• ACTIVITIES OF DAILY LIVING (“ADLs”)– Transferring (Walking) – Bathing– Dressing– Eating– Continence– Toileting

MEDICAID:Activities of Daily Living

• Healthy Married Couple: When some aging illness is diagnosed or no earlier than 70s

• Single Person with No Kids: NEVER (Private pay caregiving is better than Medicaid care)

• Disabled Family Member: Immediately

• Disabled Minor Family Member: Prior to them attaining age 18

When To Start Medicaid Planning?

The type of Medicaid benefit you receive determines “look back” periods (I.e. the penalty for transferring assets)

Home / Community CarePersonal care, physical therapy, home health care and home health aid services; clinical or out-patient basis; includes physicians, dentists, pharmaceutical, nursery

Institutional CareHospitals, medical facilities, nursing homes Does NOT usually pay for “Assisted Living facilities”

Types of Medicaid

ASSETS$14,850 in the recipient’s nameEXCEPTIONS:• “Burial Allowance” of $1,500• Life Insurance: $1,500 cash value• Personal Property (unlimited)• Client’s House (ONLY for Home & Community care) IF UNDER $828,000• Supplemental Needs Trusts• Medicaid Trusts

•Retirement Plans (IRAs) are exempted from assets if they are in “payout status” (Required Minimum Distributions or Separate and Equal Periodic Payments if recipient is under age 59 ½), in which case payments are included in Income

MONTHLY INCOMEHOME CARE: $825 per month• Any excess income must go to the recipient’s “SPEND DOWN”o Often goes to a “POOLED TRUST”

INSTITUTIONAL: ALL of the recipient’s monthly income in excess of $50 must be paid to the Nursing Home to offset Medicaid payments

Financial Eligibility Requirements for an Individual

Medicaid Asset / Income Limits and Exceptions

One Sick Spouse Two Sick SpousesResource Limits

Sick Spouse: $14,850Well Spouse: $74,820 – $119,220

- $21,750

Income Limits

Sick Spouse: $825 / mo.Well Spouse: $2,980 / mo.

- $1,209 / mo.

Exceptions(see next

slides)

Retirement Plans – if RMD or SEPPResidence – many rulesBurial Allowance - $1,500Irrevocable Burial Trust – UnlimitedLife Insurance – only $1,500 of cash valueMedicaid Trusts & Supplemental Needs Trusts

Department of Social Services and Medicaid impose a “Lookback Period” for transferring assets outside of the proposed recipient’s name

Home & Community Care3 MONTH Lookback

One Strategy:Transfer all financial assets (except $14,850) to a non-spouse, wait one month for bank statements to be updated, then apply for Home Care.

DOWNSIDE: If the recipient needs Nursing Home care… the 5 Year Look back rule applies

Nursing Home5 Year Lookback Period, and the Homestead can be

attached by Medicaid

EXAMPLE: In January, 2011 Mary transfers her Coop and most of her assets to her son Joe (total of $280,000), and applies for Home Care. In March 2015 Mary goes to a Nursing Home. She failed to make the 5 year Lookback (4 years & 2 months). Nursing Home Care in Manhattan equals approximately $12,000 per month.

$280,000 (amount gifted) = 23.3 MONTH $12,000 (monthly benefit) “Penalty Period”

Medicaid will not pay Mary’s Nursing Home benefits for 23 months. ..and Joe is liable. Joe should have paid for Mary’s care for 10 more months to get through Mary’s Lookback Period.

Transfer Penalties

What You Don’t Do, or Do Wrong, HURTS Your Disabled Beneficiary

8

- Examples:- No Will = No choice of who gets what- Improper Beneficiary Designation = Leaves funds to

beneficiary outright- Worst: Leave Nothing to Beneficiary out of fear!!!

- The Result:- Beneficiary’s assets are too high, and get kicked off of

“Needs-Based” programs- May have to PAY BACK Medicaid, other programs

Medicaid Time Bombs• Commercial Annuities

– Non-Qualified: LIFO requires tax payments– Annuitized: extra income adds to spend down

• Large Life Insurance Cash Values– $1,500 limit causes potential income issues, even though FIFO

• Coops: – Don’t like 1st party money (Medicaid Trusts, 1st Party SNTs)

• New York Real Estate– Often too expensive to be exempt under $828,000 Community Care exclusion– Not large enough to house a sibling or child caregiver

• The “Community Spouse” is entitled to some assets and income, but they are limited

• If spouse is in a Nursing Home:– $3,022.50 of income per month– $74,180 - $120,900 of resources

• If s spouses have Home Care:– Combined income of $1,192 per month

• During the Medicaid Application process the well spouse may exercise a “Spousal Refusal” to avoid inclusion of his/her assets and income– Medicaid may accept this (varies county to county), but will have a claim against the well

spouse when he/she dies

• New “Spousal Impoverishment” rules avoid liens

What About the “Well” Spouse?

Retirement Plan Exceptions• For Medicaid Participant– Excluded as a Resource, but MUST be in payout• RMD or SEPP payments

– Included as Income instead• Thereby adding to spenddown

• For “Well” Spouse

Residence Exceptions• Primary Residence under Community Care• Spousal Refusal / Impoverishment• Sibling Caregiver• Child Caregiver• Parent / Child dual Medicaid recipient

Trust Exceptions

• MAPTs• SNTs• Pooled Trusts

Spousal Refusal

Spousal Impoverishment