This blog has discussed the necessity of proper and thorough planning to ensure a smooth transition into a continuing care retirement community.  This requires, among other things, that a person properly and legally transfer all of their assets, or a substantial portion of their assets that is, to people or entities that would enable them to be eligible for Medicaid.  As many people know, there is a look back period where the state examines all transfers of assets or money over a certain period of time for purposes of Medicaid eligibility purposes.  

If during that time a person transferred any aset for less than full market value or did not transfer the assets to a proper investment vehicle that is otherwise exempt from Medicaid assets, the Medicaid applicant will likely be denied for financial reasons.  In other words Medicaid will claim that the applicant has too many assets or their income is too high to qualify.  Some examples of a Medicaid exempt transfer is the purchase of a graveyard plot, prepayment for funeral services or the purchase of a short term Medicaid annuity.  An interesting case from November, 2015 out of Broome County, entitled Good Shepherd Village at Endwell v. Peter Yezzi shows the many problems that can result when people start their Medicaid planning after admission to a continuing care retirement community.

Under the facts of the case, a resident entered into a contract for admission to a continuing care retirement community wherein they listed all of their assets, valued at approximately $1 million at the time of admission.  After admission, a large portion of those assets were transferred to the residents community based spouse, thus requiring that the continuing care retirement community seek compensation for the resident’s time via Medicaid.  Medicaid would have paid a reduced amount for the resident’s stay compared to the direct pay that the resident could have afforded had the couple not transferred a large portion of their assets to the community based spouse.  

The Court ruled that such transfer while not illegal had certain financial consequences.  Specifically, that the parties were bound under the terms of the contract to expend their personal resources prior to utilizing Medicaid and that the terms of the contract comports with both state and federal law on the matter.  The Court noted that there are two seemingly antagonistic legal principles at play.  On the one hand, New York Public Health Law § 4655 requires that assisted living operators may not modify or reduce eligibility due to a resident’s use of Medicaid.  Furthermore, a spouse living in a facility can transfer all of their assets to the community spouse for purposes of qualifying for Medicaid.  At the same time, however, federal law, as noted in 42 U.S.C. § 1396r(c)(5)(B)(v) allows that contract for assisted living operators may require that a resident spend down their personal assets prior to applying for Medicaid or other publicly funded medical assistance programs.

While the Court made its ruling on contract principles, it highlights the need to properly plan for Medicaid eligibility well in advance of when you need to do so.  Failure to plan can be a plan to fail.  Any decision regarding such expensive services calls for the need to speak with an experienced elder law attorney to ensure compliance with the law with minimal impact on your life and the life of your loved ones.

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