinations.2
The information contained is for informational purposes only and is not intended to provide legal advice.
Written by Robin Folts, Esq.
Robin Folts is an elder law attorney and Partner at Lacy Katzen LLP. She has provided counsel to hundreds of clients in applying for various Medicaid benefits. She has assisted families in applying for Medicaid benefits in counties across New York State including New York City. She chairs the Elder Law Practice Group and is a member of the Firms Management Committee. She has presented seminars to financial advisors and accountants and has discussed estate planning and elder law topics on radio and television.
If you have any questions, please contact Robin Folts.
1. The 60-month look-back period starts from the Medicaid eligibility date and the application submission seeking that date and is approved by the Agency. If a gift was made November 1, 2020, and the applicant applied for Medicaid one year later, that gift will be penalized for both community and chronic care Medicaid purposes, subject to exemptions. If the gift was made more than 30 months ago but less than 60 months prior to the Medicaid eligibility date, subject to exemptions, and the applicant was applying for both community Medicaid and chronic care Medicaid, the caseworker will assess the penalty based on the amount and date of the gift. Under this scenario, Community Medicaid should be approved, subject to other Medicaid eligibility requirements, for chronic care Medicaid, a penalty would be assessed, subject to any exemptions.
2. General Information System GIS 20 MA/05
