Medicaid is a government-run program. Unlike Medicare, which is both funded and operated by the federal government, Medicaid is run and implemented by state governments (though it is partially subsidized by federal funds). Therefore, Medicaid’s eligibility rules and its available services vary from state to state. The information that follows pertains only to New York State’s Medicaid program.
Medicaid also differs from Medicare in two other important ways: 1) the eligibility requirements are based on financial criteria instead of age; and 2) it covers all necessary medical care, including long-term care.
Medicaid’s coverage of long-term care becomes centrally important to many people with disabilities, given that Medicare itself only covers a very small portion of the costs associated with long-term care. Moreover, because Medicaid is a “means-tested” program (that is, based on financial criteria), its continued availability is often dependent on special needs trust administration and asset-protection devices.
New York State administers three different types of Medicaid: 1) Community Medicaid; 2) Community Medicaid with Long-Term Care; and 3) Nursing Home Medicaid.
1) Community Medicaid: Community Medicaid is essentially standard health insurance, providing the types of services associated with conventional health insurance policies, such as paying for doctor visits, hospital visits and prescription drugs.
2) Community Medicaid with Long-Term Care: This program provides the same benefits as those found in Community Medicaid, with the addition of community-based long-term care services such as home health care, adult care and assisted living.
3) Nursing Home Medicaid: This program provides everything covered in the first two levels of Medicaid with the addition of nursing home care.
Medicaid is a means-tested program designed for people with low income and limited resources. The costs of long-term care can be staggering, often far-exceeding $100,000 a year. As a result, many people who would otherwise never seek public assistance find themselves looking for ways to qualify for Medicaid, which is a means-tested program, in order to secure long-term care. Some of Medicaid’s important qualification guidelines are outlined over the following paragraphs:
COMMUNITY MEDICAID WITH LONG-TERM CARE: In determining an applicant’s eligibility, Medicaid looks at both the income and the resources of the applicant. Income is money that the applicant receives on a timely basis, such as Social Security, a pension or an IRA that is in the distribution stage. Resources are the assets the applicant has, such as savings, stocks or bonds.
Income: The current income limit for Medicaid with Long-Term Care is $787 per month for an individual or $1,137 per month for a couple. However, even if one’s income is above these limits, there are still a number of ways to qualify for Medicaid:
First, Medicaid exempts both health insurance premiums from one’s income. Thus, any money paid towards health insurance premiums is disregarded and not included in the Medicaid’s income calculation for purposes of qualification for Medicaid. Similarly, Holocaust reparation payments are exempt and not included in Medicaid’s income calculation.
Pay-in – Second, even if the applicant’s income is above the Medicaid eligibility limit, the applicant can “pay in” to Medicaid the excess (the difference between the limit and the income) in order to become eligible. This can be a good option for someone whose income is only slightly above the income limit.
Pooled-Income Trusts – Sheltering excess income in a pooled-income trust is one of the most popular planning tools used by people whose income is above the eligibility limits to qualify for Medicaid. New York State allows individuals of any age who suffer from a disability to place excess income in a pooled-trust (its name is derived from the way the trust is structured). Money held in a pooled-income trust is
Spousal Refusal – A community spouse can refuse to contribute his or her income or resources toward the cost of care for the spouse applying for Medicaid, and is referred to “spousal refusal” or “just say no.” An applicant for New York Medicaid whose spouse has refused contributions will be considered an individual in the State’s calculation of the applicant’s income. Note, however, that after awarding Medicaid benefits to the institutionalized spouse, the agency has the option of bringing a lawsuit to force the refusing spouse to provide support. If the agency chooses not to sue the community spouse for support, it may file a claim for reimbursement against the community spouse’s estate following his or her death.
Resources: The current resource limit for Community Medicaid with Long-Term Care is $13,800 for an individual and $20,100 for a couple. This is a hard cap. Applicants with resources above these limits will be rejected.
No Look Back for Community Medicaid – Community Medicaid with Long-Term Care has no “look back” period. This means that, theoretically, a person otherwise eligible for Community Medicaid (with or without Long-Term Care) who transfers $5 million, bringing his or her resources under the cap, would be eligible for Medicaid the next month. That said, transferring assets is a serious matter and it can have drastic repercussions that are difficult to foresee. It is vital to seek competent counsel before deciding to transfer one’s assets.
Homestead – Medicaid generally includes the value of the applicant’s real estate in calculating resources. However, an applicant’s primary residence is exempt, so long as the applicant’s equity in the home is under $758,000. Nonetheless, Medicaid reserves the right to file a claim against the estate after the applicant’s death to recover for expenditures from the applicant’s equity in the in the residence. To navigate around this potential pitfall, applicants often chose to transfer their residences to a family member or a trust. Once again, transferring assets should not be taken lights and competent counsel should always be sought before such an undertaking.
Spousal Refusal – As with regards to income, a community spouse can refuse to contribute resources towards the incapacitated spouse’s costs of care, though Medicaid can sue the community spouse’s estate to recover the expenditures.
Holocaust Reparations – As with income, Medicaid exempts the payments applicants received in Holocaust reparations from resources for purposes of determining eligibility. Thus, interestingly, if an applicant has been receiving restitution over a forty year period and can document the total amount of money received, that entire sum can be kept and does not impact the determination of Medicaid eligibility!
NURSING HOME MEDICAID: Nursing Home Medicaid has its own eligibility limits for income and resources. Income is limited to a $50 monthly allowance – all other monthly income must be given to the nursing home. The community spouse is allowed income up to $2,739 per month. The resource limit in New York State for nursing home residents is $13,800. The community spouse is allowed resources ranging between $74,820 and $109,560, plus a $1,500 burial account.
As with Community Medicaid with Long-Term Care, premiums paid for health insurance and Holocaust reparations payments are exempt and do not combine with income or resources for purposes of Medicaid eligibility requirements.
A nursing home resident cannot shelter excess income in a pooled-income trust.
Five Year Look-Back Period – Nursing Home Medicaid utilizes a five-year look-back period for uncompensated and undercompensated transfers. If such transfers are discovered, Medicaid penalized the applicant by withholding nursing home coverage for roughly the value that was transferred, and due to Medicaid’s method of calculating the penalty, the cost usually somewhat exceeds the actual value of the transfer(s).
Community Spouse – When one spouse enters a nursing home and the other spouse remains in his or her community, the community spouse is allotted an income and resource allowance. The community spouse’s income allowance is up to $2,739 of the couple’s total income, whil the resource allowance is either $74,820 or one-half of the couple’s total resources up to $109,560. Note that health insurance premiums and Holocaust reparations payments are exempt and do not contribute against the community spouse’s allowances.
Spousal Refusal – As before, the community spouse may refuse to make his or her income and resources available for the other spouse’s care. This may be a viable option in circumstances where the couple’s income and/or resources exceed Medicaid’s allowances. Again, competent counsel should be sought before using this approach.
Homestead – The applicant’s primary residence is exempt, so long as the applicant’s equity in the home is under $758,000 and the applicant intends on returning home. In this regards, it is the subjective intent of the nursing home resident that rules. Nonetheless, Medicaid reserves the right to file a claim against the estate after the applicant’s death to recover for expenditures from the applicant’s equity in the in the residence. Moreover, the state may place a lien on the property even during the life of the resident if the resident is permanently absent and is not reasonably expected to be discharged. No such lien can be placed, however, if the resident’s spouse resides in the residence.
“I needed help with my Medicaid application, I am so happy I found HPSNY. They walked me through every step and even arranged home care while my application was pending. Thanks again, I don’t know what I would have done without you”. – Margie S. Brooklyn