Frequently Asked Questions

Q. My mother suffered a stroke several months ago. She has been managing with four hours of homecare five days a week that she has been paying for herself. My sisters and I believe her condition has worsened and that she now needs more hours of home care. We are concerned that increasing her home care will deplete her savings. Will Medicaid help her?

A. If your mother needs home care and the costs are so significant that she will be spending down her life savings, she needs to know that she may be made eligible for Medicaid home care services that will provide her with as much as 24-hours/7-days a-week services at no cost to her. Such a plan will allow her to conserve her savings to help pay for expenses other than home care. Expenses may include luxuries and necessities, such as vacations, theater, and clothes as well as rent, food, telephone, electric, cable, transportation, etc.

Q. My brother has dementia and needs round-the-clock home care. I believe he has between $70,000 and $80,000 in assets. His Social Security and pension income is $2,000 per month. Currently, he is paying $700 a month for 10 hours of home care a week and $850 for rent. He is just barely able to cover his other expenses. Can we protect his savings and income and still have him qualify for Medicaid home care?

A. The answer is an emphatic “Yes!” to both parts of your question. Under the Medicaid program, the value of his assets: bank savings, stocks, bonds, etc., cannot exceed $14,550.  However, the law permits him to reduce his assets down to the required limit and apply for Medicaid home care for such services. If he gives away (i.e, transfers to an individual or to a trust) in any one month that portion of his assets above $14,550, he will be eligible resource-wise for free Medicaid home care, day care, prescription drugs, etc. on the first day of the following month. Note: There is no penalty period for transferring assets to become eligible for non-institutional Medicaid. Medicaid monthly income limit is $800. In effect, your brother has $1,200 in monthly income that Medicaid characterizes as “excess.” Medicaid will require him to contribute this amount to Medicaid to help cover his home care expenses. However, if your brother joins a pooled-income trust he will be able to conserve almost his entire $2,000 monthly limit to pay his other expenses.

Q. Would you please summarize the Medicaid rules under which it is possible to conserve approximately 50 percent of an individual’s assets should that individual require nursing-home care?

A. Under the Medicaid law in New York State an individual may be eligible for Medicaid nursing-home coverage if his savings do not exceed $14,550 and all of his income except for a personal-needs allowance of $50 per month is paid to the facility to defray the cost of his care. If the individual has assets in excess of $14,400 he may transfer (i.e., give away) his assets to an individual or trust. For example: assume the individual has $114,550. If, in an attempt to become eligible for Medicaid nursing-home coverage, he transfers away $100,000, leaving him with $14,550, he will incur a 10-month penalty during which time Medicaid will not pay for his nursing-home care.

Medicaid arrives at the penalty period by dividing the amount of money transferred ($100,000) by the average monthly cost of a nursing home in the county in which he lives. In the five counties that compose New York City, the average monthly cost is approximately $10,000, resulting in a 10-month penalty ($100,000 ÷ $10,000 = 10) during which time Medicaid will not pay for the Medicaid applicant’s care in the nursing home.

In such circumstances, there is a way to preserve some assets. The person who received the original $100,000 would return 50 percent, that is, $50,000, to the Medicaid applicant. The Medicaid applicant is then deemed to have only transferred $50,000 and therefore incurs only a five-month penalty. The applicant uses the $50,000 returned to pay for his nursing-home care for five months. By the sixth month he has served his five-month penalty – is impoverished, and is eligible for Medicaid. The process requires the utilization of a promissory note or annuity in conformity with Medicaid law.

Q. Will Medicaid take our home if my wife or I should ever need Medicaid nursing home care or home care?

A. In most instances a home – a house, cooperative, or condominium – remains an exempt asset for purposes of determining initial Medicaid eligibility. However, ultimately Medicaid may impose a lien on the sale proceeds of the property for the amount Medicaid has spent on behalf of your wife. If your home is transferred to a non-exempt individual, a penalty period will be incurred during which time your wife will be ineligible for Medicaid nursing-home coverage. Significantly, there is no penalty period if the home is transferred to a spouse; to a “caretaker” child who resided there for at least two years before his or her parent entered a nursing home and provided care to maintain the parent at home; to a child who is disabled, blind, or under age 21; or to a brother or sister who has an equity interest in the home and resided there for at least one year before the his or her sibling entered a nursing home.

Q. If my father transfers $14,000 to me and each of my three children this year, will those transfers count if he should need to apply for Medicaid nursing-home coverage?

A. The transfers you are proposing are counter-productive for Medicaid eligibility but may be a useful for a person wishing to reduce the size of his taxable estate. You are referring to a tax planning option which permits an individual to make gifts of $14,000 to any number of persons in any one year without filing a gift-tax return. Such gifts are exempt from gift and estate taxation, but they are not exempt under the Medicaid nursing-home rules. The transfer of $56,000 (4 persons x $14,000) will generate almost a six-month penalty during which time your father will not be eligible for Medicaid in a nursing home.

Q. I recently realized that I am eligible for Medicaid, but I already have Medicare. Can I have both at the same time?

A. Yes. As long as you meet Medicaid’s income and asset limits, you can have both Medicare and Medicaid benefits, but Medicare will always be the primary payer and Medicaid will be the second payer. Medicaid can pay for many medical expenses not covered by Medicare, such as personal care at home, long-term nursing-home care, or transportation to the doctor.


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