Time to Prepare for Possible Medicaid Home Care Changes

Community Medicaid Services will undergo a significant change on October 1, 2020, due to the passage of the New York State Budget Bill (“2020 Bill”). Although many of the changes in the 2020 Bill are subject to federal approval, this bulletin will offer an overview of what might be affected. You can take steps now to protect yourself should the federal government approve the changes.

What’s new?

Under the existing Medicaid Home Care program (unlike the nursing home program) there is no penalty for non-exempt uncompensated[1] asset transfers. The 2020 Bill provides for a 30-month (2 ½- year) look-back period to determine what, if any, non-exempt uncompensated transfers were made by the applicant or their spouse.  The 2020 Bill further provides for the calculation of a transfer penalty period for non-exempt uncompensated transfers occurring during the look-back period. The transfer penalty period for home care services under the 2020 Bill will utilizes the same methodology used to calculate nursing home transfer penalty periods.

Does this mean that the government can take your assets?

No. The transfer penalty under the Medicaid program is not the same as a fine and it does not involve taking your assets. The transfer penalty is a period of time that a person is determined to be ineligible. During the transfer penalty period the applicant will not be approved for Medicaid and will need to privately pay for the services.

How is the transfer penalty calculated?

The 2020 Bill did not change the methodology used to calculate the transfer penalty currently used for Medicaid nursing home applications.

When an application for Medicaid nursing home services is filed there is a look-back over a specified time.[2] As part of the application process, the applicant must submit copies of all of their financial statements[3] for the applicable look-back period. The Medicaid case worker reviews those records to see if there have been any non-exempt uncompensated transfers. The Medicaid case worker tallies all of the non-exempt uncompensated transfers which occurred during the look-back to determine the total value of the transfers. Once the total value of the non-exempt uncompensated transfers is determined, that number is divided by what is called the applicable regional rate and the resulting figure represents the number of months that care would have to be privately paid. For example, the applicable regional rate for Long Island in 2020 is $13,407. If a Long Island resident had $ $134,070 worth of non-exempt uncompensated transfers during the applicable look-back period, their transfer penalty period would be 10 months. During those 10 months they would need to find an alternate source of funding for the care.

Things to know:

• So far, we have not received notice that federal approval for the changes has been granted.
• A transfer between spouses, even during the look-back is an exempt transfer for Medicaid eligibility purposes.
• Spousal refusal remains viable in New York. Spousal refusal allows for an eligibility determination based solely on the applicant spouse’s income and assets as long as a writing is submitted with the application in which the non-applicant spouse refuses to use their excess income and/or excess assets for the applicant spouse’s medical care.
• New York State has not yet released guidance on the changes.
  • We do not know if transfers made before October 1, 2020, will create transfer penalties for applications submitted on or after October 1, 2020.
  • We do not know if transfers made before October 1, 2020 will result in transfer penalties for home care recertifications on or after October 1, 2020.
• There is no upside to doing nothing.

Things to do:

• If you currently need home care services, this is the time to speak with an attorney and create a plan so that you can apply for home care services before October 1, 2020.
• If you do not currently need home care services, this is the time to speak with an attorney to create a comprehensive long-term care asset-protection plan, to reduce the risk of future ineligibility.
• Take a deep breath, the sky is not falling and panic rarely results in good decision-making.

[1] The transfer of an asset by the applicant or their spouse for less than fair market value, other than an exempt transfer.
[2] The look-back for nursing home services is currently 60 months (five years).
[3] Monthly bank statements, brokerage statements, tax returns, etc.