Medicaid in New York is a government-sponsored healthcare option, to cover the medical expenses of those who qualify. Even simple Medicaid planning can benefit from an attorney’s knowledge and experience. Medicaid has many rules, changes in laws, and significant planning opportunities that can be easily missed if you do not have the proper knowledge.
Spending Down Assets to Qualify for Medicaid
Medicaid can provide invaluable services to those that qualify for the program. According to federal Medicaid laws, individuals looking to qualify for Medicaid may only have a net worth below a certain level. This net worth includes assets such as homes and bank accounts. Some individuals assume they can simply “gift” their house or spend down their bank account before applying for coverage. This is a dangerous assumption however because under Medicaid’s “look back” period, seniors can be penalized for recently giving away assets or spending bank accounts before applying for coverage.
Life Estate Deeds
While individuals can qualify for Medicaid if they own a home and use it as their primary residence, it does come with a big risk. Upon the individual’s death, if the assets of the estate do not cover the amounts paid out on the individual’s behalf by the state agency, a sale can be forced on the home to secure proceeds for the agency’s claim.
Life estate deeds can be a cost-effective estate planning tool to prevent this situation. A life estate deed involves the transfer of ownership from the individual’s name to someone else. While the individual is no longer the owner of the property, they do have the legal right to live in the home for the remainder of their life. Homes passed on in life estates are excluded from probate proceedings and pass directly to the named beneficiary, even if there is a surviving spouse. Since homes passed on in life estates are excluded from probate proceedings and pass directly to the named beneficiary, Medicaid will have no recovery solution against the home.