Medicaid is a government program that helps many people cover long-term care costs, such as nursing home or home health care. However, to qualify for Medicaid, you must meet financial eligibility requirements. One common concern is protecting homes and other assets from Medicaid’s strict asset limits while qualifying for long-term care benefits. Through a carefully planned and executed Medicaid Asset Protection Trust (MAPT), you can qualify for Medicaid without giving up your assets.
The Law Office of Andrew M. Lamkin, P.C. is a Long Island estate planning firm that helps clients protect their assets while navigating the complex world of Medicaid. We focus on elder law, including estate planning, Medicaid planning, and asset protection strategies. Contact us to discuss your options if you are concerned about qualifying for Medicaid without giving up your home or other assets.
Does Putting Your Home in a Trust Protect It from Medicaid?
A MAPT is an irrevocable trust designed to help individuals protect their assets, including their homes, from Medicaid’s asset eligibility requirements. By transferring assets into the trust, the individual no longer owns them, so they are not counted toward the Medicaid eligibility limit. A Medicaid trust can help preserve your home and other assets while still allowing you to qualify for Medicaid coverage.
Notably, once you transfer your home to the trust, you cannot control it further. You will not be able to sell the property or take out loans against it without the approval of the trust’s terms. A MAPT is irrevocable—the transfer is permanent, and you cannot undo it.
How to Qualify for Medicaid Long-Term Care Coverage
To qualify for Medicaid long-term care coverage in New York, you must be at or below the program’s financial eligibility limits. The government looks at your total assets and monthly income to determine if you qualify. You do not qualify for long-term care coverage if you own too many assets or your monthly earnings are too high.
Long-Term Care Coverage
Medicaid long-term care coverage provides health services to individuals who are elderly, disabled, or have chronic conditions that prevent them from independently managing their daily activities. This coverage can include:
- Nursing home care, also known as institutional care;
- Home and community-based care, like home health aides; and
- Certain assisted living or personal care services.
In New York, Medicaid long-term care coverage consists of Community Medicaid and Institutional Medicaid. Community Medicaid covers services that allow individuals to remain in their own homes, while Institutional Medicaid covers care in settings like nursing homes. Both types of coverage are subject to Medicaid’s strict financial eligibility criteria, but New York law sets a shorter lookback period for Community Medicaid.
Asset Limits
To qualify for Medicaid, you cannot own more assets that have a total value that exceeds:
- For an individual, $31,175;
- For married couples where only one spouse applies, $31,175 for the applicant and $154,140 for the other spouse; and
- For married couples where both spouses apply, $42,312.
Not all assets count toward this limit, including:
- Your primary residence,
- Household furniture and other household items, and
- One car.
The government counts most other assets toward the limit, such as savings, investments, or retirement accounts.
Income Limits
For 2024, you cannot qualify for Medicaid if you make more than the following per month:
- For a single person, $1,732;
- For married couples where only one spouse applies, $1,732 for the applicant;
- For married couples where both spouses apply, $2,351.
A Medicaid income trust may be an option if you earn more than the monthly income limit.
New York’s Medicaid Estate Recovery Program
Medicaid generally excludes your primary residence from your asset limit. Although you can usually protect your home during your life, New York’s Medicaid Estate Recovery Program (MERP) may apply after you die. MERP authorizes the government to recover funds from the estates of individuals who received Medicaid benefits for long-term care services during their lives.
How and What the State Recovers Under the MERP
New York’s MERP authorizes the state to recover the amount it spent on long-term care services provided to Medicaid recipients. After the recipient dies, the state sends a notice to the estate outlining the amount it seeks to recover.
Once estate recovery begins, the state may take legal action like the following to collect the Medicaid debt:
- Placing a lien on estate property,
- Forcing the sale of estate assets, or
- Taking physical possession of certain properties.
The estate must pay off the Medicaid debt before distributing assets to heirs.
Exceptions and Exemptions
Exceptions prevent the state from recovering funds in limited circumstances, including:
- The state cannot pursue estate recovery while the deceased’s surviving spouse is still alive;
- If the deceased has children who are under 21 years old, blind, or permanently disabled, the state cannot recover from the estate until the children no longer need support; and
- Sometimes, your heirs may receive a waiver to prevent or reduce the recovery if it creates undue hardship for them.
By placing your property into a MAPT, you can also avoid the possibility of the state using the MERP to recover funds from your estate.
The Medicaid Lookback Period
When you apply for Medicaid, you cannot exceed its asset or income limits. This limitation does not only apply to your present situation—Medicaid includes a “lookback” period of five years. If you transferred assets in any of the five years before you applied, you may be ineligible for Medicaid for a penalty period. This penalty applies regardless of your financial need at the time you apply.
Asset Transfers
For Medicaid purposes, transferring an asset includes:
- Gifting the asset to another person;
- Selling it for below fair market value; and
- Placing the asset into a trust, including an asset protection trust.
So, to avoid being counted against your assets, you generally need to transfer your home into a trust outside Medicaid’s five-year lookback period.
Penalty Periods
If the government concludes that you improperly transferred assets during the lookback time, it may impose a penalty period. The penalty results in a period of ineligibility, where you cannot receive Medicaid coverage for a specific time. The length of the ineligibility depends on the amount you transferred.
We Can Help with Your Medicaid Needs
At the Law Office of Andrew M. Lamkin, we have years of experience helping clients navigate the intersection of Medicaid eligibility and asset care. If you are wondering how to protect your home or need assistance with long-term care planning, contact us today to schedule a consultation.
Andrew Lamkin is principal in the law firm of Andrew M. Lamkin, P.C., where he focuses his practice in the areas of elder law, estate planning and special needs planning, including Wills and Trusts, Medicaid planning, estate administration and residential real estate transactions. He is admitted to practice law in New York and New Jersey.
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