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Changes to Community Medicaid for Long Term Care Benefits at Home

How has the law changed & will it impact planning for you and your loved one(s)?

Community Medicaid is an insurance program which covers an individual who requires care in their home. Prior to the recent changes, New York State permitted persons over age 65 or older, or disabled individuals to qualify for Community Medicaid benefits without having to provide bank statements for review by DSS (Department of Social Services.) This was possible because the Community Medicaid program had no lookback period requirement, meaning that an individual could make gifts of their money or assets and be considered financially eligible for home care benefits the very next month. This will no longer be the case.

For all new Community Medicaid applications filed on or after April 1st, 2021 the change in the law will begin to implement a thirty (30) month lookback period. This will also apply to any applications which request an increase in coverage of care in excess of what they had been approved for prior to April 2021. While the new laws will impose greater restrictions to obtain Medicaid eligibility, there are still many strategies we recommend to our clients to attain Medicaid approval. This article will discuss the new law as well as considerations we will take into account when assisting existing or new clients in applying for Community Medicaid benefits on their behalf.

Restrictions on an Individual’s Financial Eligibility

As mentioned above, Community Medicaid applications to date have not had a lookback period, which allowed individuals to make transfers of their assets to become financially eligible for Medicaid and immediately thereafter submit an application for benefits. The change in the law will now implement a thirty (30) month lookback period, that will be phased in, beginning April 1st, 2021 and will apply to all transactions made on or after October 1st, 2020. The new lookback period will be phased in starting in April 2021, meaning it will increase by one month, each month, until the thirty month lookback has been fully implemented in April 2023. Applications submitted on or after April 1st, 2021 will be subject to a six month lookback period and all transactions made on and after October 1st, 2020 will be reviewed by DSS. Let’s have a look at how the lookback period will be phased in over time.

Example: A single individual applies for Community Medicaid on March 1st, 2022. In order to determine the individual’s financial eligibility, they will be required to produce financial documentation for their income and assets for a period of seventeen months dating back to October 1st, 2020.

It is worth noting that while the lookback period began accruing on October 1st, 2020, it will not be implemented until April of 2021, which means that any applications submitted between October 1st, 2020 and March 31st, 2020 may not have a lookback period applied.

An individual’s transactions on their bank and financial statements will be reviewed for the applicable lookback period to determine whether a penalty period will be applied. The penalty is a period of time that an individual is ineligible for Medicaid benefits due to transferred assets within the lookback period that violate the Medicaid rules. If a penalty period is imposed, then the individual will need to privately pay for any care they receive until the conclusion of that penalty period, at which time Medicaid coverage will begin. The penalty period will be calculated in the same manner that it is calculated for an individual in a nursing home who is applying for Institutional Medicaid (also referred to as Chronic Care Medicaid). The reviewed transactions will be subject to the same exemptions permitted for Institutional Medicaid. These exemptions include gifts or transfers to (1) the individual’s spouse; (2) their disabled child or caretaker child; or (3) to complete a gift and promissory loan, to name a few. It is currently unclear whether the transfer of an individual’s home will be considered an exempt transfer under the new law. However, because an individual’s home, titled in their name, is considered an exempt resource under the existing law, it is our expectation that the transfer of the exempt resource will not impose a penalty if it occurs during the new lookback period.

Another stark difference under the new law is that a penalty period can be imposed upon an individual for transferring not only their assets, but now their income as well. A common instrument used in obtaining Medicaid eligibility for home care benefits is a pooled trust, which allows individuals to transfer their excess monthly income, over the state’s Medicaid income threshold ($875 for a single applicant and $1,284 for a married applicant in 2020), into the pooled trust. Using the pooled trust allows an individual to meet the income eligibility requirements while their trust (managed by a non-profit organization) uses any excess income to pay their bills while they receive care at home. This change in the law could create problems for those who rely on their income to pay for their home utilities, insurance and taxes.

Restrictions on an Individual’s Medical Eligibility

The Medicaid laws to date have allowed an individual to apply for Community Medicaid benefits if they need assistance with at least one “activity of daily living” (ADL) for 120 consecutive days or more. ADLs are used to assess an individual’s ability to perform certain tasks and what level of assistance they need in order to perform said tasks. Some examples of these types of activities include eating, walking, bathing, dressing, or toileting. Even if an individual did not require ADL assistance, they were previously able to receive housekeeping assistance for up to eight hours a week, which, unfortunately, will no longer be available under the new law.

The recent changes in the law also implement a heightened standard that will now require individuals applying for Community Medicaid (as of April 2021) to need assistance with more than two ADLs. The only exception will be for those individuals with dementia or Alzheimer’s, who will need to show that they require assistance for more than one ADL.

This heightened standard for medical eligibility will likely prevent some individuals who suffer significantly from their inability to complete only one or two ADLs on their own to obtain the necessary care they need in order to stay in their home. It also has the potential to harm others who are not willing to leave their homes but cannot afford to privately pay for that care in the community. The new requirements will impose an assessment of whether an individual is capable of remaining safely in the community, and the Department of Health will conduct further assessment where an individual requires more than twelve (12) hours of care per day. This may ultimately force individuals who require more care into nursing homes.

Finally, the changes will prevent an individual’s primary care physician from evaluating the applicant’s medical condition and prescribing the necessary care. Instead, the individuals will be required to see an independent physician selected or approved by the Department of Health. That independent physician will evaluate the individual and prescribe the care necessary. This new requirement will force an individual to see a new physician they are not comfortable or familiar with, and who is not familiar with their medical history. It will likely create unnecessary delays in the application process, as individuals will be forced to wait for a recommendation or approval from the Department of Health. An exception will be available for any individual submitting an immediate need application, and will allow that individual to see their primary physician.

While many of these changes to the Community Medicaid program may seem overwhelming and restrictive, they should not be viewed as an automatic denial of long term care benefits, but instead as an incentive to plan accordingly for your future, sooner rather than later. Be sure to give us a call if considering Community Medicaid for a loved one.

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