Update NY Medicaid: New 2.5 Year Look-Back Rule Starts January 1, 2023 for Community Medicaid
Medicaid asset protection planning is needed well in advance of true need, to save family assets. While many are familiar with the five-year look-back rule for nursing home care, New York State has been slated to introduce a 2.5 year look back rule for “community” Medicaid for the past two years. It’s now set to start on January 1, 2023.
There are two types of Medicaid: nursing home and community (home health care). To qualify for either, an applicant must have income and assets below certain levels. For 2022, an applicant can only retain $16,800 in assets. For those seeking home health care Medicaid, there is a window of opportunity until year-end.
Asset transfers before November 30, 2022, for applications filed before December 31, 2022, will not be subject to the 2.5 year look back rule. As a result, there is still time to plan to give away assets and become eligible for home health care. For nursing home care, assets must be transferred more than five years before the need arises, or else the applicant will still be deemed to own all or part of the asset.
While the $16,800 asset level seems harsh, there are some special rules. For example, a home you live in is an exempt asset. So too are IRAs, from which you have only received required minimum distributions (RMD). An RMD is considered income, but the principal of the IRA is not considered an asset.
When planning for Medicaid, it’s also important to keep in mind that Medicaid has a right to recover benefits it paid, from certain assets you leave at death. In NY, for now, Medicaid can only pay itself back from assets which pass under your will, also known as “probate” assets. For now, assets held in a trust are exempt from Medicaid recovery.