The High Cost of Bad Long-Term Care Advice

“You need to use up all your savings before you’re eligible for Medicaid.  It’s called the ‘spend down.’”

“Your home is exempt from Community Medicaid.”

“You can transfer half your money shortly before you go into a nursing home, and then when you apply for Medicaid, the Penalty Period will be half as long.”

“You have too much income to qualify for Medicaid.”

Coming face to face with the enormous cost of long-term care can be a huge shock for seniors who need assistance.  When they begin to ask questions about how to pay for it, all too often they receive incorrect or incomplete answers from people who are not Elder Law attorneys.  Time after time we have seen potential clients who took these answers as fact, with disastrous consequences.

Sometimes the “advice” comes from nursing home personnel, or it can be nurses, hospital discharge planners, or Social Workers who are not fully informed about current Medicaid regulations.

It is disheartening to us to speak with seniors who come in seeking advice only when they are almost out of money, when our timely advice would have saved them tens of thousands of dollars – and in some cases, much, much more.

Consider a senior woman who needs long-term care, who hears from Medicaid, or from a Medicaid application service, that her mortgage-free house is exempt from being considered a resource for Community Medicaid.  Even if she did other planning, such as transferring her money to a family member or to an irrevocable trust, and then applied for Medicaid, there’s a hole in her plan as large as her entire house.

That’s because Medicaid keeps track of how much they are spending on her care.  Yes, the home is exempt – as long as it’s her primary residence, and her home equity is less than $1,033,000 in 2023.  Once she moves out for any reason (such as assisted living, nursing home, or other), or dies, then wham! – the situation changes. 

Now Medicaid can put a lien against the home, and demand reimbursement from the home equity for any amounts spent on the person’s care.  That can easily eat up every penny of her equity in the house, leaving nothing to help pay for any future care needs (for example, if she goes into an assisted living residence), and nothing for her heirs when she dies.

If she had transferred the house to a child, or had put it into an irrevocable trust, Medicaid would not be able to seek reimbursement from the home equity.  This incomplete understanding of the rules could literally cost her hundreds of thousands of dollars.

Other times, people learn that Medicaid will only provide services if a person has less than a certain – very low – amount of assets.  They hear from friends or family that they need to spend all their savings before they can apply for Medicaid.  So, they glumly use up their entire nest egg to pay for their care – when they could have protected that money.  It could have been transferred to an irrevocable trust or gifted to children or others, and remained available to supplement their care, instead of being rapidly and completely consumed by health and long-term care providers.

Income misinformation is out there as well.  Many people believe that if they have a lot of income, they won’t be eligible for Medicaid services.  This is also incorrect information.  If you’re over 65, your income is NOT a factor in determining your eligibility for Medicaid. 

However, for those who qualify for Community Medicaid benefits, Medicaid does have a monthly income limit. Any amount above the limit is called “surplus income.”

If you do not take steps to protect your “surplus,” Medicaid will require it to be contributed to the cost of your care.  Fortunately, there is an established strategy that will enable you to protect your “surplus income” and allow you to continue to use it to pay for your expenses, or goods or services you desire.

We feel terrible when we have to tell people that the huge amount of the money they spent on their care could have been saved, if only they had come to us sooner.

Elder Law planning, and creating and implementing your plan, takes a lot of legal work, and the costs can seem high.  However, the alternative – doing nothing, or doing the wrong thing – can and often does cost many multiples of the amount people would have spent on implementing a plan with an Elder Law attorney.

Our firm has always helped our clients not only to create and document a plan, but also to help them implement it.  We do not and would not recommend a plan for a potential client unless we feel that it will clearly be cost-effective for them.  We also explain the options, as it is always a client’s decision as to whether and how to proceed.

Don’t fall prey to the belief that people who deal with seniors know the ins and outs of the Medicaid program and how best to pay for long-term care.  Even if you believe your affairs and wishes are very simple, every situation, including yours, is unique, and requires its own analysis, discussion, and actions.

Do yourself the favor of having a consultation with an experienced Elder Law attorney.  Talking through your family situation, your needs, and your goals, will point to the steps you can take to protect what you’ve worked a lifetime to save.  Not doing so could cost you everything.

