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What is the Medicaid penalty for those who need long-term care?

Although many older adults in New York eventually require Medicaid benefits to pay for long-term care, many people fail to actively plan to qualify for those benefits. They operate under the assumption that they can meet the necessary standards to qualify if they need Medicaid to pay for nursing home care or other long-term care costs as they age.

Medicaid has strict limits for both income and personal property, but some property, like the applicant’s home, do not count toward the value of their property. Many people expect that they can qualify easily once they reach the point where they might need benefits. What people often fail to understand is that a lack of planning could trigger penalties. The Medicaid penalty could delay their eligibility for benefits and drastically impact their financial circumstances.

The state looks at more than current financial records

Older adults applying for Medicaid for long-term care coverage must demonstrate that they have limited income and limited personal resources. If they didn’t plan in advance, their financial activity before they apply could trigger a penalty.

There is a lengthy lookback period that applies to any New York Medicaid application. Although lawmakers have attempted to reduce that period, the change has yet to take place. Any major financial moves in the five years or 60 months leading up to someone’s application could trigger a penalty.

The state determines the value of inappropriate gifts and transfers. Then, it determines how many months of care those assets could have covered. The penalty requires that the applicant pay with their own resources for a set number of months of care before the state starts to cover their treatment costs.

The Medicaid penalty can leave someone unable to move into a nursing home or struggling with debt that they have no way to pay. Advance planning reduces the likelihood of a penalty and can also help someone protect specific assets from estate recovery efforts after they die.

Even those who hope to remain healthy throughout their retirement years may benefit from Medicaid planning to ensure they can receive financial support if they become dependent on long-term care. As such, learning about how the New York Medicaid program responds to long-term care applications may benefit those preparing for retirement or planning to create a legacy for their loved ones when they die.

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