Mom is already in a nursing home.
The bills have started arriving.
Someone tells you that Medicaid has a five-year lookback, and your immediate reaction is:
“We waited too long. There is nothing we can do.”
That conclusion may be wrong.
Planning before the need for long-term care arises is unquestionably preferable. But the fact that a person is already in a nursing home does not necessarily mean that all Medicaid planning opportunities have disappeared.
The Five-Year Lookback Is Not a Five-Year Waiting Period
This distinction is critical.
New York generally uses a 60-month, or five-year, lookback when determining eligibility for nursing home Medicaid. During the application process, financial transactions within that period are reviewed to determine whether assets were transferred for less than fair market value. A non-exempt transfer can result in a penalty period.
Families sometimes interpret this to mean:
“If Mom did not transfer her assets at least five years ago, she cannot qualify for Medicaid for five years.”
That is not what the rule means.
The lookback is a period during which transactions are examined. Its consequences depend upon what transfers occurred, whether they were exempt, their value, and the applicable Medicaid rules.
Crisis Planning Is Different From Advance Planning
Suppose Mom had consulted an elder-law attorney while she was healthy and unlikely to need nursing home care for many years.
An advance plan might have included transferring appropriate assets to a properly drafted irrevocable Medicaid asset protection trust and allowing the applicable lookback period to pass.
Once Mom is already in a nursing home, that same strategy may no longer accomplish the immediate objective.
But that does not mean there are no strategies available.
Crisis planning starts with the situation as it exists today.
What Can Still Be Done?
That depends entirely upon the facts.
Is Mom married? Does her spouse still live at home? Does she own a house? What does she have in bank and investment accounts? What income does she receive? Did she make gifts during the last five years? Does she have a trust? Is there long-term-care insurance? Does she have a properly drafted power of attorney that authorizes appropriate planning?
The answers can significantly change the analysis.
For married couples, Medicaid’s spousal impoverishment rules may protect resources and income for the spouse remaining in the community.
Certain transfers may also be exempt from the Medicaid transfer penalty. Special rules apply to transfers to a spouse and to certain transfers involving the home and qualifying family members.
Other planning possibilities may exist depending upon the circumstances.
Prior Gifts Need to Be Analyzed
Perhaps Mom has already been helping her children and grandchildren financially.
Maybe she helped a grandchild with college expenses. Perhaps she helped a child purchase a house. Maybe she routinely gave holiday gifts.
Those transfers should not be ignored when preparing a Medicaid application.
The proper approach is to identify them, determine whether they are relevant under the Medicaid transfer rules, and develop the strategy with full knowledge of the financial history.
Discovering a significant transfer after the application has been submitted is far less desirable than addressing it beforehand.
Every Month Can Matter
Nursing home care is expensive.
Consequently, families should not delay seeking advice simply because they assume it is already too late.
If lawful planning can preserve a portion of Mom’s assets or accelerate the point at which Medicaid coverage becomes available, waiting additional months before exploring those options may itself be costly.
At the same time, urgency should not lead to impulsive transfers. Moving money without understanding the Medicaid consequences can make the problem worse.
The First Step Is a Medicaid Planning Review
Before deciding that everything must be spent, the family’s first step should be to understand the situation.
At the Law Offices of Jeffrey A. Asher, PC, we review the applicant’s assets, income, financial history, prior transfers, real estate, marital status, estate-planning documents, and family circumstances to determine what options remain available.
If appropriate, we can then develop the Medicaid strategy and handle the application process.
The lesson is simple:
Earlier planning is better, but “Mom is already in a nursing home” does not necessarily mean “it is too late.”
Before spending down a lifetime of savings, find out what options remain.