A party piece of mine when I meet with a client struggling to keep up with paying the cost of home aides for their loved ones is this: New York State covers the expenses of home care costs!
Hang on… Won’t the New York State look at everything mom and dad own when deciding whether to pick up the costs?
Yes… but this is the part where your elder law attorney pulls the white rabbit out of the magician’s hat. So move closer, listen tight and I’ll whisper into your ears so no one else hears what I am about to say…… Your parents can transfer their assets… <drumroll please>… without penalty!
The assets mom and dad have – the house, bank balances, CDs, stocks, shares. Everything that they’ve worked so hard for to build their nest egg.
The assets that I have been depleting over the years to pay for their home care aides??
Yep.. those assets. Those are the kind of assets that mom and dad can transfer away, apply for State support (A/K/A Community Medicaid) and, with mom and dad now being financially eligible (remember, in this hypothetical, they are able to transfer their assets to their son), the State will pay for the home care aides.
Okay… so what is the catch?
There is no “catch”. Until this year, New York’s lookback and penalty only applied to nursing home care. Here, we are not talking about nursing home costs. We are talking about Community Medicaid. The kind of program that pays for the cost of home care aides.
So why have I spent the best part of two years paying tens of thousands of dollars on mom and dad’s home care costs?!
You don’t know, what you don’t know. But this is an excellent reason why you see an elder law attorney.
Hold on, you mentioned “Until this year..” about Community Medicaid’s look back and transfer penalty. What does that mean?
Bear with me and let me explain.
Earlier this year, Gov. Cuomo had appointed a “Medicaid Redesign Team” to recommend savings of $2.5 billion. Changes recommended by this team included major revisions to the Community Medicaid program.
I mentioned earlier that until now, the “lookback” applied only to nursing home care. What this means is that a Medicaid application must include ALL FINANCIAL records of the applicant and their spouse during the FIVE YEARS prior to the nursing home application. This is known as the “lookback” period.
A transfer of an asset is a transfer for less than fair market value. When made by the applicant or spouse during the LOOKBACK period, a transfer penalty applied.
I have the feeling you’re now going to say that transfers for Community Medicaid applications are going to be penalized?
Yep… and you’d be correct.
So, am I going to have to keep depleting mom and dad’s assets?
Not necessarily. You see, the new law provides for an effective date of October 1, 2020. For new applicants therefore applying for Community Medicaid (the program that pays for home care) after 10/1/2020 there will be a “lookback” of 30 months (2.5 years).
So any transfer that we do now will not be penalized?
Yes………. and, possibly, no… or, as us lawyers like to say: “it depends”. Whereas the new law is black and white about the effective date of October 1, 2020, there is some confusion surrounding whether or not transfers can be made before the 10/1/2020 date.
The issue is technical.. but let me try to explain further.
There was a law that was passed back in 2005 which implemented the lookback and penalties for skilled nursing Medicaid applications. The 2005 law only applied to “transfers made on or after February 8th, 2006”. That therefore meant that transfers could happen up until February 8th, 2006.
You’re starting to lose me..
Hang in there with me. So the new law, relating to Community Medicaid, is part of the same statutory section as the 2005 law…and because the 2005 law expressly states the date February 8th, 2006, it could be that all transfers made now PRIOR to 10/1/2020 is going to be penalized because it is after the date of February 8th, 2006.
How is that fair?
It’s not.. and is possibly ex post facto law. In other words, it’s a law that has been passed which makes an act illegal that was legal when committed.
So should I still make the transfers before the October 1, 2020 effective date?
Given its ex post facto nature, I am in the camp that says that you should look to make transfers before 10/1/2020. The intent of the new law is that transfers will only be penalized if made after October 1, 2020.
If you are depleting the personal assets of an individual in order to pay for their home care costs, see an experienced elder law attorney as soon as possible. Despite the uncertainty created by the new law passed as discussed, you won’t want to miss out on taking full advantage of an opportunity to protect assets that will soon disappear once October 1, 2020 has come and gone.