Medicaid is a terrific program designed to help older Americans pay for the cost of their prescription medication, hospital care, and even long term assisted living facility needs. Of course, like any other program, the system is in imperfect and comes with its own unique set of limitations, restrictions, and penalties that seniors and their families need to understand in order to take full advantage of under the law.
Designed as a resource to help low income and disabled seniors, Medicaid requires applicants meet certain financial criteria to qualify for benefits. Sometimes, seniors find themselves in a delicate situation where the state considers them too wealthy to qualify for Medicaid but unable to pay for vital nursing and hospital care on their own. In these circumstances, seniors may need to spend down or transfer assets to qualify for Medicaid assistance.
While this may seem like a practical idea, application for Medicaid in New York requires seniors to disclose asset transfers over the previous five-years to ensure applicants are truly in need of government assistance. The Department of Social Services ”looks back” at financial transactions made by the applicant or his/her spouse and may institute a so-called “penalty period” on non-exempt transferred assets which creates a waiting period on benefits which varies depending on the situation.
To calculate the penalty period, applicants must divide the total value of assets transferred by the regional average monthly cost of private nursing facilIty services, available from the New York Department of Health. For example, if an applicant transfers $100,000 in assets during the lookback period and the regional average monthly cost of private nursing home care is $10,000, the penalty is a 10-month wait.
Are there Medicaid services that do not have a transfer penalty?
Fortunately for seniors and their families, not all assets are subject to lookback periods or transfer penalties. Asset transfers that do not affect model adult day care, the Assisted Living Program (ALP), home care, hospice care, personal emergency response system (PERS), residential treatment facility for drug and alcohol treatment, or rehabilitative in nursing homes less than 30-days.
Although the above mentioned programs are not subject to lookback or transfer penalties, there are not exceptions on asset transfers as they pertain to long term hospital care or assisted living facility care paid by Medicaid. Before applying for Medicaid to gain nursing home benefits, seniors and their families should conduct a careful examination of the applicant’s asset like bank accounts, brokerage assets, and property to ensure compliance with the law and avoid any unnecessary penalties.