Spousal refusal occurs when one spouse is being cared for in a facility (“the institutionalized spouse”), while the other spouse continues to live at home in the community (“the community spouse”). Upon application of the institutionalized spouse for Medicaid benefits, the community spouse quite simply refuses to contribute his or her income or assets for the care of the institutionalized spouse. Under federal law though, the local Department of Social Services (DSS) may institute a lawsuit against the refusing spouse to recover the cost of care.
In the past, DSS rarely initiated such lawsuits and spousal refusal was often utilized as a Medicaid planning tool in New York. With the present budget crisis, DSS is getting much more aggressive about pursuing refusing spouses. We have seen an increase in actions against refusing spouses and this something that must be taken into consideration and weighed against the other benefits of spousal refusal.
There are alternative planning options that can still protect assets. Laidlaw Firm offers free initial consultations. To discuss Medicaid planning options, contact Laidlaw Firm at (914) 767-0646 or email mlaidlaw@laidlawfirm.com to schedule an appointment.
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A recent NY decision severely curtails exemptions for uncompensated transfers of a homestead other than as expressly allowed in one section of NY law. This ruling goes against accepted rules of statutory construction and could severely impact transfers made in trust to disabled children.
The law provides four distinct categories of exempt transfers:
A plain reading of this statute would mean that if a transfer falls under any one of the four enumerated categories that the transfer should be considered exempt and not result in a Medicaid penalty period.
But a recent decision in July 2011 by a NY administrative law judge in Nassau County has held otherwise and created major uncertainty in the area of homestead transfers. There may also be wider repercussions if this ruling stands.
In this case, the Medicaid applicant transferred the shares of her cooperative apartment into a supplemental needs trust for the benefit of her disabled child and applied for Medicaid to pay for her nursing home. The value of the uncompensated transfer was $169,534.84 and a penalty period of 15.62 months of care was imposed. (This is calculated by dividing the total uncompensated transfer amount by the regional rate of $10,852.). Initially, the court held that the transfer qualified for exemption 3 above and was an exempt transfer. Medicaid appealed and the prior ruling was voided and the court declared that for homesteads, the ONLY exempt transfers are those listed in the homestead section of the statute and that the other exemptions are not available for transfers that involve homesteads.
This interpretation is an outrageous narrowing of exemption of a transfer to or for the benefit of a disabled person. It is judicial activism at its worst, involving a judge rewriting the law in a way that injures seniors' rights and leaves disabled persons vulnerable. Please consult an attorney if you or a family member have previously transferred some in trust for the benefit of a disable person. Laidlaw Firm offers free initial consultations.
]]>But historically, NY laws, regulations and practice limited recovery of Medicaid payments to a recipient’s probate estate. However, with the budget deficit and Governor Cuomo’s voter mandate for fiscal reform, the New York legislature has adopted recommendations made by Governor Cuomo’s Medicaid Redesign Team. This team issued its recommendations on February 24, 2011 and the law was revised on April 11, 2011 and the implementing regulations issued from the Department of Health on September 8, 2011.
See figure 1 below for a clear definition of probate estate assets.
FIGURE 1.
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Probate Assets |
Non-Probate Assets |
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This is major cause for concern in the realm of elder law. Whether you already have an asset protection plan in place or are seeking to create one, it is important to understand the impact of the changes on asset recovery.
Due to a massive budget deficit and laws that restrict reducing services, New York has acted to change its laws and regulations to allow for the fullest estate recovery allowed by federal law. On April 1, 2011 a change occurred in the New York Codes Rules and Regulations where paragraphs were added to current law defining an “estate” in Section 360-7.11(b) pertaining to Medical assistance liens and recoveries. The new paragraphs expanded the definition of “estate” to include any property in which the individual has any legal title or benefit interest at the time of death, including jointly held property, retained life estate, beneficial interest in a trust to the extent of such interest.
It is clear from these modifications to the definition of “estate” for recovery purposes that many elders assets could be vulnerable to Medicaid recovery or loss of services. Consultations with an elder law attorney will ensure qualifying for Medicaid and prevent assets from unnecessarily being subject to Medicaid recovery. At Laidlaw Firm, we offer free initial consultations. Please feel free to call (914) 767-0646 or email us at cgriffin@laidlawfirm.com to schedule an appointment.
Related Links:
As a single person over the age of 65, you will not qualify for Medicaid if your assets exceed $13,800. For a two-person household, your assets must be under $20,100. If you are married, but your spouse executes a “Spousal Refusal,” your assets must be under $13,800.
HOWEVER, certain assets are exempt for Medicaid qualification purposes. They include the following:
Caveat: Although these are exempt assets for determining eligibility, they may still be vulnerable to an estate claim by NY State unless further asset protection planning is performed.
To learn how you can utilize exempt assets to qualify immediately for Medicaid, contact attorney Moira Laidlaw at (914) 767-0646 or email Moira at mlaidlaw@laidlawfirm.com.
Of the proposals being considered, those with the biggest impact on Medicaid eligibility include the elimination of Spousal/Parental Refusal, the expansion of estate recovery and the definition of estate, and the implementation of a 60 month look back for non-institutional long term care (i.e. Community Care). The last proposal is the most drastic. Under current Medicaid law, eligibility to receive Community Care, such as home health aides and skilled care in your home, does not carry any penalty period for transfers. You can transfer assets today and qualify on the first day of the next month for Medicaid. Under the proposed recommendation, the same 60 month look back period that currently applies only to Medicaid Institutional Care would also apply for Community Care.
