Back to the Basics: NY Medicaid Eligibility & Protecting Assets

The New York Medicaid program is a critical lifeline for millions of residents. Unfortunately, many remain confused by some of the complex details. It is common to have only a fragmented understanding of how Medicaid works from random discussions with friends and neighbors or by hearing snippets of news clips discussing the program.

One of the most misunderstood aspects of the system is the “spend down” requirement. Medicaid is a need-based program, and so qualification requires one to have assets below a very low threshold. But that does not mean that everything you own will be lost before qualifying for Medicaid.

Medicaid Misunderstandings.
Some of the most common questions asked by New York residents regarding the “spend down” requirement include:

Do all of my assets need to be disposed of before qualifying?

Not all assets are counted in Medicaid applications. Specifically, when an applicant is still married and there is a “community spouse” (who still lives at home), then various assets can be kept. This usually includes: a home (up to $750,000), as much as $110,000 in other resources, a car, various household furniture and effects, some retirement accounts, and a few other assets.

These rules are different if the applicant is not married, as single residents have far fewer exemptions. However, there are a few other options depending on one’s circumstances. For example, a family home can be preserved if an adult child was also living in the home for two years and providing care to the senior.

Should I transfer assets to another family member’s name?

Very simple attempts to get around the spend down requirement are usually not wise moves. That is because there is a “look back” period where transfers are analyzed. Essentially, all assets given away within five years will trigger a divestment penalty that prevents one from qualifying for Medicaid for a set period of time.

Is my spouse required to spend down assets as well?

In general, both spouses assets will be considered during the application process, regardless of which spouse is named as owner. However, as mentioned above, a community spouse is given leeway with exempt assets. The program is not designed to force a healthy spouse to lose everything in order to secure program support for an ailing partner. However, depending on the size of a family’s assets, without planning, a couple may still need to spend significant resources to qualify.

Can a trust protect assets?

When planning ahead for potential Medicaid support, there are many strategies that can be employed to protect assets. Most notably, assets can be moved into a Medicaid Asset Protection Trust (MAPT) with the income from the trust going to you or your spouse. The benefit of the MAPT is that is can protect assets above and beyond any exemption while still allowing individuals to qualify for Medicaid. Importantly, assets in a MAPT are still subject to scrutiny based on the five year look-back period. In other words, it is important to create a MAPT as early as feasible.

The advice of counsel is critical when making these plans. The rules change frequently, vary from state to state, and your needs hinge on specific factors about your own situation (your marital status, current health, types of assets owned, etc.). Contact an elder law estate planning attorney to ensure you act prudently to protect your assets while ensuring care is available down the road.

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