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What is long-term care?

Long-term care is a variety of services designed to help meet both the medical and non-medical needs of people with chronic illnesses, disabilities or advanced age. It may involve assisting with daily tasks like dressing, bathing and bathroom care, meal preparation, and round-the-clock medical care, which may require skilled practitioners. Long-term care may be provided at home, in a community, in assisted living or in a nursing home. 

The care may be provided by a patient’s family member, but this is often impractical, for the assistance may require specific training. Many families rely part-time or full-time on professional long-term care, which can be very expensive.

In New York, the average cost tends to be higher than the rest of the nation, with annual nursing home care ranging from $135,000 to over $200,000, and in-home care in the $22 to $30 per hour range.

Because of the cost of this care, the majority of older Americans cannot afford it without help from public programs like Medicaid, unless they purchased private long-term care insurance during their 50’s and 60’s.

What is Medicaid?

Medicaid is a federal healthcare program, administered through each state government. It provides payments for medical services for citizens with limited resources. It is different from Medicare, which is a government healthcare program available for any citizen over the age of 65.

Medicaid is currently the only option to pay for long-term care without private insurance or out of pocket expenditure.

Healthcare insurance normally doesn’t cover long-term care, and Medicare only pays the cost of care for up to 100 days, with patient co-payment.

A vast majority of elderly citizens requiring home care and nursing home care rely on Medicaid in order to receive the care they need.

Seniors may exhaust their entire life savings for long-term care.

Do you know someone who has spent time in a nursing home? Most people believe it will never happen to them. However, a 2017 AARP study estimated that 47% of men and 58% of women will need some type of long-term care in their later years. Preparing for long-term care should be a part of everyone’s retirement plan.

The New York Times published a story in 2012 about a retired schoolteacher who was forced to deplete her life savings of $300,000 on nursing home care before she could qualify for Medicaid. She was also required to contribute all but $50 of her monthly Social Security income toward nursing home costs. Her situation is not a one-off, even today.

Medicaid applicants for long-term care must meet strict financial eligibility requirements.

Medicaid is designed as a payor of last resort, meaning it will only kick-in when a patient has no other option to pay for their needed medical treatments.

Nursing Home Medicaid

Applicants for Medicaid for nursing home care in New York are allowed only $15,750 in total assets, plus a burial fund and certain exempt assets, such as a car, IRA and clothing. Any income beyond $50 per month must be contributed toward the cost of care before Medicaid will pay.

If the applicant owns a home that is not occupied by a spouse or an underage or disabled child, the value of the house is counted toward the applicant’s total assets. This means the equity of the house may be required for payment for long-term care.

If the applicant is married, while the other spouse remains in the community and independent of long-term care, the community spouse may keep $74,820 in assets, in addition to the home. The community spouse is also allowed a monthly income of up to $3,216 before being required to contribute to the cost of the applicant’s nursing home care.

Community Medicaid (Home Care)

If the Medicaid applicant seeks to cover the cost of in-home long-term care services, she or he may keep the same $15,750 in total assets, plus exempt assets, including the home in which the applicant resides. 

But this does not mean the home is totally protected for their family. Medicaid recovers the cost of the paid benefits from the estate of a Medicaid recipient once he or she passes away.

The home care applicant is also allowed to keep a monthly income of up to $895 for an individual, or up to $1,304 for a couple. While the income over $895 should be technically available to cover long-term care costs, a “Pooled Trust” can be utilized to keep the excess income to pay for living expenses beyond the home care.

There are other planning options available to help preserve assets and income while still qualifying for Medicaid benefits, but one must plan ahead.

Medicaid will penalize the transfer of assets.

If a Medicaid applicant attempts to give their assets away so that they may qualify for benefits, then they will be ineligible for Medicaid benefits for a number of months, known as the Penalty Period

The transfer of assets rules do not currently apply for home care benefits, so that one can qualify for New York Medicaid immediately after transferring assets. This rule is changing for all home care Medicaid recipients applying beginning October 1st. We will discuss this further below.

