What is the 2022 New York Look Back Law?
Medicaid is designed to cover individuals without the assets or funds to pay for long-term care. When time comes for an applicant to apply for Medicaid, they will have to undergo an assessment and disclose all transfers and gifts they made for a specific time, called the look-back period. An applicant will be penalized with ineligibility depending on the value of asset transfers they completed during the look-back period. The term look-back derives from the government looking back at your assets , for example, for the past two years. The rationale behind the government looking back to see if applicants transferred assets is to deter applicants from disposing of assets right before the application process to avoid having to pay long-term care costs with those assets.
The long-term nursing home care assessment has long been a 60-month look-back period. However, New York State is now enacting a look-back period for Medicaid Community or Home Care. Effective October 1, 2022, New York Medicaid Community and Home Care applications will be subject to a 15-month look-back period at a minimum. Eventually, the look-back period will be 30 months (2.5 years), but this increase will be in phases, with the permanent 30-month period beginning in April 2023.
What if I made transfers within the look-back period?
If an applicant made the transfers and gifts within the “look back period”, they will be subject to a Medicaid penalty.
The Medicaid penalty is calculated as a period of ineligibility equal to the monthly amount of Medicaid’s current regional rate for nursing home care for your geographical area. For example, the current New York City regional rate in 2022 is $13,415. If a Medicaid applicant transferred $53,660 to their grandchild within the look-back period, the resulting penalty would be 4 months of Medicaid ineligibility ($53,660 transfer ÷ $13,415 regional rate = 4 months ineligibility).
If you are reading this before the Medicaid Community and Home Care look-back period starts, the time to plan for long-term care is now. Unfortunately, the costs of waiting can mean losing your eligibility for community or home care.
Proactive Asset Protection
By engaging with an experienced estate planning attorney, a client can divest themselves of assets through a trust with the intention that if they should ever need long-term care, they would qualify.
A trust designed to protect from Medicaid allows the client to maintain control of the assets while ensuring the divesture so the client can begin the look-back period running upon transfer of those assets. This also allows the client who establish atrust and transfers assets to name the beneficiaries who ultimately receive the trust assets once the client passes, as well as to appoint a trustee to manage the assets during their lifetime and beyond. A client may also remove and add beneficiaries as they see fit.
An alternative can involve the simple transfer from the client to a loved one of assets to start the look-back period. However, an asset protection trust allows the client more control as they can change beneficiaries and trustees, shield the assets from the children’s creditors and preserve various tax savings, so it is far more advantageous to use a trust to protect assets than transferring to a loved one outright.
Plan Your Eligibility and Protect Your Assets
Do not wait to discuss your asset protection plan with an attorney. An estate planning attorney can help you with Medicaid planning and ensure your application is made properly. We invite you to call us at (718) 513-3588 or email firstname.lastname@example.org.