Paying for nursing home care in New York is not cheap. It will cost thousands of dollars a month even for a shared room. While you may have set aside money for years for your retirement, those funds could fall far short of what you need for financial security if you move into a nursing home.
Thankfully, Medicaid can help older adults without the resources to pay out-of-pocket for nursing home care. However, advance planning is necessary, or financial transfers and gifts could trigger a penalty when you apply.
Once New York implements pending changes to the state program, Medicaid can look back at 60 months of financial transactions when someone applies for support related to nursing home care. What happens if you incur a penalty when you apply?
Although you may never need Medicaid benefits as you get older, you might
When you apply for Medicaid, the state will look over the last five years of your financial records. If the state determines that your financial history means that you have incurred a penalty, they will calculate the total value of the transfers or gifts and then convert that into a number of months of care.
You will have to find a way to pay for that many months yourself without any benefits. Obviously, that can cause severe financial hardship if your current situation qualifies for Medicaid. You could accrue massive debt or find that there isn’t a facility willing to take you.
You will be responsible for paying for yourself
Recognizing that possibility and planning for it in advance could reduce the likelihood that you trigger a massive penalty when you apply for benefits. If you are subject to a penalty, you may need to use credit to cover those costs or ask your loved ones for financial support.
When you do finally start receiving benefits, they could affect your family when you die. Without advance planning, even the house that didn’t prevent you from qualifying could be subject to recovery efforts. Whatever you receive in benefits can become a claim against your estate. In the end, you may have nothing at all to leave behind after receiving Medicaid benefits.
Engaging in Medicaid planning when you start thinking about retirement can help you avoid penalties and estate recovery efforts after your death.