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How Can Medicaid Income Disregards Affect Eligibility to Receive Financial Assistance With Long-Term Care Needs?
As the costs of nursing home care have risen, it has become nearly impossible for many older individuals to afford the quality care they deserve. With numerous nursing homes charging upwards of $10,000 a month, an individual’s hard-earned life savings can disappear rapidly if they have not engaged in long-term care planning. Medicaid assistance often plays a significant role in making nursing home care affordable. However, the income eligibility rules can be complex and confusing. An experienced New York Medicaid planning lawyer can help clarify the impact of Medicaid income disregards and suggest strategies for meeting the program’s requirements.
What is Medicaid?
Medicaid is a government-funded and administered program that helps eligible low-income and disabled individuals of all ages pay for medical care. Different types of Medicaid coverage exist, which may pay for in-home services, doctor visits, or other types of care.
However, the primary use of New York’s Medicaid program for older individuals is to help cover the extremely high costs associated with nursing home care.
How is Medicaid Eligibility Determined?
Medicaid is a means-tested program, and applicants must meet basic requirements to receive benefits. To qualify for long-term care Medicaid, an individual must have a medical need for the level of care provided by a nursing home facility and possess limited income and assets. The asset limits are adjusted annually by the state and vary based on the applicant’s marital status and whether their spouse is also applying. Essentially, the applicant must prove to the government that they are financially incapable of paying for their required care. Additionally, all applicants must be residents of the state where they request assistance.
When determining if an individual is eligible for long-term care Medicaid, officials will not only look at their current financial situation but also look back at their records over the last 60 months (five years) for long-term care in a nursing home facility. It is widely expected that in January 2024 there will be a phased-in look back of 30 months (2.5 years) for community Medicaid or long-term home coverage. These “look back” periods aim to ensure that the applicant did not give away assets or transfer property for less than the fair market value with the sole goal of qualifying for Medicaid benefits. If violations of the rules are found, the applicant may be subject to a penalty period before coverage can begin. Since any length of ineligibility can result in having to pay for expensive nursing home or home care costs out of pocket, it is crucial to start planning for Medicaid long before it is required to achieve the best possible outcome.
What Does Medicaid Consider Assets or Income?
The asset and income limits for Medicaid are very low. With few exceptions, the government counts any property you control and could potentially use or sell to pay for your care as an asset. Unfortunately, this also includes assets you share jointly with your spouse.
The following resources are considered countable income or assets when applying for Medicaid:
- Employment wages
- Social Security Income
- Annuity payments
- Social Security Disability Income
- Financial gifts from friends and family
- Bank accounts
- Cash
- Stocks and bonds
- Vacation or secondary homes or property
- Investments
What are Medicaid Income Disregards in New York?
A Medicaid income disregard (also known as an exemption) is a resource that is not counted against the applicant’s income limits. Every state has distinct rules on income disregards, and the state laws can change yearly, so consulting with a knowledgeable lawyer who can provide up-to-date information is crucial. In New York, some examples of assets and income that may be exempt include:
- The first $20 of income each month
- A primary residence
- A car
- Personal belongings and household items
- Prepaid burial or funeral agreements or up to $1,500 for a burial allowance
- 401Ks and IRAs in payout status
While your home is usually exempt from being counted against your Medicaid asset limit during your lifetime, it could eventually be subject to Medicaid’s Estate Recovery Program. Without an asset protection plan in place, your heirs may be forced to sell your home to repay Medicaid for your long-term care costs.
How is Income Handled if Only One Spouse Is Applying For Nursing Home Medicaid?
Placing a spouse in a nursing home can be a very emotional decision, but it can also cause financial concerns for the spouse who continues to live independently. Your income will be disregarded if your spouse applies for nursing home Medicaid coverage and you do not. Additionally, you have the right to a minimum amount of monthly income to keep you out of financial hardship. If your personal income does not meet this threshold, you may retain part of your spouse’s income to supplement your own up to the set limit. This is known as the Community Spouse Monthly Income Allowance (CSMIA).
Other state rules may also apply in this situation. If you are seeking long-term care Medicaid on behalf of your spouse, don’t hesitate to speak with a helpful lawyer who can guide you through the process.
Do You Have Options if You Exceed the Asset Limits For New York’s Long-Term Care Medicaid?
While careful planning for future healthcare costs is highly recommended, it isn’t always a viable option for individuals requiring immediate nursing home care. You may still have options if you or a loved one cannot afford your long-term care needs but do not qualify under Medicaid’s strict rules. You may be able to “spend down” your assets on approved expenses, such as credit card debt, medical bills, prepaid burial plans, and more, to meet the asset limits. However, you must act carefully to avoid incurring a penalty period.
You may also qualify for New York’s Medicaid Excess Income Program if you have high medical care bills. Under this program, once you spend enough of your monthly income on medical expenses to meet Medicaid qualification requirements, you become eligible for Medicaid for the remainder of the month.
How Can Medicaid Planning With A Trusted Law Firm Benefit You and Your Loved Ones?
Everyone deserves to age with dignity and receive excellent care after they can no longer live independently. Unfortunately, long-term care services are staggeringly expensive and can quickly deplete your savings, leaving little for your family. A robust estate plan that includes Medicaid planning strategies can protect your legacy and grant you and your loved ones peace of mind. To learn more about Medicaid eligibility and planning, contact Davidov Law Group today to schedule your assessment: (516) 253-1366.
