Medicaid is an important health care program in New York, providing assistance to low-income individuals and families. However, the process of qualifying for Medicaid, particularly through the ‘spend down’ procedure, can be complex. The ‘spend down’ process allows individuals whose income or assets exceed Medicaid’s limits to still qualify for its benefits by lowering their ‘countable’ resources.
Seeking the help of a New York Medicaid lawyer can be beneficial in handling the Medicaid ‘spend down’ process, including the asset and income limits. These legal professionals are well-versed in the rules and regulations of Medicaid and can provide guidance on how to optimally use the program’s benefits. At Schlessel Law PLLC, our team of Nassau County Medicaid planning attorneys can assist you in identifying potential financial issues and ensuring that the spend-down strategy fits well into your overall financial plan. With the right legal support, our team can help you effectively manage the spend-down process and secure your access to necessary healthcare services. Call us today at (516) 574-9630 to schedule a consultation.
What Is Spend Down Medicaid?
Medicaid Spend Down is a program designed to assist individuals in New York who have income and resources that exceed the eligibility limits for regular Medicaid. It allows individuals to “spend down” their excess income on medical expenses, thereby reducing their countable income to meet the Medicaid eligibility requirements. In simple terms, it is a way for individuals to qualify for Medicaid by using their income to pay for necessary medical costs.
Under the provisions of Section 1902(a)(17) of the Social Security Act, medical or remedial care expenses that are paid by specific public programs can be used to offset the spend down amount for an individual applying for or receiving medical assistance. This allows these expenses to directly contribute to reaching the required spend-down total, providing a potential pathway to eligibility for those seeking medical assistance.
Availability of Spend Down Medicaid in New York
Medicaid programs differ across states, each with unique rules, eligibility criteria, and coverage options. In New York, there is a wide range of Medicaid programs designed to meet the different healthcare needs of its residents.
Overview of Medicaid Programs in New York
In New York, Medicaid offers comprehensive health coverage to eligible children, pregnant women, elderly adults, and people with disabilities. The state administers several programs tailored to residents’ needs, including Child Health Plus for children, Medicaid for Pregnant Women for expectant mothers, Disabled, Aged, or Blind Medicaid for the elderly, and the Medicaid Buy-In Program for Working People with Disabilities for individuals with specific medical conditions. Each program has its own eligibility requirements and benefits.
Does New York Offer Spend Down Medicaid?
New York does offer a Medicaid “spend down” program, also known as the Medicaid Excess Income Program, for individuals whose income exceeds the standard Medicaid limit. This program allows individuals to become eligible for Medicaid by spending a portion of their income on medical expenses, effectively reducing their income to meet Medicaid requirements.
New York Eligibility Requirements for the Medicaid Excess Income Program
The Medicaid eligibility requirements in New York are thorough and aimed at providing healthcare coverage to those who need it most. The main eligibility criteria include:
Residency and Citizenship
Applicants are required to be residents of New York State and must satisfy immigration status requirements, which include being a US citizen, a US national, or a legal alien.
Age/Disability
The criteria for eligibility for this program primarily revolve around certain health and age-based factors. These are:
- Visual Impairment: The individual must have a vision impairment that significantly affects their ability to perform daily tasks.
- Age Limit for Children: The program is available for children under the age of 21, providing a wide range of youths access to the program’s benefits.
- Disability: Any individual with a disability, regardless of age, is eligible. The program aims to provide assistance and resources to individuals living with disabilities.
- Senior Citizens: Seniors aged 65 or older are also eligible. This allows the program to support the elderly population by offering them the help they might need at this stage of life.
Income Limitations
In New York, individuals can put money to Pooled Income Trusts to manage income exceeding Medicaid’s eligibility threshold. Monthly income, including earnings from employment, Social Security, gifts, annuities, SSI, and IRAs, should not exceed $1,732 for single individuals to qualify for Medicaid services. For married couples requiring care, this limit is higher. Additionally, a $50 monthly allowance for personal needs is exempt from the income calculation.
Asset Limitations
Medicaid divides assets into two categories: countable and exempt. Exempt assets do not impact your eligibility for benefits. If an asset isn’t exempt, it must be sold, and the proceeds used for nursing home care before qualifying for Medicaid. In New York, there is a 5-year look-back period to review asset transfers. Penalties can be applied if assets were sold for less than their value, transferred to others, or given away. Essentially, all money, property, and items convertible to cash are considered countable unless they are specifically exempt.
Exempt Assets in 2024:
- Cash/Non-Exempt Assets: Up to $31,175.
- One Home: Equity limit of $1,071,000. The home is exempt if there is an intent to return, or if it is occupied by a spouse, a minor child, or a disabled individual. If an exempt home is sold, the proceeds become countable, potentially disqualifying you from Medicaid until the money is spent down and your countable resources fall below the maximum allowable amount.
- One Vehicle: No equity limit specified.
- Other Personal Items: Items that cannot be sold, household goods, furniture, clothing, jewelry, and other personal belongings are not considered countable assets.
| New York Eligibility Requirements for the Medicaid Excess Income Program | Details |
|---|---|
| Residency and Citizenship | Must be a resident of New York State and meet immigration status requirements (US citizen, US national, or legal alien). |
| Age/Disability Requirements | Eligibility includes individuals with significant visual impairments, children under 21, individuals with disabilities regardless of age, and seniors aged 65 or older. |
| Income Limitations | Single individuals: monthly income must not exceed $1,732, including earnings from employment, Social Security, gifts, annuities, SSI, and IRAs. Married couples: this limit is higher. Additionally, a $50 monthly allowance for personal needs is exempt from the income calculation. |
| Asset Limitations | 5-year look-back period for asset transfers with penalties for improper transfers. Exempt assets: up to $31,175 in cash, one home (equity limit $1,071,000), one vehicle, and personal items (household goods, furniture, clothing, jewelry). |
Rules for Spouses
Medicaid rules include specific provisions for spouses to ensure that the community spouse (the spouse not receiving Medicaid) is not impoverished. The spouse who does not need care can retain half of the countable assets, with a limit of $154,140. If their assets are below $74,820, they can receive assets from the spouse needing care until they reach this minimum amount. These rules help maintain financial stability for the community spouse while the other spouse receives Medicaid benefits.
