15 Apr 2019
Nancy is 91 years old and lives alone in her own home. Her family tells me she now needs 24-hour care at home, but they think she cannot qualify for Medicaid benefits because she (a) owns her home; (b) has money in the bank; (c) has an IRA; and (d) collects a pension. They’re also aware of some “five-year look back” period so even if there is some possibility of help, they cannot wait five years.
Can Medicaid help or not? It’s complicated so let’s look at this case to better understand Medicaid eligibility and how Nancy’s family might proceed.
Nancy has these assets:
Checking/Savings: $85,000 IRA: $90,000
Home: $350,000 (value)
And the following monthly income:
Social Security: $1,200
IRA Distribution: $658
There is a difference in determining eligibility for Community Medicaid (care at home) as compared to Institutional Medicaid (care in a nursing home). The dreaded “five-year look back period” is for nursing home care only. For in-home care, there is no penalty and no look back period for assets transferred out of Mary’s name for her to qualify for Community Medicaid.
Medicaid assesses eligibility on two levels: assets and income.
On the matter of assets (property and bank accounts) for Community Medicaid eligibility, Nancy’s house is exempt if she continues to live in it. Since New York has estate recovery for Medicaid recipients, the state can come after the house after she passes away (or if she moves out of the house) unless some further planning is done. Typically, people transfer the home into a trust with the help of a qualified Elder Law attorney, thereby eliminating the estate recovery issue.
Nancy’s IRA principal is also exempt if she takes the minimum required distribution (RMD). It is important to note that in some New York counties, a distribution higher than the RMD is required to exempt the retirement asset. Since most IRAs have direct beneficiaries (passing to the heirs), the IRA principal is protected. Nancy can keep up to $15,450 in her name to qualify for Medicaid so if she transfers $69,550 of her $85,000 in countable assets, either to an irrevocable trust or to her children, she is in effect eligible for Community Medicaid. And her eligibility starts the first of the month following the transfer.
Then there is the issue of her Income. With $3,458 in monthly income, she is $2,599 above Medicaid’s 2019 limit of $859 per month. But she can still qualify for Medicaid by either (a) paying Medicaid the $2,599 each month OR (b) setting up a Pooled Income Trust to protect this excess income.
Using a Pooled Trust, the $2,599 of excess income is transferred from Nancy’s account to a pooled trust account each month. Then she or her family can request this money be paid to her various creditors (electric, phone, cable, food, home maintenance, etc.). Bills must bear Nancy’s name, cannot be medical in nature and funds cannot be used for gifts to others. The trust can typically be used only to pay for Nancy’s non-medical living expenses (there are some exceptions). Except for the monthly fees associated with a pooled trust, she has access to all her income each month. And she maintains control over the money in the trust. She tells them who to pay, how much to pay and when to pay.
Once Medicaid is established, we can pursue home care services, day care, transportation and so forth to meet Nancy’s needs and allow her to potentially remain at home for the rest of her life. Ideally, this enables her to avoid any long-term nursing home placement.
All this information can feel overwhelming and confusing. Getting assistance from a qualified professional is essential to navigating this process efficiently, effectively and within the rules of NY State law.