The Buffalo News has an article about the difficulty of middle class families to afford nursing home care. The article talks about how elderly or infirm people seeking to spend down or transfer assets to qualify for Medicaid are finding it increasingly difficult because of changed rules, and a new law will make it even tougher. The changes, designed to minimize government spending by reducing the number of people eligible for aid, are hitting many middle-class families in the pocketbook.
To ensure they qualify, families of residents or future residents routinely try to legally manipulate their assets to evade the financial limits. To remain eligible, the maximum Medicaid-countable assets you can have are $104,400.
Of the 120,000 residents in nursing homes in New York, 75 to 78 percent are on Medicaid, said Richard Herrick, president and CEO of the New York State Health Facilities Association. As a result, nursing home care consumes about 14 percent of the approximately $49 billion New York State annual budget for Medicaid, or about $7 billion, he said.
To qualify for Medicaid, an individual must disclose all assets — from bank accounts to vacation homes — to the county Department of Social Services. A single individual can have up to $13,050 in assets.
If the individual is married to a “community spouse,” a person who is not in a facility, the spouse can keep between $74,824 and $104,400, depending on the total assets they had before going into a nursing home. The community spouse can also keep a house and a car.
To determine the length of the penalty period, the county looks at how much money a Medicaid candidate has gifted for less than fair market value within the look-back period. To calculate a penalty period, a person can divide the total amount of money they moved around during the look-back period by the average monthly cost of skilled nursing for their region, Beinhauer said. For Western New York, the average monthly cost is $7,066.
For example, if a person gave $100,000 to his children before applying for Medicaid, they would have a little longer than 14 months to wait before the government started paying.
That’s not to say all gifts will cause delays. Beinhauer said certain gifts can be justified.
“If you can establish a pattern of gift making and you were in good health when you made the gift, for example, you could argue that gift should not be considered a sanctionable transfer,” he said.
Prepaying burial costs and funeral expenses is an easy way to spend down money legitimately, Burial-related costs for a spouse, son, daughter or sibling are not counted as part of one’s assets.
A house can also be transferred in several ways so that the transaction is exempt. If a child is living with a parent for two or more years or a sibling for at least a year, the applicant can transfer the deed without the house counting as an asset.