Medicaid Planning for Married Couples: Maximizing Nursing Home Eligibility

Medicaid Planning

What Does New York Medicaid Cover?

Medicaid is a program that is available to low-income adults. Generally speaking, each state has its own Medicaid program following federal standards. However, Medicaid is not to be confused with Medicare, the federal health insurance program.

Medicaid covers other groups besides low-income adults, such as pregnant individuals, children, and those with disabilities. Medicaid covers a wide array of items, such as dental benefits, hospital inpatient and outpatient services, prenatal care, vision care, glasses, medicine, home care, and care in a nursing home, among other things.

Eligibility For Medicaid Based on Income

Individuals and married couples must meet income requirements to be eligible for Medicaid benefits. Income that is included in this equation is employment wages, pensions, Social Security Disability Income, alimony payments, gifts, annuity payments, IRA distributions, and Social Security income.

If an individual’s income exceeds the required eligibility limit, they may not qualify for Medicaid. This is why planning effectively for Medicaid eligibility is such a crucial step in your financial and estate planning for your future and the future of your loved ones.

If you are married, and only one spouse applies for Medicaid benefits, the other spouse’s income isn’t generally applicable. As non-applicant (or community) spouses, they are also eligible to retain a certain income level to avoid impoverishment, which is factored into the income eligibility limits.

This is called the Community Spouse Monthly Income Allowance (CSMIA) in New York. By utilizing the CSMIA, the applicant spouse can transfer some or all of their income to the community spouse, thereby increasing their chances of eligibility for Medicaid by removing the income from their name.

An exception to this allowance is that if the community spouse already has a consistent monthly income of the allowable limit, they may be unable to utilize the other spouse’s income or the CSMIA.

What About Assets?

Assets such as cash, investments, bank accounts (including savings, checking, and money market), stocks, bonds, and vacation homes are countable assets. By countable, they would qualify towards the asset limit for eligibility for Medicaid.

Non-countable assets such as your home, household items, and personal belongings are generally considered non-countable assets and won’t be factored into eligibility limits. Other non-countable assets can include burial funds set aside of up to $1,500 or your vehicle.

Your home exemption may qualify if you plan to return to your home. The value is then generally determined based on the actual value of the house, less any mortgages owed on the property. It is typically exempt if the applicant’s spouse lives in the home.

To calculate, the individual would need to add up the value of all countable assets, ensuring that non-countable assets aren’t included, and if this amount is under the asset limit, that individual would likely satisfy that portion of eligibility.

What is a Look-Back Rule and Why Does it Apply To Medicaid Eligibility?

The look-back period is one of the most crucial aspects of the asset limit eligibility requirement. The look-back period for nursing home care is typically 60 months or five years back from the time of the application. This can mean that Medicaid will carefully scrutinize any assets transferred within five years to outside sources to determine eligibility.

If individuals are unaware of the look-back period, they may inadvertently subject themselves to a penalty period for Medicaid ineligibility. A penalty period discourages applicants from gifting or selling assets under fair market value to position themselves better for Medicaid benefits.

It is important to note that the penalty period of ineligibility typically starts at the time of the application rather than the time the questionable transaction took place, which could mean that the individual is ineligible for another five years. In the case of nursing home Medicaid, however, the look-back period may overlook asset transfers, depending on the circumstances. You should closely review all assets with your estate planning attorney several years in advance to ensure you are not affecting eligibility for nursing home Medicaid.

What Are My Options?

Some individuals will worry that they can not afford nursing home care and choose to exhaust their assets until they become eligible for Medicaid. While this is an option, there are typically better options that you can choose.

In most cases, you can spend down your countable assets. Some of the ways to spend down assets may be to invest in home improvements, pay off debt such as loans, credit cards, medical bills, or your mortgage, or use funds for in-home care before you (or your loved ones) have determined it’s time to move to a nursing home.

New York also has a Medicaid Excess Income Program, which allows residents to avoid ineligibility due to the income limit if they have significant health costs. For example, suppose an individual has consistently substantial medical expenses. In that case, they may be able to utilize their income to cover those costs, establishing that their leftover income is within the income limits for Medicaid. Medical costs may include prescriptions, doctor visits, medical supplies, or other necessary medical expenses.

An Estate Plan That Benefits You and Your Loved Ones

If you are planning for Medicaid eligibility, you may already be one step ahead of the game without knowing it. Several people don’t consider that they may not be eligible for Medicaid and, therefore, don’t plan accordingly. If you found this article, you are likely researching your options and have taken a necessary step in the right direction.

We pride ourselves on listening to and educating our clients. We provide a clear map for the best options based on your needs and create a plan that ensures success for the later chapters of your life. Call us today at (516) 253-1366 to get started.

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