If you or a loved one wants to qualify for Medicaid Community Care, it is imperative to act immediately. This 60 month look back period would apply to new Medicaid applications if this recommendation becomes law. To avoid having these strict requirements impact your Medicaid eligibility, contact attorney Moira Laidlaw at (914) 767-0646 or email Moira at mlaidlaw@laidlawfirm.com to start your Medicaid Planning today.
]]>Imagine this: you transfer your house to your children to protect the value of your house from Medicaid. Then one of your children gets divorced or sued in a personal injury lawsuit, and your house is considered an asset of your child’s and gets taken through that proceeding.
How do you prevent this from happening? Well, in a word, create a TRUST.
Clients become worried when they hear the word trust. What is a trust? How will it work? It’s this esoteric thing that clients find intimidating. They think it’s just for the rich and famous. Not true! Trusts are the friend of the middle class as well. I tell clients to think of trusts as a small business. They have their own bank account and their own operating terms, as specified in the trust agreement. Your lawyer will help you create the trust agreement and administer it in accordance with the law.
For asset protection purposes, if you create a trust, you will be foregoing your right to withdraw the principal of the trust, but if done right, you will receive income and a right to live in the house if you transfer a house. You will retain enough other rights to the property of the trust so that if you were to die, the beneficiaries of the trust receive a date of death value on the trust property for capital gains purposes, instead of a cost-basis value of trust property.
If you are thinking “huh” to that last part, consider this example:
Husband and wife purchase a house in 1950 for $45,000. They make capital improvements to the house valued at $25,000. The present value of the house in 2011 is $700,000.
So there are many benefits to an irrevocable trust. Here they are:
Of course, a trust is not right for every person. There are also a few drawbacks. They include:
To set up an Irrevocable Income-Only Trust to protect your or a loved one's assets, contact attorney Moira Laidlaw at (914) 767-0646 or email Moira at mlaidlaw@laidlawfirm.com.
]]>Institutional Medicaid applicants are subject to a 5 year look-back period on assets that are given away. Medicaid will then examine each asset given away, assign a value to it, and assess a penalty period during which the applicant will have to privately pay for Medicaid.
The penalty period is calculated by dividing the amount transferred by what Medicaid assesses the average private pay cost of a nursing home in your County. The penalty period does not start to run until the applicant is receiving institutional care (i.e., residing in a nursing home) AND has applied for Medicaid and would otherwise be eligible to receive Medicaid but for the transfers.
As stated above, the 5 year look-back period does not apply to Community Care. Also, certain gifts are not subject to penalty. Examples of gifts that are not subject to a transfer penalty are those made to a spouse or directly to a disabled child or to a trust for the sole benefit of a disabled child. There are other exemptions to penalties as well.
If you have a question on how to gift assets and qualify for Medicaid Institutional Care, contact attorney Moira Laidlaw at (914) 767-0646 or email Moira at mlaidlaw@laidlawfirm.com.
]]>In New York, one of the best emergency planning strategies is a gift and loan strategy. It requires precise calculations, but here’s a sketch of how it generally works:
Gift/Loan Strategy:
There are a couple of risks with respect to the gift and loan strategy. You need to make sure you work with legal counsel to properly calculate the exact amount that should be gifted and loaned. You also need to make sure to loan the money to a trustworthy relative or friend.
There are a few other emergency Medicaid planning strategies. They include personal care contracts and funding exempt assets, especially prepaying for burial expenses and/or plots.
When a loved one is in a nursing home, it’s not too late to qualify for Medicaid. To discuss emergency Medicaid planning strategies, contact attorney Moira Laidlaw at (914) 767-0646 or email Moira at mlaidlaw@laidlawfirm.com.
]]>COMMUNITY CARE (aka “Home Care”): Community Care refers to staying in the home and receiving in home health aids or skilled care in your home.
INSTITUTIONAL CARE (aka “Nursing Home”): Institutional Care is Medicaid’s term for a nursing home, whether it’s a short or long term stay.
Regardless of which Medicaid service you are applying for, the eligibility criteria are determined by both income and resources.
To qualify for Community Care, the income for a one person household is $767 and a two person household is $1,137. The resources of a one person household is $13,800 and for a two-person household is $20,100 plus exempt assets. (Please see our related post on Exempt Assets.)
For those applicants needing Institutional Care, the applicant’s income cannot exceed $50 while the spouse remaining in the home (aka “Community Spouse”) is $2,739. The Community Spouse’s resource allowance ranges from $74,820 up to $109,560. This allowance can be increased if a hearing is requested and judicial approval is received, and is only granted in “exceptional circumstances.” See also our related post on “Spousal Refusal.”
For help in determining whether you or a loved one meets the current income and asset eligibility requirements for Medicaid, contact attorney Moira Laidlaw at (914) 767-0646 or email Moira at mlaidlaw@laidlawfirm.com.
]]>Spousal Refusal is legal and recognized by the legislature and courts as a valid Medicaid planning tool. However, just because it is legal, does not mean that there are no consequences to Spousal Refusal. Medicaid has a right of recovery against the refusing spouse. It doesn’t always pursue the refusing spouse, but the right to do so is there.
So a common question is:
If the “well” spouse can be sued by Medicaid, why execute a Spousal Refusal?
Here’s why: Medicaid obtains better rates for services than you would if you private paid. So repaying Medicaid will be more affordable than private paying, even if you have to repay Medicaid 100%.
Also, Medicaid doesn’t always pursue every spouse, so there is a chance that a demand won’t be made. Morever, if a demand for reimbursement is made, with proper legal advocacy, you can negotiate down significantly the final amount due.
In summary, here are the benefits and drawbacks to Spousal Refusal:
Pros:
To discuss Spousal Refusal as a Medicaid planning strategy for you, contact attorney Moira Laidlaw at (914) 767-0646 or email Moira at mlaidlaw@laidlawfirm.com.
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