Asset Protection/Medicaid Planning
The Deficit Reduction Act of 2005 brought sweeping (and for the most part unfriendly) changes to Medicaid and its qualification guidelines. In the event an individual needs long-term care, including nursing home (not including certain types of homecare), effective planning is extremely important. The monthly regional rate for nursing home care in the Central New York area in 2009 is $6,938.00/month (if paid by Medicaid, private pay is significantly more expensive). What does this mean to someone needing care? An individual or married couple would spend several hundred thousand dollars and could spend most or all of their assets on nursing home care without proper planning (as Medicaid would deem the individual ineligible-resource limits for eligibility are discussed below).
Medicaid is a joint federal, state and city program; it is need-based meaning it is available to those individuals with low incomes and limited assets. There is absolutely no age restriction for qualification. In order to qualify, you must submit a detailed application and provide detailed financial records for the previous 36 months (60 months if you made transfers to trusts)-this is known as the "look-back period". While DRA 2005 increased the look-back period to 60 months for all transfers, New York has agreed not to enforce that part of the federal statute until February 1, 2009. At that time, one month will be added to the direct transfer look-back period for each month following February 1, 2009 i.e. for March 1, 2009 the look-back will be 37 months, and for April 1, 2009, the look-back will be 38 months (until February 1, 2011 when the look-back will reach the 60 month level set by DRA 2005). Although New York's rule on direct transfers is friendly to those who have already transferred assets, it provides no protection for future transfers.
Where an individual is single and in need of nursing home or other qualifying long-term care, that individual is allotted certain resource and income maximums-amounts above those limits would create Medicaid ineligibility (requiring that person to 'spend down') an otherwise eligible applicant/recipient ("A/R"). For 2009, the limits are as follows: a) resources of the A/R: $13,800.00; b) monthly income of the A/R: $50.00. If you are married the community spouse ("CS") is allotted the following amounts: a) resources of the CS: $109,560.00; b) monthly income of the CS: $2,739.00 (see Medicaid 2009 Publications – GIS)
The above resource and income amounts are applicable to any resources not considered exempt such as the homestead and certain IRAs in regular payout status. The homestead is the primary residence occupied by an A/R and/or family members (spouse, minor children, certified blind or certified disabled children, and other dependent relatives). The exemption is limited to $750,000 of equity. It should be noted that there is no cap while a spouse, child under 21 or disabled child of the A/R is resides in the home.
The above is a brief overview of some of the rules of Medicaid and the impact of DRA 2005. Too often productive people who have worked their entire lives as responsible members of the community are forced to spend a lifetime of savings in order to obtain proper care. We welcome the opportunity to help you preserve your estate for the benefit of those you intend.
Asset Protection / Medicaid Planning areas include:
- Long-Term Health Care Planning
- Medicaid Applications
- Medicaid/Irrevocable Income Only Trusts
- Supplemental Needs Trusts (both Third Party and Self-Settled)
- Promissory Notes/Medicaid Annuities
- General Powers of Attorney, Living Wills and Health Care Proxies