Community Spouse Income Protection
The spouse who does not require care can retain some of the income from the spouse who does, provided their personal income is below $3,853.50 per month. In New York, the maximum amount they can keep from the other’s income is $3,853.50. New York follows an “income first” rule, which means the state only considers requests for additional community spouse resources (CSRA) if their combined monthly income is insufficient to cover the needs of the spouse. Essentially, a spouse can request additional CSRA if there is still a shortfall after using the income of the spouse in the nursing home.
It’s essential to understand that qualifying for Medicaid is not automatic. Individuals need to apply and submit the required documents to confirm their income, assets, and medical costs. Seeking advice from a skilled legal professional knowledgeable about Medicaid can be helpful in understanding the detailed eligibility criteria and the application process
Planning for Medicaid
Planning for Medicaid can be challenging due to the detailed application process and strict eligibility requirements. However, with careful planning and professional help, you can successfully manage these complexities.
Strategies to Meet Eligibility Requirements
When trying to qualify for Medicaid, many people face strict asset limits. Often, individuals have more assets than the Medicaid program allows, making it difficult to get approved. A common strategy to address this issue is to ‘spend down’ non-exempt assets, thereby reducing their wealth to meet the eligibility requirements.
Home Improvements
For Medicaid eligibility, your primary residence is not considered an asset. Therefore, investing money in home improvements is a practical way to reduce non-exempt assets. This strategy not only increases your home’s value and comfort but also lowers your countable assets.
Home improvements can range from extensive renovations to simple upgrades. Examples are installing a new roof for better durability, adding accessibility features like wheelchair ramps or stairlifts, constructing a handicap-accessible bathroom, upgrading old plumbing systems for improved functionality, or building extra storage space like a backyard shed.
Vehicle Repairs or Purchase
Similar to your home, Medicaid considers your primary vehicle an exempt asset. Therefore, investing in vehicle repairs or buying a new vehicle is an effective way to reduce your assets.
This can include routine maintenance or significant repairs, such as installing a new muffler, fixing the air conditioner, replacing worn tires, or repairing the transmission. Another option is to sell your old car and combine the sale proceeds with additional funds to buy a newer model. It’s important to remember that Medicaid exempts only one vehicle per person.
Acquisition of Uncovered Medical Devices
Buying medical devices that are not covered by Medicaid or other insurance plans is another practical way to reduce your assets. This includes purchasing items such as hearing aids, dentures, eyeglasses, wheelchairs, and walkers. These acquisitions help reduce your countable assets while also enhancing your health and overall quality of life.
Debt Repayment
Reducing assets by paying off existing debts is also an effective strategy. This approach lowers your financial liabilities and can decrease the stress of having debt. Types of debts that can be cleared include credit card debts, mortgages, car loans, medical bills, and personal loans.
Hiring a Family Member for Care
Establishing a Family Caregiver Contract allows you to financially compensate a relative or friend for caregiving services. This contract specifies the type and frequency of care provided, as well as the compensation amount. While commonly used by adult children caring for elderly parents, it can also apply to other relatives or friends. Compensation should be fair and based on local rates for similar caregiving services.
Creating a Life Care Agreement
Life Care Agreements, also called Personal Care Agreements, are contracts designed for the long-term care of an elderly person. These agreements usually involve a caregiver, often a family member or a close friend, who receives a lump sum payment in return for committing to care for the elderly individual for the duration of their life.
The amount of the lump sum needs to be determined carefully to ensure it is fair and reasonable. This calculation should consider the life expectancy of the senior and the cost of care in their local area. Such agreements not only guarantee that the care needs of the senior are met but also offer a legitimate method to manage and spend down assets.
Buying an Annuity
Annuities are financial tools that transform a lump sum of money into a consistent income stream over a set period. In the context of Medicaid, individuals or couples can use annuities to convert non-exempt assets into income, thereby reducing their countable assets and potentially qualifying for Medicaid.
Canceling Life Insurance Policies with a High Cash Value
Life insurance policies with a cash value exceeding $1,500 count as assets for Medicaid eligibility. To avoid this, consider canceling the policies or reducing their cash value to stay under the exemption threshold. The money obtained from either canceling or reducing the policies can be spent down in Medicaid-compliant ways. Examples include paying off debts or funding home improvements.
Working with an Experienced Nassau County Medicaid Planning Lawyer
The Medicaid Spend Down process in New York is an important financial option for those seeking long-term medical care assistance. While it can appear complex and daunting, it’s important to remember that help and guidance are available. By staying informed and understanding the nuances of the process, you can make the right decisions for your unique situation.
A Nassau County Medicaid planning lawyer can be a vital resource in this process, providing guidance and knowledge to ensure that applicants maximize their benefits while minimizing potential financial pitfalls. At Schlessel Law PLLC, our skilled Medicaid planning lawyers help applicants successfully navigate the Medicaid system, ensuring their access to the essential health care services they need. The New York Medicaid Spend Down process, while challenging, is a crucial pathway to accessing necessary health care for many New Yorkers. Contact us today at (516) 574-9630 to learn more about how our team can help.
