Do I Need an Attorney When Applying for Medicaid Nursing Home or Medicaid Home Care in New York?

Applying for Medicaid nursing home or home care is an extremely complex process – one with potential complications not often evident at first glance. The rules and regulations relevant to Medicaid eligibility also change frequently and vary by state. Securing the services of a seasoned elder law attorney is imperative to ensure the most favorable outcome.

There are many instances when utilizing an experienced attorney can make a significant difference. For example, the Medicaid applicant’s spouse may need to execute a spousal refusal in order for the applicant to successfully obtain Medicaid (a spousal refusal allows the well spouse to retain resources and income above the levels ordinarily permitted). Once a spousal refusal has been executed, however, the well spouse will be subjected to a potential lawsuit by the Department of Social Services. Knowing one’s legal rights and options in the face of a potential suit is critical.

Additionally, there are legal arguments that can be made with regard to the transfer of assets by the Medicaid applicant that would avoid the implementation of a potentially onerous penalty period. When someone other than an elder law attorney handles the Medicaid nursing home application, however, these opportunities are almost always overlooked.

It’s also important to consider that the application process for Medicaid nursing home or home care is one that typically takes several months as further documentation and explanations are often required. Medicaid officials may require up to five years of financial records and will closely examine every detail. Any unexplained or questionable expenses – even those that are part of routine planning – can disqualify the applicant if not properly handled. In most cases, elder law attorneys are able to complete this process much faster, saving the applicant a significant amount in care expenses. 

There is also post Medicaid eligibility planning, which is often needed (and which a non-attorney cannot advise upon). The failure to properly make these arguments and to be in a position to get the proper legal representation provided by an experienced elder law attorney can result in tens of thousands of dollars being unnecessarily spent by the applicant and his or her family.

Home is Where the Heart is: The Medicaid Home Care Alternative

All too often when I am reviewing the requirements for Medicaid Nursing Home eligibility and an asset protection plan with a client their immediate reaction is the same – they are never going to a nursing home and I need not waste any time discussing it. Fortunately, for many of my clients that may be true. For an equally large percentage, however, it is not.

Is there any way to accurately predict who will one day need to enter a nursing home? Unfortunately, the answer is no. One thing that appears to be certain, however, is that a great majority of seniors would prefer to remain at home and receive care there rather than in a nursing home.

The Medicaid Home Care program provides a viable solution for many Medicaid eligible seniors. With Medicaid home care, there are no penalty periods imposed if a senior transfers (gifts) his or her assets. The assets transferred, however, would be subject to the five year look back period, and would create a period of ineligibility for nursing home Medicaid as provided for by the Deficit Reduction Act of 2005 (“DRA”).

Additionally, if the applicant for Medicaid home care is married, the couple can transfer all assets into the name of the non-applicant spouse. The non-applicant spouse can then execute a “spousal refusal,” which would allow the applicant spouse to become eligible for the Medicaid home care program.

If a single individual applies for Medicaid home care and has monthly income in excess of the amount permitted by Medicaid, he or she can transfer his or her excess income to an approved “pooled trust.” The pooled trust will, in turn, be permitted to reimburse the applicant for many of his or her expenses from the excess income her or she contributed.

If the applicant for Medicaid home care is single and does not have a spouse or blind, disabled or minor child residing with him or her, the applicant will be subject to a $820,000 home equity cap on the net equity value of his or her home for eligibility purposes.

In order to receive home care services, the applicant’s health and safety must be able to be maintained in the home. The applicant’s conditions must be “stable” (not expected to suddenly deteriorate or improve), and not require skilled professional care. The assistance in the home must be needed “to prevent a health or safety crisis” from developing.

The level of services and number of hours the home care program will provide depends in large part on the needs of the applicant, his or her ability to “self direct” activities of daily living, the amount of assistance available from his or her spouse and/or others residing in the home, and the specific Medicaid home care program for which the applicant is applying.

In light of the harsh requirements imposed by the Deficit Reduction Act, the Medicaid home care program provides, in many instances, an excellent and viable alternative.

To Love, Honor and Cherish – Until Medicaid is Needed

Sadly, the exorbitant costs of nursing home care in Westchester County and the surrounding region have a number of seniors considering divorce as a means of preserving their assets and obtaining Medicaid. With nursing homes averaging $385 to $425 per day in Westchester, some of my senior clients have inquired as to whether divorce is a viable or necessary option.

Fortunately, the availability of “spousal refusal” in New York often helps to dissuade clients from seeking a divorce, especially if Medicaid eligibility is the primary motivating factor. In simplest terms, “spousal refusal” allows the spouse of the applicant for Medicaid to refuse to contribute his or her assets and income towards the cost of care. This will allow the applicant spouse to obtain Medicaid. The refusing spouse, however, will then be susceptible to being sued for support by the Department of Social Services in the amount expended for the cost of care (approximately half of the private pay rate).

