The high cost of long-term care means that, as a senior, the likelihood that you will need to qualify for Medicaid increases substantially. Consequently, it is wise to plan for the possibility by learning more about the Medicaid eligibility requirements, including the Medicaid “look-back” rule. To help you better understand, the Long Island Medicaid planning attorneys at Eghrari Wealth Training Firm explain what you need to know about Medicaid’s “look-back” rule.
Why Might I Need to Qualify for Medicaid as a Senior?
Why would you suddenly need to qualify for Medicaid as a senior? The answer is directly related to the likelihood that you will need long-term care (LTC) during your retirement years. When you reach retirement age, around age 65, you will already stand more than a 50 percent chance of needing some type of LTC services before the end of your life. Those odds increase yearly, and your spouse shares the same odds if you are married. If either of you ends up in LTC, the cost of that care will be steep. The nationwide average for a year in LTC for 2022 was over $100,000. If you were a New York resident that same year, you paid, on average, almost $160,000 for LTC.
How Will You Pay for LTC?
As a senior, you will likely rely on Medicare for most of your healthcare expenses. Medicare, however, will not cover LTC expenses nor will most private health insurance plans. In fact, unless you purchased a separate long-term care insurance policy at an additional cost, you will probably be faced with covering your LTC expenses out of pocket. Not surprisingly, over half of all seniors in LTC turn to Medicaid, because Medicaid does cover LTC expenses. First, however, you will need to qualify for Medicaid.
Qualifying for Medicaid and the Look-Back Rule in New York
Because Medicaid is a “needs-based program, Medicaid uses both an income and a “countable resources” limit when determining eligibility. Although some assets are exempt from consideration, it is still easy for a retiree to have non-exempt assets that exceed the countable resources limit. If that is the case, your application will be denied. To prevent applicants from transferring assets out of their name in anticipation of applying for benefits, Medicaid imposed the “look-back” period. The look-back period in almost all states, including New York, is 60 months. The look-back rule allows Medicaid to review your finances for the 60-month period preceding your application for asset transfers made for less than fair market value. If any transfers are flagged, it may trigger a penalty period during which you will be responsible for covering your LTC expenses.
By way of illustration, imagine that you gifted non-exempt assets valued at $500,000 to an adult child during the look-back period. The length of the penalty period imposed by Medicaid is determined by dividing your excess assets by the average monthly cost of LTC. Using the average monthly cost for a private room in LTC in New York for 2022 of $13,233, you would incur a penalty period of 38 months ($500,000/$13,233 = 37.78). During the waiting period, you would be forced to use your own assets to pay for your LTC expenses. Incorporating Medicaid planning into your estate plan early on is the best way to make sure you do not run afoul of the Medicaid look-back rule.
Contact Long Island Medicaid Planning Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns regarding the need for Medicaid planning, contact the Long Island Medicaid planning attorneys at Eghrari Wealth Training Firm by calling us at 631-265-0599 to schedule your appointment.
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