We will look at the subject of Medicaid estate recovery in NY in this post. But first, we will explain some inconvenient realities about Medicare and long-term custodial care.
Living Assistance for Seniors
When you have been capable of taking care of your own day-to-day needs all your life, it can be hard to imagine a time when you will need help with your activities of daily living. This is fully understandable, but it is also difficult for people to envision life as octogenarians.
Once you become eligible to collect your full Social Security benefit, your life expectancy is into the mid-80s according to the Social Security Administration. In other words, if you live until you are 67, you will probably have the octogenarian experience.
Clearly, many people require living assistance at that point. Alzheimer’s disease strikes over 30 percent of the oldest old, and there are many other reasons why people need long-term care.
In fact, the United States Department of Health and Human Services tells us that 35 percent of seniors will reside in nursing homes. In addition, 52 percent will incur some type of long-term care costs.
Medicare does not pay for long-term care. It will cover convalescent care after an injury or illness when recovery is expected. However, it does not extend to the custodial care that nursing homes and in-home caregivers provide.
Medicaid Estate Recovery
Now that we have provided the necessary background information, we can zero in on the point of this post. Medicaid does cover long-term care, but you cannot qualify if you have significant assets. The limit is just $16,800 in New York.
However, your home is not considered to be a countable asset with an equity limit of $955,000.
It may be comforting to recognize the fact that you can qualify for Medicaid to pay for long-term care even if you own your own home. That’s the good news, but Medicaid estate recovery is the bad news.
The program is required to seek reimbursement from the estates of beneficiaries after they pass away. If you are a Medicaid recipient and you own a home at the time of your death, they would place a lien on the property unless your spouse or a child is residing in the home.
Avoid Medicaid Estate Recovery
You can potentially qualify for Medicaid if and when you need long-term care and avoid Medicaid estate recovery if you take the right steps in advance. First, you establish and fund an irrevocable trust. Your home and income producing assets would be conveyed into the trust.
If you apply for Medicaid, the assets in the trust would not count. While you are living independently, you could accept distributions of the trust’s earnings.
Careful advance planning is the key to the successful execution of this strategy because there is a five-year look back period. After you transfer assets out of your name without getting fair value in return, you will be ineligible for Medicaid for a period of 60 months.
A lot of people would not be able to give their children their inheritances in advance at least five years before they may need living assistance. They need the income that is generated by the assets, and this is understandable. This approach can provide the ideal solution for these folks.
Attend a Free Medicaid Planning Webinar!
We have shared some basic information about nursing home asset protection in this post. If you would like to learn more, attend one of our upcoming Medicaid planning webinars. There is no charge to attend, and you can obtain more information if you visit our webinar page.
Ready to Act Today?
We are prepared to spring into action if you would like to work with ta Manhattan, NY elder care planning attorney to preserve your legacy. You can call us at 212-973-0100 to schedule a consultation, and you can alternately reach us through our contact page.
- NYC Nursing Home Cost Projection for 2031 - May 21, 2023
- Advanced Estate Planning: These Trusts Can Provide a Solution - May 19, 2023
- Testamentary Trust vs. Living Trust: What’s the Difference? - May 10, 2023
See Larger Map Get Directions