New York State Medicaid Law
by David Goldfarb and Jeffrey G. Abrandt Goldfarb Abrandt & Salzman LLPNew York Medicaid Attorneys
Don’t make a mistake with Medicaid eligibility; contact a New York elder law attorney with knowledge of Medicaid law. Goldfarb Abrandt & Salzman LLP is a law firm that handles New York Medicaid cases.
Updated with 2020 income, resource and penalty rates
Introduction
Medicaid is a joint federal, state and city program which provides medical assistance to persons with low incomes and limited assets. It is available to persons who are eligible for public assistance or SSI (Supplementary Security Income). However, Medicaid is also available in some states for persons with higher incomes. In states like New York, the Medicaid Surplus Income Program is available for persons over sixty five years of age or who are blind or disabled and whose incomes are too high to qualify for public assistance or SSI. These individuals must spend down any excess income on medical costs until they reach the Medicaid income level. As an alternative to spending down, New York permits Medicaid recipients living in the community and certain congregate care facilities to protect all their income by the use of trusts for income (see below). Once this eligibility threshold is met Medicaid covers all types of medical care including hospital care, doctor bills, nursing home coverage, home care, and prescriptions. If you are on Medicare, you keep and use your Medicare, but Medicaid covers the Medicare deductibles and many services not provided by Medicare.
This article sets forth the Medicaid rules regarding assets, income and “spousal impoverishment,” that is, what income and resources the husband or wife of a Medicaid recipient in a nursing home can retain. We have also included information about Community Medicaid, which covers medical assistance received when one lives in their home, some adult homes, some assisted living facilities, and the most recent changes enacted by Congress and New York State. Since Medicaid recipients also often have Medicare as well, we begin with a brief overview of the different parts of the Medicare program.
Medicare: Excellent Insurance but Without Further Help You Could Go Broke.
Medicare Parts A & B —“Traditional Medicare”
Medicare is a federal program available to persons who are sixty five years of age and older, and disabled persons of any age who receive Social Security Disability benefits. Basically, it is the health insurance component of Social Security. Medicare Part A covers hospital and limited amounts of “skilled” nursing and home health care. Medicare Part B is optional and covers part of physicians’ costs and other medical services and supplies. Medicare is the most cost-effective health insurance a senior citizen can buy! Everyone eligible should have Medicare coverage and take the optional Part B coverage at the earliest time allowable (unless they have carefully compared Part B to their own employer’s retiree plan and if it is found to be “creditable”). Medicare, however, is far from perfect; it is in fact a safety net with many holes. Medicare has certain deductibles, limited payment periods, and restrictions on the types of services covered. Two of the most severe restrictions are that it only covers nursing home care if it is “skilled” rather than “custodial” care, and it covers only 100 days of nursing home care per spell of illness. A spell of illness begins with the first day of inpatient care in a hospital or nursing home and ends when the beneficiary has been hospital and nursing home free for 60 consecutive days. Recipients of Medicare Parts A and B (Traditional Medicare) should have a supplemental Medigap policy (see below).
Medicare Part C
Another variety of Medicare is Part C which is not traditional Medicare. Medicare Part C is managed care whereby insurance companies or medical providers have contracted with the Federal Government to provide comparable coverage without some of the deductions of Medicare, but with a specific network of approved providers. The attraction for Medicare subscribers to take Part C is that you do not have to pay for Medigap insurance. For people who are chronically ill, Part C is frequently less flexible than traditional Medicare Part A and B supplemented by a Medigap policy. If your Medicare Part C policy has “credible drug coverage” you do not need to purchase a Medicare Part D policy.
Medicare Part D
Part D is a separate policy for drug coverage at additional cost. Be sure to review whether you need to purchase Medicare Part D to help pay for drugs. These policies reduce the cost of prescriptions for the Medicare recipients until a threshold of several thousand dollars is spent, at which point the insurance covers almost 100% of your drugs above the threshold. If you have other drug coverage, make sure it is “creditable” or you will end up paying more for Part D coverage if you enroll later.
Purchase a Medigap Policy If You Have Traditional Medicare
You should also have a Medigap policy or private Medicare supplemental insurance policy if you have Medicare Parts A and B. These policies fill in the gaps in Medicare Parts A and B coverage. For example, most Medigap policies cover the 20% of physicians’ charges not covered under Medicare. However, most policies do not cover the portion of the physicians’ charges above the Medicare approved level, which in New York State is limited to a small percentage, but can still exceed what supplemental insurance pays. Also be forewarned, only certain Medigap policies (policies graded “C” or better) cover nursing home co-payments for the 80 days of co-insurance when a Medicare recipient is in a nursing home receiving “skilled” care under the Medicare definition. (This includes high levels of nursing care and physical, occupational and speech therapy.) This skilled level of care is limited to 100 days per spell of illness (see above). This co-payment for nursing home care can exceed $10,000 if you do not choose the correct Medigap policy that covers the co-payment for nursing home stays.
