Pre-need & Chronic Medicaid
When someone enters a nursing facility, an application for Chronic Medicaid may be appropriate. The average cost of a nursing facility on Long Island is $15,000.00 per month. This type of cost would exhaust assets very quickly in most cases. Chronic Medicaid is the program that covers nursing home care. Medicaid is a needs based program which means there are resource and income requirements that must be met. For 2017, an individual applying for Chronic Medicaid can have no more than $14,850.00 in liquid non-qualified assets, an unlimited amount of retirement assets so long as the applicant is taking a monthly required distribution and an irrevocable pre-paid funeral trust. The applicant may keep no more than $50.00 per month in income.
Five-year Look-backChronic Medicaid has a five-year look-back. The look-back refers to the period of time that the Department of Social Services will review your assets and any transfers that you have made. To the extent that the applicant has made transfers or has too many assets in their name to qualify, they will be ineligible for Medicaid. If the applicant gifted or transferred money out of his or her name in order to qualify for Medicaid, the Department of Social Services will total the dollar amount of gifts and for each approximately $12,811.00 that was gifted, one month of Medicaid ineligibility is imposed. For example, if an individual gifted away approximately $50,000.00 within the five-year time period, the Department of Social Services will impose a four-month penalty. It is also important to note that the ineligibility begins to run on the day that the applicant enters the nursing home rather than on the day that the gift was made. If the applicant entered the nursing home in September, the four-month penalty would run for September, October, November and December. Medicaid would pick-up starting in January and the applicant would be responsible for the nursing home bill from September through December.
What if Your Assets are over $14,850?If the applicant exceeds $14,850.00 in liquid assets, there are certain planning mechanisms that can be used in order to qualify the applicant for Chronic Medicaid benefits. One of those mechanisms is establishing an irrevocable pre-need funeral. New York State Law mandates that pre-need burial trusts for applicants or recipients of Medicaid be irrevocable. This means that the prearrangement may not be canceled prior to death nor can funds be refunded if the actual funeral costs are less than then funded agreement. Thereby, an individual with a revocable agreement would have to convert it to an irrevocable agreement if they were to require Medicaid in the future. The Medicaid applicant is also permitted to set up pre-needs for a spouse, minor and adult children, stepchildren, brothers, sisters, parents and the spouses of these persons. The timing of when these pre-need funeral trusts are established can be crucial to the Medicaid application.
ConclusionIt is important to note aside from the irrevocable pre-need there are other exempt transfers that can be used to qualify an individual for Chronic Medicaid. Transfer of assets to a spouse in an unlimited amount, transfer of the primary residence to a Caretaker Child, transfer of assets to a disabled child and transfer of the primary residence to a sibling with an equity interest, are exempt transfers used to qualify an individual for Chronic Medicaid. Even when there are no exempt transfers, there is last minute planning that can be accomplished that could save approximately half of the remaining assets. It is crucial to consult an Elder Law Attorney in your area as soon as possible in order to preserve the maximum amount of assets.