The most common misconception about Medicaid is that it is solely a program for the poor. While Medicaid is designed to provide services to those who are “technically” impoverished, it also serves to prevent families from becoming impoverished by the costs of long-term health care while, at the same time, providing basic health care, either at home or in a senior care facility.
Medicaid is a joint Federal and State program administered by local governments which, accordingly, may vary from state to state. This page will only review New York State’s Medicaid program.
In New York City the agency responsible for the administration of Medicaid is the Medical Assistance Program, which is part and parcel of the Human Resources Administration.
To qualify for Medicaid an applicant must demonstrate financial need and, if accepted, may only retain resources determined to be exempt by Medicaid or within Medicaid’s financial limits. Said resources include Austrian or German reparations as well as essential personal effects such as clothing, furniture and automobiles. Also included are irrevocable burial trusts, a burial fund in the amount of approximately $1,500.00 and a resource account of approximately $14,850.00 (please note these amounts are adjusted on an annual basis).
As noted above, reparation payments received by survivors of the Holocaust from the Federal Republic of Austria or Germany are exempt resources and are not includable in a determination of eligibility. However, accumulated reparation payments must be identified as such to be exempt. This is best accomplished by depositing the Austrian or German reparation payments in a Victims of Nazi Persecution Compensation Trust. (See also the section entitled “Needs of Survivors” elsewhere on this website). Be aware the interest earned on the reparation accounts once deposited is not exempt.
Other than through restitution planning, to achieve Medicaid financial status one must either spend down their assets or make transfers of these assets to reach the financial limitations permitted by Medicaid.
A spend down is achieved when a person has exhausted his or her assets, usually by paying for their own health care. Once a person’s assets are exhausted in this manner, application may be made for Medicaid.
The transfer of assets method of achieving Medicaid financial status will enable a person to obtain Medicaid while preserving a significant portion of their assets for their family. However, caution and strict compliance with Medicaid transfer of asset guidelines is essential. The transfer of assets by either the applicant for Medicaid or the applicant’s spouse, to a person other than their spouse, during or after the 60-month look-back period prior to application for institutional services such as nursing home care, will create a period of ineligibility unless an exemption applies.
If an Application is made within the look-back period of 60 months then the maximum possible penalty period of ineligibility is unlimited.
It is also important to note that multiple consecutive transfers will not overlap each other but will be treated as a single transfer, with a penalty period running from the date of the first transfer; thus there will be no concurrently running penalty periods.
As mentioned above, there is no penalty period on a transfer of assets if an exemption exists. Most notably, the transfer of assets between spouses does not cause a penalty period. Similarly, there is no transfer penalty for the transfer of restitution assets to Victims of Nazi Persecution Compensation Trust.
Currently, a community spouse is entitled to retain an income allowance of $2,980.50 per month, and a maximum resource amount of $119,220.00. These amounts are also adjusted annually for inflation. In addition, in New York State, both the Federal and State laws entitle a spouse to exercise the right of “spousal refusal” which, in effect, allows the community spouse to retain resources above the allotted resource amount without jeopardizing the institutionalized spouse’s Medicaid. As a result of spousal refusal, the HRA obtains the right to bring a proceeding against the community spouse for support. In cases where the community spouse submits a spousal refusal, the Department of Social Services requests a contribution of 25% of that portion of the community spouse’s income in excess of the monthly income amount. Note, however, that Medicaid will be provided regardless of whether the community spouse contributes the excess income.
As noted above, specific transfer of asset rules apply between spouses, i.e., transfers of assets between spouses do not cause a penalty period. Therefore, it is permissible for institutionalized spouses to transfer all of their assets to the community spouse and thus make themselves eligible for Medicaid. Thereafter, the community spouse has the right to submit a spousal refusal document following which the Department of Social Services would be obligated to provide Medicaid to the institutionalized spouse. Nonetheless, the Department of Social Services reserves its right, under the Social Services Law, to recover support from the community spouse.
An interesting provision of the law permits the community spouse to make transfers after the institutionalized spouses Medicaid application has been approved. Thus, a transfer which takes place after the institutionalized spouse is receiving medical assistance will not affect the institutionalized spouse’s eligibility for receiving medical services. The Department of Social Services, however, has a continuing right to sue for support for services rendered to the institutionalized spouse. Thus, such a transfer would not provide a guaranteed shield of one’s assets from a law suit.
Further, an administrative directive issued in April, 2002, by the New York State Department of Health opens the door to passing on properly segregated compensation funds (such as those in a carefully drawn Compensation Trust) to a grantor’s heirs, subject, of course, to estate taxes.
With respect to Medicaid planning, the general goal is to devise a plan which will give the client peace of mind and limit exposure to payments, claims or lawsuits brought by the Department of Social Services. With proper assistance, all of these goals can be met.