On a regular basis, clients express their fear that if they ever go into a nursing home and/or need long-term care, the Medicaid program will take their home and life savings.
While it is prudent to be concerned as to what will occur if you or a family member needs long-term care, Medicaid does not seize the Medicaid recipient’s home, its contents and his or her life savings upon eligibility for the Medicaid program.
If one is both financially and medically eligible for Medicaid, and Medicaid has provided services to the Medicaid recipient, Medicaid will have a claim/lien against the individual's estate at the time of his or her death. The estate includes all real and personal property and other assets included within the individual’s estate, as defined for purposes of state probate law; and may include at the option of the state any other real and personal property and other assets in which the individual had any legal title or interest at the time of death, including such assets conveyed to a survivor, heir or other person receiving an inheritance.
New York, as permitted by federal law, has opted to limit the definition of one’s estate for Medicaid recovery purposes. This includes one’s probate and/or intestate estate (when one dies without a last will). Thus, assets that are in the decedent’s name alone, which do not have a named beneficiary, rights of survivorship such as joint accounts, life insurance policies (with named beneficiaries), retirement accounts and accounts payable on death or transfer on death are considered part of one’s estate for recovery purposes.
Meanwhile, revocable and/or irrevocable trusts are not probate assets. Thus, they are not subject to estate recovery in New York. However, it should be noted that the transfer of one’s assets to an irrevocable trust will disqualify the Medicaid applicant and his or her spouse for nursing home Medicaid in New York, and create a 60-month lookback period. However, once the lookback period has passed, the assets in the irrevocable trust will no longer be available and countable resources for purpose of Medicaid eligibility and the assets in the trust will no longer be subject to Medicaid recovery. Assets transferred to a revocable trust do not create said lookback period. However, they are still counted as available resources for purposes of Medicaid eligibility.
Finally, with respect to the residence of a Medicaid recipient, under New York law, a Medicaid lien may not be placed on the residence if the residence is still occupied by the recipient, recipient’s spouse, child under 21 years of age, blind or disabled child of any age and/or a sibling who has an equity interest in the home and has resided in the home for one year prior to the recipient's admission to a medical institution.
While the above may seem helpful in preventing Medicaid from placing a lien on the residence, in many instances, at the time of a Medicaid recipient’s death, the home is owned by the recipient in his or her name alone and/or jointly with his or her spouse. Thus, Medicaid can file their lien for services provided immediately upon the death of the single Medicaid recipient or upon the death of the surviving spouse.
The most prudent course of action to avoid Medicaid recovery and/or liens is to be proactive and utilize an irrevocable Medicaid asset protection trust and gifting scheme, if appropriate, before the need for long-term care becomes a reality.
Anthony J. Enea, Esq. is a member of the firm of Enea, Scanlan & Sirignano, LLP of White Plains. His office is centrally located in White Plains and he has a home office in Somers. He can be reached at 914-948-1500. Mr. Enea is the Past Chair of the Elder Law Section of the New York State Bar Association (NYSBA), Past President and a founding member of the New York Chapter of the National Academy of Elder Law Attorneys (NAELA), a member of the Council of Advanced Practitioners of the National Academy of Elder Law Attorneys, President of the Westchester Bar Foundation and a Past President of the Westchester County Bar Association.