Community Medicaid
Historically, Community Medicaid has provided extensive services well beyond those provided by Medicare, including home nursing services, home physical therapy services and home care.
It is important to note that the Medicaid rules regarding transfers/gifts spousal impoverishment and eligibility for community based care (doctor visits, prescriptions, home health care and hospital coverage) are very different from the rules for getting nursing home coverage. For example, in New York State transfers/gifts will not disqualify you from receiving community-based care including home health care, but will cause a disqualification period for nursing home care.
Income and Resource Rules
An individual Medicaid recipient residing in the community in 2020 can retain income of $875 per month plus an unearned income credit of $20; an individual in an institution such as a nursing home is restricted to a personal needs allowance of $50 per month. In 2020, income allowed for a couple in the community who are both receiving Medicaid is $1,284 per month plus an unearned income credit of $20 for some couples, and they are allowed $23,100 in resources. However, if only one person needs Medicaid it is usually advantageous for that person to apply on his or her behalf alone; the non-applying spouse must refuse to contribute his/her resources or income to the applicant’s medical needs (“spousal refusal”). The Medicaid agency must grant benefits, but reserves the right to pursue the non-contributing spouse for support in family court.
In order to receive Medicaid, an individual who is disabled or over the age of sixty four, can, in 2020, have non-exempt resources of no more than $15,750. In New York, an exempt irrevocable funeral trust, in any amount necessary to pay for the services, may replace the previously allowable $1,500 burial fund. However, the spouse of an individual in a nursing home who remains in the community can retain significantly higher amounts of resources and still not affect the nursing home spouse’s Medicaid eligibility. The resource rules for a community spouse are discussed below in the section on “Treatment of Income and Resources of Institutionalized Spouse and Community Spouse.”
Self Settled and Pooled Not-For-Profit Trusts
Allowing Community Medicaid Recipients to Utilize All Their Income
For many Medicaid recipients living in the community, the modest income limitation of $895 per month would not leave sufficient funds to pay all living costs. Under Federal Law, Medicaid recipients may join a not-for-profit pooled income trust to protect monthly income above $895 so it can be used to pay the Medicaid recipient’s bills. Each month all income above $895 is deposited in the trust and it can be applied to pay bills of, or for services of and for, the Medicaid recipient.
Medicaid recipients and applicants under the age of 65 may also, on their own behalf, or have a parent, grandparent, guardian or the Court create a trust which will work like a not-for-profit pooled income trust, but which can have the advantage of having a family member or friend be the trustee. Like the not-for-profit trust, all monthly income above $895 must be deposited in the trust and only bills directly benefiting the Medicaid recipient can be paid by the trust.
Nursing Home Medicaid
Treatment of Income and Resources of Institutionalized Spouse and Community Spouse
Under these Medicaid rules, an “institutionalized spouse” includes not only a person in a nursing home, but a person in a hospital who is expected to remain in such a facility for at least 30 consecutive days. [The definition was extended in 2013 to include people in the Managed Long Term Care (MLTC) Program].
The rules previously described regarding a “spousal refusal” apply to nursing home Medicaid as well. Under these procedures, an individual can apply for Medicaid and his/her spouse can refuse to contribute income or resources to the applicant’s medical care. The Medicaid agency must provide benefits, but retains the right to pursue a support order against the refusing spouse in court.
Transfer of Resource/Asset Rules
When a person transfers assets and then receives or applies for Medicaid-covered nursing facility services, the local Department of Social Services ”looks back” at financial transactions made within 60 months (five years) from the first date on which the person was institutionalized and applied for Medicaid coverage that included nursing facility services. A transfer by either the Medicaid applicant or the spouse of the applicant will affect the applicant’s eligibility for nursing home services, some “nursing home-like” services in a hospital, and some special home health care programs. Under legislation passed in 2020 (and effective on or after October 1, 2020), these same transfers will affect eligibility for home health care Medicaid as long with a look back of two and one half years. The effective date of this new law may be later October 1, 2020.
