Changes to Community Medicaid Could Have Costly Consequences

The New York State budget enacted in April 2020 made dramatic changes to the state’s Medicaid Program.  Two key, and extremely consequential, changes are (a) a new 30-month “look back” for Community Medicaid services, and (b) new requirements to qualify for Medicaid personal care services.  Due to the pandemic and to major modifications that will be required to the Medicaid system in New York, these changes have not yet been implemented.  If and when they are implemented, these changes are going to be costly – and in some cases, very costly – to those who need home care or assisted living care, and who have not taken action to protect themselves.  Other modifications will make accessing Medicaid benefits more difficult and cumbersome.

The budget left open many important questions, but the Department of Health is providing guidance on how these changes will be implemented, with the caution that the rules have not yet been finalized.

For now, New Yorkers who apply for Community Medicaid are not subject to any disclosure or review of gifts or transfers of their assets made prior to their application.  Officially, March 31, 2024, applications for Community Medicaid will be subject to the new “look back” for gifts or transfers made on or after October 1, 2020.  It is possible that the new "look back" will be delayed again, but the situation is unknown.  If the look back is implemented, many applicants will wind up spending far more of their own money before they become eligible for Medicaid.

What is the new look back?

Once implemented, for the first time in New York, people who apply for Community Medicaid needing home care or assisted living will be required to provide complete financial records for themselves and their spouses for a period of 30 months preceding the date of their application. This period is called the “look back.”

Any “uncompensated transfers” (gifts or transfers to family members or to a trust, for example) made during the “look back” period will subject the Medicaid applicant to a “penalty period” of ineligibility for benefits. The length of the penalty, according to the Department of Health, will be calculated in the same manner as for nursing home care.

What is the timing of the phase-in?

The change is currently scheduled to apply to applications for Community Medicaid services filed on or after MARCH 31, 2024.  This deadline has been pushed back several times and may get pushed back again.  Not surprisingly, Medicaid needs time to work out the rules and logistics as well as to train its staff to handle what will be a far more complex application. Systems will need to change as well.  The timing of the changes is also affected by restrictions on changes to the Medicaid program that were instituted because of the coronavirus pandemic.

The “look back” will apply to transfers made on or after October 1, 2020. So if you transferred money or property prior to that date, you will not be subject to a “penalty period” for Medicaid home care or assisted living.

The “start date” of the penalty, according to the Department of Health, will be from the month that the applicant is both financially and medically eligible for Medicaid home care.  So if it takes Medicaid three months to process your application, but you were eligible at the time you applied, three months of the “penalty period” will already have passed when your application is approved.

Other important issues

    1. One worry for those considering Community Medicaid was whether New York State would permit the continued use of Pooled Income Trusts to protect monthly income.  Fortunately, it appears that transfers of monthly income into a Pooled Income Trust will not be treated as an uncompensated transfer. However, it is still an open question whether any income that is not spent from the trust in the month that it is deposited will remain protected.
    2. Personal Care Services – Requirements and Timing.  New York State has proposed regulations (128 pages of them) regarding the new restrictions on eligibility for personal care and for Consumer-Directed Personal Assistance Program (“CDPAP”) services.  Those regulations are still under review. None of the changes except the one discussed in  paragraph 3 below will occur before March 31, 2024 (And this date may still change).  Read more about them in our article here.
    3. Starting Nov. 8, 2021, a change in regulations made it easier for MLTC plans to reduce services for new members who were required to transfer to that plan, either because their previous MLTC plan closed, or because they received home care through the “Immediate Need” program and, after 120 days, are required to enroll in MLTC, or for other [specific] reasons.

The above issues and other important questions remain on the table, as Medicaid works its way through the logistics of implementing the new rules. What has become crystal clear, however, is that now is the time for those who need Community Medicaid services to prepare and submit their applications. The window of opportunity to apply under the current, more generous rules is closing soon.

Consulting with an Elder Law attorney will give you the best possibility to secure your financial future and your peace of mind.  Our firm works hard to help our clients, and these developments make planning now even more urgent.

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