Medicaid Nursing Home Care

If you need long term skilled nursing care and are financially eligible under New York’s laws, you can have your nursing home care paid for by Medicaid. This is different from Community Medicaid, the other type of Medicaid available to New Yorkers. Since New York has a generous Medicaid program, it is possible for nursing homes to operate profitably even if most of their income is coming from Medicaid. The result is that there are many nursing homes in New York, and almost all of them accept Medicaid. In most nursing homes, Medicaid pays for a large majority of their residents.

Nursing Home is the type of Medicaid that involves the “five year look back.” In brief, this is how it works. If you are over 65 and single, you are not eligible to apply for Medicaid unless you have a very low level of total “resources,” as defined by Medicaid, in your name.  The level is $16,800 in 2022, and usually changes slightly each year.

Download our Nursing Home Medicaid Handout

Resources are assets such as savings accounts and investment accounts, cash value of life insurance policies, and your home.  Once you are at or below this level and you apply for Nursing Home Medicaid, Medicaid requires you to provide all of your financial records for the past five years.  They are extremely thorough in this regard, and the application is complicated under the best of circumstances.

Once the application is filed, Medicaid will carefully examine your records, looking for gifts and uncompensated transfers of money or property.  Any non-eligible transfers to third parties (such as gifts to children or relatives) at any time within the past five years will result in a “penalty period.”  There is no accusation of wrongdoing, and it does not mean that Medicaid will sue anyone, or that the nursing home will refuse to take you. What it means is that Medicaid will not begin paying for the nursing home until after the penalty period is over. You will have to find a way to pay privately until then.

Theoretically, the penalty period is approximately the amount of time in the nursing home that the transferred funds would have covered. However, in practice, the nursing home bill incurred during the penalty period is almost always larger than the amount gifted or transferred.

If you need to enter a nursing home, depending on the amount of your assets, there are strategies that can permit you to save some of your money by reducing the length of the penalty period.  Private annuities and promissory notes are a time tested way to minimize the nursing home penalty period. For a discussion of how this strategy works, click here.

The sooner you take action to protect your assets from being completely depleted, the better.  Don't let the ruinous costs of nursing home care eat up your life's savings - contact us now.

Trusts in Elder Law and Estate Planning

Trusts are among the main workhorses of Elder Law and estate planning, and are some of its most powerful and valuable tools.  They serve a number of useful purposes.  Most people understand the concept of a Will, but a Trust can serve the identical function as a Will without its inconveniences, and provide significant additional advantages as well.

The grantor names the “trustee,” to hold and manage assets on behalf of a beneficiary or beneficiaries.  The trust itself is legally a “person,” and is the owner of the assets that the grantor (or others) transfer to it.

Download our Estate Planning Handout

If you create a trust and place your assets into your trust, you might not need a Will at all.  You can designate in the trust agreement what happens to your assets upon your death, in the same way that you would in your Will.

Assets that are in your name alone at the time of your death are subject to your Will, and are required to go through a court process called “probate” before they can be distributed.  Probate is public, and often expensive, frustrating, uncertain and time-consuming.

A benefit of all trusts is that assets in the trust are not subject to probate.  Distributions can be made quickly and efficiently, the process is private, and far less costly and time-consuming than a probate proceeding.

Different kinds of trusts have different requirements and benefits, and different levels of control by the grantor. Revocable trusts are used for estate planning, avoiding probate, and maintaining privacy.  Irrevocable trusts also avoid probate, but at the same time they afford asset protection and facilitate eligibility for government benefit programs such as Medicaid.

Supplemental Needs Trusts, also known as Special Needs Trusts, provide support for persons with disabilities without compromising their eligibility for government benefit programs.

The first step in creating a trust generally involves meeting with a trust lawyer who will review your assets, income, goals, and objectives.  Then, he or she will create the trust agreement and help you “fund” the trust.  The experienced attorneys at Lamson & Cutner have the knowledge and skills in elder law trusts to help you preserve your assets and income to the greatest extent possible, while ensuring efficient and prompt distribution of your assets to your chosen beneficiaries upon your death.

The types of trusts for the elderly typically used in Elder Law planning include:

Every case is individual and unique, and you’ll need proper advice on what trust configuration will deliver the maximum advantage for you.  Different trust strategies apply to various economic and family situations, and often depend on whether you need, or want to plan against the risk of needing, home care or nursing facility care.   Trusts are the most effective and prudent way to hold and protect your assets, and they’re fully authorized for this purpose under Federal and New York State laws.

