Elder law is a complex topic that touches on some of the most personal and challenging times in life. It is important to make sure that you and your family have the right information when making planning decisions. Here are some of the most common New York elder law myths debunked.
I have too much money for Medicaid; I could never be eligible. The 2023 Medicaid countable asset limit in New York is $30,182 for an individual applicant and $40,821 for a married couple both applying. This may seem low, but with proper planning you can protect your assets. A common tool in protecting assets such as a house and non-retirement assets, is the funding of a properly drafted irrevocable trust. Further, certain retirement assets in an individual’s own name do not count towards the above asset limits if handled properly. The result is that those with assets well above the limits can still be eligible for Medicaid with proper planning. In fact, Medicaid has become the “safety net” for the middle class when it come to financing the exorbitant costs of long-term care such as a nursing home.
Going on Medicaid means I have to settle for subpar care. Nursing homes are not allowed to reject patients or provide a lower level of care because they are using Medicaid to finance their care. The result is that almost every nursing home in New York accepts Medicaid patients and provides them with the same level of care as those privately paying.
Gifts under the IRS limit don’t count for Medicaid. The Federal annual gift tax exclusion for 2023 is $17,000 per donor per recipient. However, that is a tax rule that has nothing to do with Medicaid rules. Any gift to a non-spouse, even if less than $17,000, may be considered an uncompensated transfer for Medicaid purposes and cause a period of Medicaid ineligibility.
I’m protected because I have a revocable trust. Revocable trusts offer no asset protection for Medicaid purposes. In order to protect your assets if using a trust, they should be in an irrevocable trust carefully drafted to meet Medicaid’s requirements.
I’m joint on my mother’s bank account, I’ll just take her name off the account and the funds will be protected. When applying for Medicaid, any account the applicant has an interest in is considered the applicant’s asset except to the extent documents are provided showing that a non-applicant joint owner actually contributed their own funds to the account. For a non-married nursing home applicant, taking their name off a joint account is likely to be considered a gift to the other joint owner and cause a period of ineligibility.
Medicaid has a 5 year look back period; I understand that I (or my family member) could never qualify for Medicaid for 5 years so what’s the point of doing Medicaid planning? If a person is declining or already in need of long-term care services such as a nursing home, they may still be able to qualify for Medicaid within months not years. This is because the 5 year look back period is just an audit period where Medicaid gets to review an applicant’s financial records to see if a penalty period can be imposed. With proper advance planning or because of certain exceptions to the transfer penalty rules, an applicant can sometimes be made immediately financially eligible for Medicaid benefits. In other instances, an applicant can sometimes be made eligible for Medicaid benefits within a few months. In other cases, the penalty period may actually be as long as the 5 year look back period so it is important to get the look back period ticking as soon as possible with proper planning.
There are many elder law myths swirling around that can lead someone astray. It is essential that decisions are based on the right information. The experienced elder law attorneys at Kurre Schneps can debunk these myths and guide you toward a plan that is right for you. Contact us today to schedule a consultation.
