If you think you or a loved one may need to apply for Medicaid benefits in the future, it is important to understand the asset transfer rules.  Generally, gifts or transfers of money or property within the applicable “look back” period will subject the Medicaid applicant to a “penalty period” of ineligibility for benefits.  The attorneys at Lamson & Cutner can help clients understand the Medicaid asset transfer rules and qualify for Medicaid benefits, taking into account the recently-enacted Community Medicaid “look back” that is currently scheduled to go into effect in 2024.  Note:  The implementation date for the “look back” has been extended  to 2025, although a firm date has not yet been announced. Contact our firm to learn the current status of the Community Medicaid look back. 

Medicaid Look Back Period Extended to Community-Based Services

Applications for Medicaid benefits in a skilled nursing facility are subject to the five-year nursing home look back period.  More information about the Nursing Home look back can be found here.   In 2020, New York State enacted (but has not yet implemented) legislation requiring – for the first time – a look back period for applications seeking in-home care or other Community Medicaid benefits.

The new look back period is 30 months.  However, due to the Public Health Emergency currently in effect, the States are not permitted to impose more restrictive Medicaid eligibility standards.  As a result, implementation of the new look back has been delayed until March 31, 2024, and it may be delayed further.  For New York's Medicaid system, the changes will require a tremendous amount of logistical preparation, as well as additional work, paperwork, and changes in procedures.

The new look back will mean that many patients and their families will incur substantial additional costs that were previously covered by Medicaid.  These may include the costs of adult day health care programs, private duty nursing services, certified home health agency services, assisted living program services, personal care services, limited license home care services, and managed long-term care services provided in a community setting.  The transfer penalty period will begin in the month when the applicant’s Medicaid application has been accepted, and the applicant has been approved for care based upon a functional assessment.  More information about the Community Medicaid look back is available here.

Understanding Medicaid Look Back Exemptions

People who want to apply for Medicaid can avoid a penalty period in cases where they are able to make an exempt transfer.  Medicaid asset exemptions and qualified exempt transfers are not subject to any Medicaid penalty, for either Medicaid Nursing Home benefits or Community Medicaid benefits.

Here is a list of exempt transfers that should be considered in appropriate cases:

• A blind or disabled child of any age. A Medicaid transfer of assets to a disabled child of any age — or to a child who is legally blind — are exempt from asset transfer penalties.
• A trust for the sole benefit of a disabled person under the age of 65. Note that the contingent beneficiary of the trust must be the disabled person’s estate, and Medicaid will be able to make a claim for reimbursement against the estate if the disabled beneficiary dies when he is 55 years of age or older.
• Transfers of assets to spouses are permitted and are exempt.  However, spouses have a mutual legal obligation of care and support.  Unlike most states, New York permits the spouse who is holding all of the married couple’s assets to refuse to make his or her assets available for the support of the spouse who needs care.  This is called “spousal refusal.”  When one spouse signs a “spousal refusal” form, Medicaid must provide care to the spouse who needs care, without any penalty period.

Note:  Spousal refusal is not necessarily a 'free ride.'  Medicaid has the right to seek reimbursement from the spouse who refused, and in the past several years has done so with increasing frequency.  Fortunately, even when Medicaid seeks to be reimbursed, it does not mean that spousal refusal ‘didn’t work.’  The amount claimed will be for Medicaid’s costs, which are always less than private pay rates, and a compromise settlement can often be obtained.  In a typical case, the reimbursement amount is materially less than what would have been billed on a private pay basis.

• Caregiver Agreement. This is a contract between the person needing care, and the person who is going to provide the care.  The caregiver can be a child, sibling, or friend.  The care services are defined in the contract and are pre-paid in a lump sum.  The payment is not subject to any penalty because it is for services to be rendered, and is therefore not a gift or transfer.  The net effect, however, is a transfer of assets from the person who needs care.  Read more about caregiver agreements here.

In addition to the above, an exempt transfer of the primary residence can be made to any of the following:

• A brother or sister with an equity interest in the home who has resided in the home for at least one year.
• A “caregiver” child who has resided in the home for at least two years.

We Can Help You Navigate Medicaid’s Asset Transfer Rules

The attorneys at Lamson & Cutner are dedicated to helping clients in NYC, Westchester, and the NY Metro area, understand and navigate the complex laws surrounding Medicaid eligibility.  We focus on health care and asset protection, helping client protect the assets, property, and income they have worked their entire lifetimes to accumulate.  Contact us today to schedule a no-obligation consultation with an experienced attorney.