Challenging the New York Nursing Home Surcharge Tax for Private Payers

February 7, 2013
By Ettinger Law Firm on February 7, 2013 9:00 AM |

Many seniors and their families only learn about the significant cost of nursing home care when they begin planning for it later in life. New York is one of the most expensive in the country, with annually costs reaching $100,000 or more to live in a skilled nursing facility. NY elder law attorneys and other senior advocates always recommend as early preparation as possible, because getting a jump on the issue keeps more options open. For the majority of residents, Medicaid support is usually needed. The earlier this is planned for, the more property can be spared for being "spent down" to qualify for Medicaid.

Conversely, some seniors of more means (or more early planning), may have saved enough personal assets to pay for nursing home care on their own. Some pay for care for a few years and then switch over to Medicaid when their resources are exhausted.

Unfair "Granny Tax?"
Some advocates are working to repeal a state surcharge tax that applies to all residents who privately pay for skilled nursing home care. As discussed in a WHEC article this week, the 6% surcharge tax was first applied in 2002 as part of the New York State Health Care Reform Act. It applies only to private payers, obviously, as the state wouldn't tax itself via Medicaid payments.

The tax is not insignificant. For a $100,000 annual fee--the average--that amounts to $6,000 extra that must be paid each year. However, it is not uncommon for individuals in more expensive locations to have $9,000 to $10,000 added to their bill each year as a result of this tax. All told, the tax brings in about $600 million to the state every year.

Those who are against the surcharge refer to this measure as the "granny tax." It has come under fire from many. Most potently, the critics argue that it is grossly unfair to tax those who properly saved and are paying their own way for this care. The tax is set for review this year, and some advocates are hoping to no to extend it.

However, they likely face an uphill battle as the Governor has called for the tax's extension in his latest budget plan. Also, considering the incredibly tight budget situation, eliminating $600 million, no matter what the cause, is a tough pill to swallow. More than likely the tax will continue. It is yet another detail about paying for long-term care in New York that residents need to be aware of and prepare for when crafting future plans.