Looking Ahead to the Look-Back
While the world focused on the panic and uncertainty of the COVID-19 pandemic, New York State quietly ushered in its 2020 budget. Hidden in the plans was a brutal change to the Community Medicaid application that is scheduled to take effect on October 1, 2020. There will now be a 30-month (2 ½ year) look-back period for applicants seeking Community Medicaid benefits.
In New York, Community Medicaid is available to eligible people who are living in their own homes and need care, such as a personal aide, as well as eligible people living in Assisted Living facilities. Community Medicaid differs from Chronic Care Medicaid which covers Nursing Home care.
A “look-back period” refers to an amount of time that the Department of Social Services will go back from the day you apply for Medicaid to conduct a complete financial review of transactional activity.
For Community Medicaid, there is currently no look-back period. Starting October 1, 2020, there will be a 30-month or 2 ½ year look-back.
The Department of Social Services will request financial records, bank statements, tax returns, and other relevant documents to thoroughly examine the transactions made within the look-back period. Any transactions of $2,000 or more which are not clearly identifiable, must be explained. If the Department of Social Services determines there were transfers made for less than fair market value, commonly referred to as a nonexempt or uncompensated transfer, then a penalty period is imposed. This means that Medicaid will not pay for the applicant’s care for the length of the penalty period.
The penalty period for nonexempt or uncompensated transfers of assets is calculated by dividing the total value of all assets transferred by the average monthly cost of nursing home care in your area, called the “Monthly Regional Rate”. This average is determined each year for the different regions across New York State.
For 2020, the Monthly Regional Rate for the “Western (Buffalo) Region” which includes Alleghany, Cattaraugus, Chautauqua, Erie, Genesee, Niagara, Orleans, and Wyoming counties is $10, 720.
|If a Medicaid applicant had made $100,000 of nonexempt/uncompensated transfers during the look-back period, he or she would be assessed a penalty of about 9 months. [$100,000 / $10,720 = 9.328] Medicaid does not go “seize” the transferred resources, instead they will not pay for the applicant’s care for a period of 9 months|
For Chronic Care Medicaid, which has a look-back period of 60 months, the penalty period does not begin to run until the applicant meets three conditions:
- He or she enters a skilled care facility;
- He or she has $15,750.00 or less of countable assets; and
- He or she actually applies for Medicaid.
With the new implementation of a look-back period for Community Medicaid, the same conditions are likely to be enforced except the first condition will instead reflect a starting point for the individual receiving the care.
This change to Community Medicaid has the potential to be completely disastrous for applicants and their families. They will not only need to grapple with the stress and financial ramifications of the new look-back period, but they will also be subject to the longer and more complicated Medicaid applications. The Department of Social Services is already inundated with applications for Chronic Care Medicaid, and the new Community Medicaid applications will only add to the lengthy wait times for adjudication. We can likely expect to see an increase in Community Medicaid applications following the devastation seen in nursing homes as a result of COVID-19.
As difficult as it can be to imagine or think about needing daily assistance, the sooner you or a loved begins Medicaid planning the better. Unfortunately, there can be a sudden and unexpected change in an individual’s health that necessitates care whether it be at home or in a facility. With proper planning, you can preserve more assets and feel ready for whatever life throws at you.