If you already have a trust created for estate planning purposes, your trust should be evaluated by an Elder Law attorney.  Make sure that you have focused on the serious financial risks that you may face, in particular the potential need for long-term care at some point. The goal of our services is always to put you in the best position possible to maintain your lifestyle, and to protect your and your family’s financial future.

When you need a trust attorney, choose the caring, experienced legal professionals at Lamson & Cutner.  With offices in both NYC and Westchester County, we are conveniently located and prepared to help you create or update elder law trusts.  You can speak to us from the comfort of your own home, if you prefer, via Zoom or conference call.  To learn more about your options or to schedule a consultation with an estate planning attorney or Medicaid trust attorney, contact us today.

Placing a Co-op in a Trust

If you are currently a shareholder in a co-op and want to implement an asset protection strategy that involves transferring your shares and proprietary lease to a trust, you will need the co-op board’s approval.  This is another good reason to retain an Elder Law firm experienced in addressing these matters.  If the board says no, a knowledgeable attorney may still be able to persuade them to change their mind and allow you to move ahead with the plan.

Download our Estate Planning Handout

We’ve found several approaches that have a track record of success with co-op boards:

The goal is to convince the board that the transaction doesn’t hurt the co-op, and can be consummated in a way that won’t expose the building to any additional risk.  While no firm can guarantee getting board approval every time, Lamson & Cutner has been successful in almost every case.

Transferring a Co-op Apartment to a Trust

In NYC, Westchester, and the NY Metro Area, the process of placing co-op property into a trust includes the following steps:

  1. Create a trust agreement: You will need to create a trust agreement, and have it reviewed by the co-op’s attorney and approved by the Board before you can transfer your co-op into the trust.  At Lamson & Cutner, we usually submit the completed trust agreement for approval before it is signed.
  2. Establish communications with the management company and co-op attorney: Confirm that the trust agreement complies with the co-op’s requirements for transferring the co-op shares and proprietary lease into the trust.
  3. Sign forms required by the co-op board: Depending on its rules, the co-op board may require you to sign Guarantees, Consents, or other documents.
  4. Close the transaction: Transferring co-op shares into a trust involves the issuance of a new share certificate and proprietary lease.  At closing, your Trustee will sign the necessary paperwork.
  5. File Transfer Tax Return with NYC: For co-op shareholders in New York City, a transfer tax return is required, even though no tax will be due.

Trust Lamson & Cutner

Transferring property into a trust can seem complicated.  Indeed, when co-op property is involved, there are many steps that need to be followed.  However, the transfer can be a vital part of an asset protection strategy or estate plan.  The Elder Law attorneys at Lamson & Cutner are skilled and experienced in transferring co-ops  into trusts.  We are committed to making the process as seamless and straightforward as possible for our clients.

To learn more or schedule a consultation, contact Lamson & Cutner today.

What exactly is a private annuity, and why do Elder Law attorneys recommend them?

The kind of annuity most people are familiar with is the kind typically sold by insurance companies.  Commercially, an annuity is a contract you buy from an insurance company.  You pay a lump sum up front and afterwards you receive a guaranteed stream of income.  The stream continues either for a specific period of time, or for the rest of your life.

Federal law has allowed Elder Law attorneys to use this concept in a modified form to protect a portion of the assets of clients who are going into nursing homes, and who will be subject to the “look back” period if they make transfers or gifts to other people or to a trust.

Download our Nursing Home Medicaid Handout

Here’s how the annuity concept is used in Elder Law practice.  An Elder Law firm can draft a private annuity for you.  This is the same type of contract the insurance company offers, except that it is between you and someone you choose.  Instead of paying a lump sum to an insurance company, you pay it to your chosen child/friend/relative (your ‘counterparty’).  The counterparty then provides you with a guaranteed stream of income for a specific period of time.  The contract is individualized so that the stream of income you receive is structured to protect a gift or transfer that is subject to a Medicaid penalty.

These annuities need to be structured on a case-by-case basis.  Their unique nature, and their terms and conditions, mean that insurance companies are not interested in writing this type of contract for you.

Lamson & Cutner employs this strategy to enable you to protect at least some of your money if you need nursing home care and need to do some last-minute planning.  We explain the strategy under “Private Annuities” on our website, www.cutner.com.

