For many families, paying for a loved one’s extended stay in a nursing home would be difficult without the help of Medicaid. However, in order to qualify for the program, a person’s income and assets must fall within certain limits.
Federal rules state that to qualify for Medicaid nursing home coverage, a person must have no more than $2,000 in “countable” assets. However, New York State has more generous rules, so for New York residents in 2016 the limit is $14,850 for a single person. If a married person needs nursing home care, there are protections for a spouse who remains outside. In this situation, the community spouse has a maximum threshold of &74,820 to $119,220 ($14,850 for the institutionalized person and $119,220 for that person’s spouse). Certain types of resources are exempt, such as up to $828,000 of equity in a home and one motor vehicle.
If you have countable resources above the limits, you may be told that you need to “spend down” your assets, paying for nursing home care yourself, until you reach the resource limits, at which point Medicaid begins covering the cost. This is what happens in many cases. In other cases, a family may anticipate the need for long-term care and wish to transfer assets to the next generation ahead of time, in order to preserve the family’s resources while still qualifying for Medicaid. This is an excellent strategy, as long as the Medicaid rules are followed.
Medicaid has a five-year “look-back” period for transfers of assets. A person applying for Medicaid must disclose all financial transactions for the previous five years. During this time, any transfers of assets for less than fair market value may prevent the person from being eligible for Medicaid. (However, in New York State, the asset transfer rules do not apply for recipients of Medicaid for home care services.) In addition, invalid transfers may result in a costly penalty period during which ineligibility may continue even after assets are spent down.
To avoid ineligibility and penalties, it is important to plan ahead. Transfers made more than five years in advance are not affected by the rules. There are also important exceptions to the asset transfer rules as well as legal strategies including certain trusts that can help preserve assets while ensuring eligibility. As you can see, Medicaid planning is very complex and it is essential to have help from a qualified elder law attorney.