When applying for nursing home Medicaid, the Department of Social Services will require financial records for the past 60 months (called the Lookback Period) and they will examine all transactions.

The penalty period for transfers is calculated by dividing the total value of all assets transferred from the applicant by the average monthly cost of care in their area. So, if a widow transferred her $250,000 home to her child during the 60-month period, and the average cost of nursing home care is $10,000 per month in her area, then her penalty period is 250,000/10,000, which works out to 25. She will not be eligible for Medicaid coverage for 25 months, and she will be personally liable to pay for her care in the interim.

The sooner a person transfers their assets to their family members or to a trust, the better their chance to avoid a penalty period.

“NYLAG is extremely concerned that the rights of consumers with disabilities of all ages to access the home care services they need is being sharply cut back.”

— New York Legal Assistance Group at www.nylag.org

Starting October 1st, New Medicaid Lookback Period rules apply for Home Care.

New York State passed its 2020-2021 budget in April. In an effort to reduce a $6 billion deficit, the budget included devastating cuts to Medicaid eligibility for home care services.

For seniors and persons with disabilities applying for Medicaid October 1st and beyond, the lookback period will be 30 months. An applicant must show records for all financial assets for themselves and their spouse for the 30 months prior to their Medicaid application. 

If there were any transfers of assets during that 30-month period, then the penalty period will apply and Medicaid will not cover the cost of care during that period.

This new 30-month Medicaid lookback period for home care will cause significant processing delays within local agencies, because they previously only reviewed the last month of financial transactions.

New medical standards will make fewer people eligible for benefits.

Currently, home care Medicaid applicants are required to demonstrate a need for assistance with at least two Activities of Daily Living (ADL) out of these six; bathing, dressing, eating, transferring, toileting and continence. Beginning October 1st, Medicaid applicants must demonstrate a need for assistance with more than three ADL’s, or a need for assistance due to a diagnosis of dementia or Alzheimer’s disease.

This medical evaluation must be made by a physician under contract with the Department of Health, not the applicant’s primary care physician. Physicians familiar with the applicant’s medical history will be excluded.

This requirement may also create delays for applicants.

These changes may prevent seniors from remaining in their homes.

The New York Medicaid program will eliminate Level 1 services, which are currently available for up to 8 hours per week to those who need assistance with housekeeping, but do not require personal care with dressing or toileting.

New Medicaid applicants will no longer be informed of the availability of the CDPAP (Consumer Directed Personal Assistance Program), which allows seniors or people with disabilities to choose caregivers, often their family members, and allows them to be paid by the state. This program has been popular with seniors who prefer not to receive care from strangers. Many adult children could afford to care for their parents because of the CDPAP.


What Should These Families Do Now?  

The new Medicaid eligibility rules will not apply to applications submitted before October 1, 2020. Existing Medicaid benefits recipients will be grandfathered, as well.

The Families First Coronavirus Response Act, signed on March 18, 2020, promised to give New York State as much as $6.2 billion in Medicaid funds, in return for maintaining Medicaid benefits the state had in place as of January 1, 2020. Therefore, the budget cuts will not be effective until October 1, 2020. However, the director of the budget may delay the effective date for a period not to exceed 90 days until after the federal emergency is over.

For families with persons who require home care support, it is important to submit Medicaid applications before October 1st. If home care is not necessary now, you should still plan ahead, considering the new 30-month lookback period.

Consult with an experienced elder lawyer before these changes lock out your loved one’s benefits. Jiah Kim is a member of the National Academy of Elder Law Attorneys, and ElderCounsel. She has helped many families protect their assets from exorbitant long-term care expenses.

Medicaid planning is a specialized practice. Only a small number of estate-planning attorneys are capable of competently executing these plans.

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Don’t wait until something unexpected happens to family.

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