The period of time that an institutionalized person is ineligible for Medicaid because of transfers/gifts by that person or that person’s spouse is called a penalty period. It is the number of months that is calculated by dividing the value of the property transferred during the previous five years (or 2 1/2 years for home care) by the average cost of nursing facility services in that area of the state. In New York City, the average cost of nursing facility services for 2020 is presumed to be $12,844 per month. On Long Island it is $13,407. In Westchester, Orange, Putnam, Rockland, Dutchess, Sullivan and Ulster counties it is $12,805.
Penalty periods expire five years after the transfer or begin to run when the applicant/recipient is in a nursing home, has exhausted all non-exempt resources, and is “otherwise eligible” for Medicaid. In other words, if a transfer has been made within the five year look back, the applicant who has made a transfer must wait out the full five years or apply for Medicaid and face a penalty period based on the amount transferred, which begins only after they have no more than $15,750 in liquid assets.
No planning which involves transfers of assets should be embarked upon without first consulting a knowledgeable attorney.
Under the transfer rules certain resources and transfers are exempt. A home is exempt if transferred to one of the following:
- a spouse,
- a minor (under 21), or a blind or disabled child of the person,
- a brother or sister with an equity interest in the home who resided in home one year before institutionalization,
- a son or daughter who resided in home two years and provided care so as to keep the person from becoming institutionalized.
Certain other transfers of any resource are also exempt. The transfer is exempt if the resource was transferred to a spouse or to another for the sole benefit of the spouse, or transfers from a spouse to another for the sole benefit of the spouse; to a disabled child, or specifically to a trust established solely for the benefit of the disabled child; or to a trust established solely for the benefit of a disabled individual under 65 years if age. If the transfer was to the spouse, the spouse is prohibited from transferring the resource without creating a penalty period.
The transfer may also be exempt if the resource was intended to be disposed of at fair market value or the transfer was exclusively for a purpose other than to qualify for Medicaid. The law states that Medicaid also would not be denied if it would work an “undue hardship”. However, “undue hardship” is difficult to establish.
Transfers Between Spouses
Transfers between husband and wife should take place before the sick spouse goes on Medicaid. However, there is a reasonable amount of time provided to allow for transfers between husband and wife even after a Medicaid application has been filed or a decision on eligibility has been made provided good cause for the delay exists (90 days in New York City). Assets will not be considered available if they are acquired by the community spouse after the month Medicaid eligibility for the institutionalized spouse is established. As discussed above, a penalty period will be created if the community spouse makes a subsequent transfer of these assets received from the institutionalized spouse.
Resources – Community Spouses of Institutionalized Medicaid Recipients
All resources held by either spouse shall be considered available to the institutionalized spouse to the extent the value exceeds the Community Spouse Resource Allowance (CSRA). The CSRA level for 2020 is $74,820 or one-half the couple’s resources as of the date of institutionalization to a maximum of $128,640. The resources of a community spouse include those transferred to the community spouse by the applicant/recipient as allowed by the rules on transfer of resources explained above. The CSRA can also be increased if the spouse in the community has income (as discussed below) which is less than $3,216 per month and needs additional interest and dividends to bring his or her monthly allowance up to $3,216. However, income will first be transferred from the institutionalized spouse to the community spouse before additional resources will be allowed.
Medicaid cannot be denied even if the community spouse decides to retain more resources than the allowable CSRA. The spouse applying for Medicaid is required to execute an assignment of support in favor of the Medicaid agency unless because of a mental or physical impairment, he/she is unable to execute an assignment, or if to deny assistance would create an undue hardship.
Income
Income belonging to the institutionalized spouse and/or the community spouse is treated as available only to the spouse whose name it is in. Income in the name of both is considered to belong one-half to each. Income with nothing to indicate to whom it belongs is considered to belong one-half to each spouse.
The income of the community spouse is not deemed available to the institutionalized spouse. From his/her own income the nursing home resident retains a personal needs allowance ($50 per month) and must spend down his/her remaining income on medical care. The community spouse is allowed to retain a community spouse monthly income allowance of $3,216, in 2020, unless a greater amount is established by fair hearing or court order. If the community spouse has less than $3,216, then income from the institutionalized spouse can be given to the community spouse to bring his/her income to that level.
If the community spouse has more than $3,216 in income per month, then Medicaid will suggest that he/she contribute 25% of the excess over $3,216 to the institutionalized spouse’s medical care. But Medicaid will not be reduced if this amount is not paid.
The rules regarding married couples are complex and care must be taken. The best advice is to seek the advice of an elder care attorney, especially if one spouse evokes “spousal refusal.”
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