Elder Law 101: Big Changes or Little Changes
Opinion Advocates for ideas and draws conclusions based on the author/producer’s interpretation of facts and data.
By Alan Feller, Esq.
Sometimes change comes marching down Main Street with a brass band, jugglers and a costumed mouse. Other times, change clings to the bottom of your sneakers and goes unnoticed for a long time. Right now, both forms of change are possibilities for Medicaid planning.
Twenty years ago, lawmakers in Congress put together the Deficit Reduction Act of 2005 which was signed into law in 2006. A stated goal of the act was to close some Medicaid eligibility loopholes in order to save the government money. For elder law attorneys, it cemented the idea that Medicaid was a fragile government entitlement subject to political and market forces.
A flexible three-year Nursing Home Medicaid Application look back was turned into a stricter five-year look back where it has remained. Excess resources, which used to be easily divided under a “half-a-loaf” calculation were now governed by a more rigorous promissory note set-up. Though annoying, these two loudly trumpeted changes did not appreciably deter Medicaid planning.
The sneaky Medicaid change that quietly became a major issue happened over the last several years. Medicaid has the legal right to seek recoupment or contributions to offset their long-term care payments on behalf of applicants. Primarily, these recoupments are divided into spousal contributions, Medicaid liens and estate recovery. County Medicaid offices have pursued spousal contributions where a community spouse maintains significant resources while their loved one is receiving nursing home Medicaid. Medicaid liens placed on residences of a Medicaid recipient have also been undertaken by the counties.
Staffing, workloads and organizational efficiency do impact enforcement consistency on the county level. The other prong on the fork, estate recovery, was neglected for many years.
New York State, prior to the pandemic, contracted with a Texas company to address estate recovery for deceased Medicaid recipients. The state is looking for probate assets (assets that belong to the decedent alone and require a surrogate’s court estate case to be opened to obtain those assets). With residences being exempt resources for Medicaid home care, many properties were left in the decedent’s names.
Probate assets are subject to estate claims from creditors which file those claims in a timely manner, within seven months following the issuance of letters (court order). Once an estate claim is filed and authenticated, the executor (or administrator) has to satisfy the claim before estate assets can be distributed. This is a huge potential windfall for New York State. For a while, the Texas company was sending out estate questionnaires to families hoping they would provide the necessary estate information. They still send those forms out, but now they can search digital websites which list open estates in each New York county. This saves legwork and time, allowing for more efficient claim filing.
Leaving assets exposed during and after the Medicaid planning process is complete is now riskier than ever. Medicaid is swooping in and grabbing estate assets at a level that we have never seen. Proper trust planning while fully utilizing the transfer rules helps to reduce the risk. With the threat of more Medicaid loophole closures on the horizon, planning earlier is the most intelligent solution.
Alan D. Feller, Esq. is managing partner of The Feller Group, a law firm dedicated to the practice of elder law and estate planning, located at 625 Route 6 in Mahopac. He can be reached at afeller@thefellergroup.com. Contact the professionals at The Feller Group for more self-care ideas.
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