While it is understandable why many New Yorkers may want to qualify for Medicaid in order to finance a nursing home stay, there are right and wrong ways to go about doing so.
The problem with a person’s just transferring wealth so he or she can meet the Medicaid program’s asset and income requirements is that doing this will likely expose the person to the lookback period and related transfer penalties.
This lookback period traditionally applies to nursing home stays on Medicaid’s dime. Basically, the authorities will examine all gifts and other transfers a person made, for example to friends and family members, within 60 months prior to applying for Medicaid.
Based on the dollar value of these transfers, authorities will then calculate a penalty that will apply once a person has entered a nursing home and is otherwise qualified for Medicaid.
The penalty acts as a denial of payment for the nursing home’s services for a set number of months depending on the dollar amounts transferred. The penalty may force family members who benefitted from these transfers to pony up the money for the nursing home stay during the penalty time Medicaid.
To give an example, according to 2020 figures, someone in the New York City boroughs who transferred about $36,000 in wealth during the lookback period would probably have to pay for the first three months of a nursing home stay without help from Medicaid.
The lookback rules are expanding to home health care
Effective starting in 2022, similar rules will be in place for people trying to use Medicaid to pay for certain home health care. Eventually, the lookback period will be 30 months, not the 60 months for nursing home payments. This new rule has been postponed before and may be postponed again.
Some transfers of wealth are exemption from the strict lookback rule
There are several exemptions to this rule. For example, transfers between spouses are generally exempt. Careful long-term care planning may be important to taking advantage of these exemptions and other legal Medicaid planning techniques.