UNDERSTANDING THE NEED FOR MEDICAID PLANNING-NEW YORK MEDICAID PROGRAM A Basic Understanding of the New York Medicaid Program Will Illustrate the Need to Include Medicaid Planning in Your Overall Estate Plan to Ensure that You Will Qualify for Those Benefits When the Time Comes
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The life expectancy of Americans has increased dramatically over the last century. The advances in science and medicine that have increased our life expectancy, however, have yet to find a cure for age related dementia diseases or a way to slow down the natural aging process. For many elder Americans this means that a stay in a long-term care facility is likely at some point. Given the high cost of long-term care this also means that more and more elderly individuals will need to qualify for Medicaid benefits. A basic understanding of the New York Medicaid program will illustrate the need to include Medicaid planning in your overall estate plan to ensure that you will qualify for those benefits when the time comes.
THE NEED FOR LONG-TERM CARE Believe it or not, the average life expectancy of an American has increased about 30 years in just over a century. At the turn of the 20th century, the average American could expect to live until about age 50. By the turn of the 21st century that number had risen to just over 78 years. Though we are living longer we still face many of the same age related medical problems as we age. In fact, you stand a better chance of suffering from age-related dementia now than you would have 100 years ago. Alzheimer’s alone is now the 6th leading cause of death in the United States. Statistics tell us that one in three seniors will die with the Alzheimer’s or a similar disease and two in five seniors will need long-term care at some point. All of this means that there is a good chance you will need long-term care if you are fortunate to live well into your golden years. By 2050, experts estimate that the number of people using long-term care services will be
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around 27 million – double the number who were using long-term care in 2000.
WHY MEDICAID BENEFITS MAY BE NEEDED
Neither the Medicare program nor most private healthcare policies will cover the costs of long-term care.
People often fail to think about longterm care benefits until they are needed. In New York, however, one in five seniors depends on Medicaid benefits, meaning you should consider the need to qualify for Medicaid early on. Another mistake people often make is assuming that long-term care costs are covered by private insurance policies and/or Medicare benefits. The truth is that neither the Medicare program nor most private healthcare policies will cover the costs of long-term care. In New York City, the average cost of a year of longterm care is $136, 200. In Long Island, that figure increases to $144, 408 while it decreases some – to $104,148 – in the western part of the state. In the absence of insurance to cover these costs you will be forced to pay them out of pocket. The average New Yorker could watch a lifetime of hard work and savings disappear in a few short years as a result of the cost of long-term care. The good news is that Medicaid does cover long-term care costs, meaning you may one day need to qualify for Medicaid benefits.
LONG-TERM CARE INSURANCE Although most employer sponsored or private healthcare policies do not cover long-term care expenses, you may purchase a separate long-term care policy from a private insurer. The State of New York also offers
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coverage through the Partnership for Long Term Care. Not only may a participant purchase longterm care through this program but purchasing certain Partnership for Long Term Care policies also help ensure that you will qualify for Medicaid should the need arise.
NEW YORK MEDICAID BASICS Medicaid is intended to provide benefits to low income individuals and families. As such, an applicant must meet income and resource requirements to qualify for Medicaid benefits. Although Medicaid is funded primarily by the federal government it is administered at the state level, meaning that both benefits and eligibility criteria can vary from one state to the next. In New York, a senior applying for Medicaid cannot have countable resources of over $13,800 ($20,100 for a married couple) as of 2013. The resource limits are slightly different for an applicant applying for long-term care benefits through the Partnership for Long Term Care program, particularly as they apply to a “community spouse�. A community spouse is someone who remains at home while a spouse resides at a longterm care facility.Regardless of which New York Medicaid program you apply for you will likely be required to prove that your countable resources are less than the program limit.
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THE FIVE YEAR LOOK-BACK PERIOD Knowing that an applicant must have countable resources below the Medicaid program limit, some applicants make last minute asset transfers to family or loved ones in an attempt to lower the value of their resources. Unfortunately, this is not a viable option because Medicaid employs a five year “look-back� period. Any asset transfers made during the look-back period are considered by the Medicaid program when evaluating an application. In most cases, the value of the asset transferred during the look-back period is attributed to the applicant as if the transfer was never made. If the value of transfers made during the look-back period cause your resources to exceed the program limit you will incur a penalty period. The penalty period will last until the cost of your care exceeds the value of the assets transferred during the look-back period. Medicaid calculates this by dividing the value of the asset by the average monthly cost of long-term care in your area. For instance, if the average cost of care is $10,000 and you made asset transfers valued at $300,000 you would have a penalty period of 30 months ($300,000/$10,000 = 30).
COUNTABLE ASSETS Not all assets are included when calculating your resources for purposes of applying for Medicaid. Typically, assets such as your home, your vehicle and your personal possessions are not counted. In addition, burial plots, face value of a life insurance policy, and certain retirement funds are exempted up to a certain point in most states.
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MEDICAID PLANNING At this point you likely have a better understanding why Medicaid Planning is so important. Starting early is the key to ensuring that you will qualify for Medicaid benefits to pay for long-term care should you need it at some point in the future. If, however, you suddenly find that you (or a loved one) need to qualify for Medicaid and your resources exceed the acceptable limits there are legal steps that can be taken to maximize your chance of being accepted and minimize the penalty period for any assets transfers you make in order to qualify. For example, you may be able to restructure your assets by shifting countable resources to exempted resources. If you own your home and are still paying off the mortgage you might be able to use funds held in savings to pay off the mortgage as a way to protect those funds because your home is not a countable resource.
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In recent years the laws relating to Medicaid and the five year look-back period have become considerably more complex making the assistance of an experienced estate planning attorney even more important if you find yourself in need of Medicaid benefits or if you foresee the need in the future.
New York State Department of Health, Medicaid in New York State New York State Department of Health, Medicaid and the Partnership NOLO, What Will Happen if Medicaid Says I Transferred My Assets to Qualify for Benefits? American Association for Long-Term Care Insurance, Long Term Care Statistics
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About the Author Barton P Levine For more than 30 years, Bart Levine has been the principal member of the Law Offices of Barton P. Levine. Mr. Levine specializes in estate planning, probate and estate administration, bankruptcy representation, special needs planning, medicaid planning, guardianship representation, elder law representations and real estate representation. Mr. Levine presents free educational seminars to the public throughout the greater New York City metropolitan area. These seminars are intended to educate the public about the importance of proper estate planning. Seminar topics include Basic Estate Planning, Asset Protection, Special Needs Planning, Medicaid Planning, Estate Planning for the GLBT Community, IRA Planning and many others. Mr. Levine also presents continuing education courses to the professional community. Experience Mr. Levine has been a member of the New York Bar since 1973. Mr. Levine is also admitted to practice law before the federal courts of the Southern and Eastern Districts of New York. Mr. Levine is a member of the American Academy of Estate Planning Attorneys (AAEPA) and the New YorkState Bar Association, Trusts & Estates Division. Law Offices of Barton P. Levine Main Office: 260 Madison Avenue, 17th Floor New York, NY 10016 Toll Free: (888) 268-4425 Fax: (212) 268-6267 Email: blevine@bartonlevine.com Website: www.bartonlevine.com
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