Medicaid Asset Transfer Rules In New York

If you think you or a loved one may need to apply for Medicaid benefits in the future, it is important to understand the asset transfer rules.  Generally, gifts or transfers of money or property within the applicable “look back” period will subject the Medicaid applicant to a “penalty period” of ineligibility for benefits.  The attorneys at Lamson & Cutner can help clients understand the Medicaid asset transfer rules and qualify for Medicaid benefits, taking into account the recently-enacted Community Medicaid “look back” that is currently scheduled to go into effect in 2024.  Note:  The implementation date for the “look back” has been extended  to 2025, although a firm date has not yet been announced. Contact our firm to learn the current status of the Community Medicaid look back. 

Download our Estate Planning Handout

Medicaid Look Back Period Extended to Community-Based Services

Applications for Medicaid benefits in a skilled nursing facility are subject to the five-year nursing home look back period.  More information about the Nursing Home look back can be found here.   In 2020, New York State enacted (but has not yet implemented) legislation requiring – for the first time – a look back period for applications seeking in-home care or other Community Medicaid benefits.

The new look back period is 30 months.  However, due to the Public Health Emergency currently in effect, the States are not permitted to impose more restrictive Medicaid eligibility standards.  As a result, implementation of the new look back has been delayed until March 31, 2024, and it may be delayed further.  For New York's Medicaid system, the changes will require a tremendous amount of logistical preparation, as well as additional work, paperwork, and changes in procedures.

The new look back will mean that many patients and their families will incur substantial additional costs that were previously covered by Medicaid.  These may include the costs of adult day health care programs, private duty nursing services, certified home health agency services, assisted living program services, personal care services, limited license home care services, and managed long-term care services provided in a community setting.  The transfer penalty period will begin in the month when the applicant’s Medicaid application has been accepted, and the applicant has been approved for care based upon a functional assessment.  More information about the Community Medicaid look back is available here.

Understanding Medicaid Look Back Exemptions

People who want to apply for Medicaid can avoid a penalty period in cases where they are able to make an exempt transfer.  Medicaid asset exemptions and qualified exempt transfers are not subject to any Medicaid penalty, for either Medicaid Nursing Home benefits or Community Medicaid benefits.

Here is a list of exempt transfers that should be considered in appropriate cases:

Note:  Spousal refusal is not necessarily a 'free ride.'  Medicaid has the right to seek reimbursement from the spouse who refused, and in the past several years has done so with increasing frequency.  Fortunately, even when Medicaid seeks to be reimbursed, it does not mean that spousal refusal ‘didn’t work.’  The amount claimed will be for Medicaid’s costs, which are always less than private pay rates, and a compromise settlement can often be obtained.  In a typical case, the reimbursement amount is materially less than what would have been billed on a private pay basis.

In addition to the above, an exempt transfer of the primary residence can be made to any of the following:

We Can Help You Navigate Medicaid’s Asset Transfer Rules

The attorneys at Lamson & Cutner are dedicated to helping clients in NYC, Westchester, and the NY Metro area, understand and navigate the complex laws surrounding Medicaid eligibility.  We focus on health care and asset protection, helping client protect the assets, property, and income they have worked their entire lifetimes to accumulate.  Contact us today to schedule a no-obligation consultation with an experienced attorney.

Medicaid Recertification

If you are on Medicaid, you will need to be recertified annually. The recertification process demonstrates to Medicaid that (a) you are still alive; (b) you still need services, and (c) you are still financially eligible for Medicaid.

While the recertification process is far less onerous than the initial application, it does require diligence and the production of recent financial records.

Some people believe that their MLTC agency or their nursing home will take care of the recertification, but they are in no way obliged to do so. In concept, recertification is the explicit legal responsibility of the Medicaid recipient. However, in practice, nursing homes often assist or even direct the recertification process, because if the Medicaid recipient is not recertified, the nursing home will stop being paid.

Many people are able to complete the recertification process for their loved one who is receiving Medicaid services.  However, if you feel you need assistance, contact our firm to inquire about having us do the recertification.

Download our Community Medicaid Handout

Medicaid Assisted Living

Assisted Living residences are adult apartment buildings or communities that provide a secure environment for seniors who are generally self-directing. These communities usually offer restaurant-style dining, housekeeping, laundry, and other services, and are sometimes associated with a “graduated care” facility that provides a range of housing options from independent living to skilled nursing care.

