When a parent begins to need nursing home care, families are often confronted with two problems at the same time: finding appropriate care and figuring out how to pay for it.
For many families, the financial questions are frightening. Will Mom have to spend everything she has? What happens to her house? Can she give money to her children? What if she already made gifts? Will Medicaid pay for the nursing home?
The most important thing to understand is that needing nursing home care does not necessarily mean that your mother must lose everything she has accumulated during her lifetime. Medicaid planning may provide lawful opportunities to protect assets while helping her qualify for benefits. However, the available options depend heavily upon her individual circumstances and, importantly, the timing of the planning.
Medicare and Medicaid Are Not the Same
One common source of confusion is the difference between Medicare and Medicaid.
Medicare may cover skilled nursing or rehabilitation services for a limited period when its requirements are satisfied. It is not, however, a general long-term-care program.
Medicaid can pay for long-term nursing home care for an eligible individual. Eligibility is based upon detailed financial and other requirements. A person may have too many countable resources to qualify immediately, but that does not necessarily mean that all of those resources must simply be paid to the nursing home.
Do Not Start Moving Money Without a Plan
When a family realizes that Mom may need Medicaid, a common reaction is to begin transferring her money to children or other relatives.
That can create a serious problem.
For nursing home Medicaid, New York generally examines financial transactions during a 60-month, or five-year, lookback period. Transfers for less than fair market value during that period can result in a penalty period during which Medicaid will not pay for nursing home care.
That does not mean that every transfer creates a penalty. Certain transfers are exempt, and other planning strategies may be available depending upon the circumstances.
The important point is that transfers should be part of a Medicaid strategy, not a reaction to a crisis.
What About the House?
Families are frequently particularly concerned about the family home.
The fact that your mother owns a home does not automatically mean that it must immediately be sold to obtain Medicaid. Different rules can apply depending upon whether a spouse or certain other relatives reside there, your mother's circumstances, how the property is owned, and what planning has already been completed.
Medicaid law also recognizes important exceptions to the transfer penalty rules for certain transfers of a residence, including qualifying transfers to a spouse and, under particular circumstances, certain children or other family members.
Because a house is often a family's largest asset, decisions concerning it should be made only after considering Medicaid eligibility, potential estate recovery, tax consequences, and the family's overall estate plan.
Married Couples Have Additional Protections
If your mother is married and your father remains at home, special Medicaid rules may protect assets and income for him.
These spousal impoverishment protections generally permit the spouse remaining in the community to retain certain resources and income, subject to the applicable rules and limitations.
This is important because qualifying one spouse for Medicaid should not automatically impoverish the spouse who remains at home.
Planning May Still Be Possible
Perhaps the greatest misconception about Medicaid planning is that it must have been completed five years before nursing home care becomes necessary.
Advance planning is extremely valuable. But a five-year lookback is not the same thing as a rule saying, “If you did not plan five years ago, it is too late.”
Even after a nursing home admission, planning opportunities may remain. The appropriate strategy depends upon assets, income, marital status, prior transfers, existing trusts, the home, the applicant's family circumstances, and other factors.
Start With an Analysis, Not an Application
A Medicaid application is much more than a form.
Before filing, the family's financial history should be reviewed, potential transfer issues identified, available planning strategies considered, and the necessary financial documentation assembled. A poorly planned application can result in delays, requests for additional documentation, or a determination that Medicaid will not pay for a period of nursing home care.
At the Law Offices of Jeffrey A. Asher, PC, we help New York families evaluate Medicaid eligibility, develop appropriate asset-protection strategies, and navigate the Medicaid application process.
If your parent may need nursing home care, the best time to evaluate their options is before making transfers, spending substantial assets, or assuming that nothing can be protected.
Every family's circumstances are different. Good Medicaid planning begins by determining what can, and should, be done in yours.