For couples that were married late in life, are in second or third marriages, or have maintained their assets separate and apart throughout their marriage, the thought of having financial responsibility for the nursing home costs of their spouse is often troubling.

Clearly, if the divorce is being sought for Medicaid purposes alone, it is an extreme measure that should be the last resort after all other available options and asset preservation techniques have been fully explored. Couples considering a divorce should thoroughly examine all pros and cons as well as the emotional and financial impact on themselves and their families.

If it is eventually determined that a divorce is to be pursued, it must satisfy all of the requirements of the Domestic Relations Law. This may be difficult to accomplish because of the illness or disability of one spouse. Resolving these issues necessitates consulting a sufficiently experienced family law attorney. A number of underlying elder law issues will also need to be addressed.

One of the first issues to arise is often mental capacity. As can be imagined, many cases involve seniors who are very ill and disabled. The attorney must take all steps necessary to ascertain whether the client has the requisite capacity to understand the divorce proceeding. This would require consulting with the client’s physician and perhaps obtaining a written opinion as to the client’s capacity.

If it is determined that the client does not have the requisite capacity to participate in the divorce proceeding, it then may become necessary that an Article 81 guardian be appointed for him or her. The guardian should be a disinterested third party and should not be the other spouse due to the potential financial conflict of interest. While the guardian could consent to a divorce, annulment or separation, he or she would need to ensure that the rights of the incapacitated spouse have been protected.

The continued financial support of the incapacitated spouse will also be an issue of paramount importance in determining whether divorce is a feasible option. The divorce must be a real and not a “sham” in the sense of the equitable (perhaps not equal) distribution of the assets. The well spouse needs to understand that the financial settlement must be fair and reasonable in light of the length of the marriage and other relevant factors. Assume that Medicaid will closely scrutinize whatever financial settlement is achieved.

As the baby boomer generation begins to face these issues, the need for a slight modification of the marriage vows may be in the offing. My experience has been that the decision to pursue a divorce is, in many cases, abandoned once the reality of the financial settlement of the divorce has been determined and “spousal refusal” has been carefully reviewed as an option.

Are You Absolutely Sure You Want to Get Married?

Whether it’s because we are living longer or because divorce has become more prevalent, we are seeing more couples, ages 60 or 70, tie the knot. Many do so unaware of the rights and obligations they inherit should their spouse become ill and require long-term care. If such a case occurs, the financial consequences can be devastating.

According to the US Department of Health and Human Services, at least 70 percent of people over age 65 will require long-term care services at some point in their lives. While second marriages are still popular – with 1 out of 4 Americans age 25 or older having remarried at least once (U.S. Census) – another trend is emerging. The number of cohabitating seniors nearly doubled, jumping from 1.2 million to 2.2 million (2000 and 2008 U.S. Census). In many instances the decision is financially based, with the couple fearing liability for one another’s medical expenses.

In my experience, those who choose to marry late in life generally maintain separate finances and often opt for a pre-nuptial agreement. Unfortunately, when it comes to Medicaid eligibility, the spouse is still considered a “legally responsible relative” even if all finances were kept separate. His or her assets and income will be counted and deemed available for Medicaid nursing home or home care purposes and must be disclosed.

This news is often compounded by the realization that to qualify for Medicaid, it may be necessary for the applicant to transfer his or her assets to their husband or wife. The well spouse must then execute a “spousal refusal” statement, indicating that he or she refuses to pay their husband or wife’s medical expenses. This statement allows the applicant to become eligible for Medicaid despite the fact their spouse has income and assets above the permitted eligibility levels.

The execution of a “spousal refusal” requires Medicaid to consider only the income and assets of the applicant and not his or her refusing spouse. Both parties must still provide information to Medicaid as to their assets and income. While a spouse’s failure to do so can’t be used against the applicant in determining initial eligibility, an ongoing refusal to provide the requisite financial information will result in a denial of the application.

Once the refusing spouse has executed the “spousal refusal” statement, he or she may be liable to Medicaid for reimbursement of the amounts actually paid for the nursing home or home care costs. While still a substantial sum, this amount is significantly less (often 40-60 percent less) than most nursing homes’ private pay rate, which in Westchester averages from $385.00 to $425.00 per day. After an application filed with a spousal refusal has been approved, there are many post-eligibility planning opportunities that can be implemented to limit the refusing spouse’s exposure to Medicaid’s claims.

While a “spousal refusal” can save a great deal, it does not eliminate the costs altogether. Further complications may arise if assets are transferred and the Medicaid applicant has children from a prior marriage. Sadly, in some cases, these realizations lead to a discussion of divorce. Even in divorce, New York has laws in place that require a separated or divorced spouse to continue supporting a former husband or wife who has become a “public charge” or a victim of extreme hardship.

The decision to marry or remarry late in life is one that should be undertaken after consideration of all the potential consequences. With the significant increase in the numbers of seniors suffering from debilitating illnesses, particular attention should be paid to the feasibility of becoming financially responsible for another’s long-term care.