Download our Independent Assessor Handout

Traditionally, Assisted Living facilities have been private pay only. However, that is changing somewhat in New York as the population ages.  Gradually, more and more facilities are offering at least some Medicaid rooms or apartments.  There are also some Assisted Living residences for which most or all of the rooms are paid for by Medicaid.  These rooms are part of New York Medicaid's Assisted Living Program ("ALP").  This type of Medicaid still falls under the “Community Medicaid” umbrella.

While many seniors are moving into Assisted Living while they are still independent, some may need help with the Activities of Daily Living ("ADLs").  ADLs include dressing, bathing, eating, toileting, and “transferring,” which means moving from one place to another such as from your bed to a chair.

If you do need assistance with ADLs, you are usually permitted to receive it in an Assisted Living facility. Even if you live in a facility that does not accept Medicaid to pay for living expenses, if you are eligible for Medicaid Home Care, you can usually receive home health services in the facility that are paid for by Medicaid.

Whether you live in a private pay or Medicaid-paid Assisted Living residence, it makes sense to protect your income with long-term care planning.  By creating and funding the right kind of trust, assets are moved out of your name.  Those assets can still be used to pay for a private pay Assisted Living.  Then if you later move to a nursing home, you will already be at least partway through the five-year lookback that Medicaid uses to delay access to Medicaid funds.  With luck you will be beyond the five years and be able to access Medicaid to pay for your nursing home immediately.  Read more about Medicaid Asset Protection Trusts here.

The sooner you take action, the more of your life's savings you can protect.  Contact us now!

Medicaid Home Care in NYC, Westchester, & the NY Metro Area

People need health care support for various reasons, and in New York in particular, they may be able to access government benefits to pay for this expensive support.  Many individuals are unaware that they may be eligible for Medicaid benefits, including long-term care services provided in their homes.

Medicaid Home Care is part of Community Medicaid services, and is for eligible people who need assistance with the Activities of Daily Living (“ADLs”) but who otherwise can remain safely in their own homes.  ADLs include dressing, bathing, eating, toileting, and “transferring” (moving from one place to another such as from your bed to a chair).  Medicaid is also health insurance for eligible people if they don’t have Medicare.

Download our Independent Assessor Handout

Advance planning for Community Medicaid programs such as Home Care is particularly important now, as Medicaid’s eligibility rules are changing.  There will be a new “look back” and other new requirements as well.  These new rules will make achieving eligibility more challenging, and planning more complicated.

The timing of the implementation of the rules is uncertain due to the Federal Public Health Emergency.  No matter the timing, it is still the case that usually the best strategy for protecting your assets and accessing Medicaid is to create and fund a Medicaid Asset Protection Trust.  Call our firm with your questions, and to learn the latest status.

Medicaid programs, including Medicaid Home Care services, are complex.  Working with experienced Medicare and Medicaid planning attorneys can help you understand various programs and their qualification requirements, so you can plan proactively to protect your assets and income to the extent allowed by current laws.  The legal professionals at Lamson & Cutner help clients with a variety of Elder Law matters, including Medicaid and in-home care, long-term care planning, estate planning, and more.

Medicaid financial requirements for eligibility take into account various factors such as your age, marital status, any assets you hold singly or with others, and sometimes your income.  Click here to learn more about the rules that apply to your specific situation.

With offices in New York City and Westchester County, the knowledgeable, skilled Elder Law professionals at Lamson & Cutner are prepared to assist you with Medicare and Medicaid planning — including Medicaid Home Care benefits in NYC, Westchester, & the NY metro area.  To learn more and to schedule an initial consultation, contact us today.

Medicaid Fair Hearing

If you are not satisfied with a decision made by Medicaid, you may request what is called a “Fair Hearing.” This is a legal proceeding, heard by an administrative Law Judge (ALJ). Both your arguments and those of the Medicaid department are presented, and the judge makes a decision.

There are numerous reasons why you might request a Fair Hearing. Medicaid may deny your application. You may disagree with the type of care, or the amount of care you are granted. Also, Medicaid requires you to contribute toward the cost of your care from your monthly income. There may be a difference of opinion about what your monthly contribution should be.

If you want to contest any of these (or other) issues, you are not permitted to go to civil court right away. You must first request a Fair Hearing. If you still disagree with the judge’s decision, you are then permitted to pursue other remedies in civil court.

Download our Nursing Home Medicaid Handout