Many people don’t think much about what will happen if they need long-term nursing care, but failing to plan for that possibility can lead to financial challenges when the time comes. One thing that must be considered is that gifts, transfers, home changes and other financial activities can become part of the financial eligibility review.
New York’s Medicaid rules include a lookback period for nursing facility coverage, which means that prior financial transactions can affect their benefits. This lookback period is meant to identify transfers that were made for less than fair market value. These transfers can include things like giving someone money, but they can also involve selling property for less than market value or transferring assets to another person. Even some trust changes can count against you when it comes to qualifying for Medicaid for long-term care.
Why do timing and records matter?
If a transfer is considered improper, Medicaid coverage can be delayed for a specific penalty period. For transfers that were made on or before February 8, 2006, New York will review transfers made within the 60 months before the application. Transfers after the date of the application also matter.
New York has some exceptions that apply to certain transfers. If the transfer is to a spouse, certain disabled children, specific family members or qualifying trusts, the eligibility for Medicaid may not be impacted.
Keeping records, including deeds, appraisals, written agreements and explanations for unusual transactions may be beneficial. In some cases, questionable transfers might be clarified by those documents, which could mean that they wouldn’t lead to a penalty period.
Understanding Medicaid planning is critical, and it must be started early. Waiting too long or handling the planning inappropriately could mean that the lookback period will lead to not being able to get Medicaid coverage when it’s needed.
Unfortunately, penalty periods can lead to considerable financial devastation for the individual and their family. Working with someone who’s familiar with long-term care planning is critical for anyone facing this situation.