Asset Protection and Mediciad

Frederick J. Kramer

Attorney and Counselor at Law

Elder Law and Estate Planning

(516) 293-4747

Asset Protection and Medicaid

It is extremely important to plan in advance of a long term illness because you would otherwise spend a significant amount of money (approx $10,000-$12,000) each month of your own assets if nursing home care were required. For most Seniors, this cost is far beyond the smaller monthly income they receive.

The Medicaid law imposes a penalty period (waiting period) upon the individual who divests himself or herself of assets (i.e.: to individuals or to an Irrevocable Trust). The penalty period is calculated by dividing the value of assets gifted or divested by the published regional rate of nursing home care in the county where the person lives. Currently the year 2005 regional rate for Nassau/Suffolk residents is $9,612/mo and the boroughs of New York City $8,870/mo. The look back period for individual asset transfers is three years, which means the penalty period is practically no longer that three years. The look back period for transfers to an Irrevocable Trust is 5 years, which means the penalty period could be as long as five years. The actual penalty period, however, depends on the value of assets gifted.

2005 New York Medicaid Basics

1. Applicant Asset limit is $4,000.

2. Applicant Resource (income) limit is $2,378.

3. Community Spouse asset limit is $95,100.

4. Applicant must have skilled care need.

The concerns regarding whether to apply for Home Care Medicaid revolved around the income budget the law imposes on the Home Care Medicaid recipient. We discussed that under certain circumstances an ill person who needs assistance at home may opt to privately pay for care if the monthly cost is ultimately less than the cost to access Medicaid. The cost to access Home Care Medicaid is the ill person’s excess monthly income over a statutory limit (Regular Home Care Medicaid: $667/month + $20.00 if over age 65). Sometimes an ill person’s monthly income is so far in excess of the $667/month level that it becomes more financially favorable to privately pay for the same number of hours of care.

If Nursing Home Care is required at some point then there is not much choice but to liquidate and transfer all assets (including IRA’s) preferably to the spouse so as not to create any Medicaid penalty period. The community spouse (the well spouse at home) is entitled to retain up to $4,000/per month of income. Monthly income in excess of that level must be contributed to some extent to the Nursing Home. In addition, the Medicaid law limits the amount of resources the well spouse may retain ($95,100 plus the residence). This $95,100 limitation causes community spouses to be concerned that they may be sued for having excess resources over that allowable $95,100 statutory level.

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The information presented at this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.