What Is The Look Back Penalty Period in NY?
Eligibility for Medicaid benefits is based upon the Medicaid applicant’s income and resources. Non-exempt transfers of assets, which are without consideration are considered gifts and are presumed to have been made for the purposes of qualifying for Medicaid. Transfers or gifts are subject to a look-back penalty period, of sixty-month, or a five-year look back penalty period. During an application for Medicaid eligibility, the Department of Social Services, or the Human Resources Administration investigates an applicant’s records for the look back penalty period. They look at the history going back five years regarding transfers and gifts in order to determine what, if anything, of a penalty period should be imposed.
Currently, under New York Medicaid law, there is no penalty period or look back penalty period for in-home care. However, that care is limited for care in an individual’s home, if an individual needs full-blown nursing home care, there is a five-year look back penalty period. Generally, what happens is the Department of Social Services, or the Human Resources Administration calculates the amount of gifts or transfers that were made without consideration within the look back period, and divides that by the regional cost of the nursing home in order to calculate the disqualification period. Commencement of the penalty period is as follows:
In cases of a transfer of assets or gifts made on or after February 8, 2006, the begin date of the period of ineligibility is the first day of the month after those assets have been transferred for less than fair market value, or the date on which the otherwise eligible individual is receiving nursing facility services for which Medicaid coverage would be available, the imposition of a transfer penalty, whichever is later, and which does not occur during any other penalty period. Multiple transfers made during the look back penalty period including transfers that would have otherwise resulted in a fractional penalty are accumulated into one total amount to determine the penalty period, which means that calculation will begin on the date the applicant needs the nursing home care and applies for nursing home care.
What is the Medicaid Application Process in New York?
The application form is only the beginning of the Medicaid application process. Much of the information requested in the application form must be verified by the submission of additional documents. Medicaid typically provides a list of documents required to accompany a Medicaid application. These additional documents should be sent to DSS, Department of Social Services, along with the application when submitted. For all Medicaid applications, except nursing home care, the local Medicaid agency will accept only an expedited application form listing current income and assets without the full five-year financial history. Only upon nursing home care will an applicant be required to provide a full five-year history for their application.
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The application would require social security cards proof of age and citizenship, birth certificate; proof of legal status, marital status, and possibly a marriage certificate will be requested. If the spouse were deceased, the death certificate would be required. If the person is divorced or separated, a copy of the divorce or separation agreement must be submitted. In order to establish residency, rent receipts, mortgage statements, real estate tax bills, leases, telephone, or utility bills in the name of the individual applying for Medicaid to establish local residency. In addition, income verification documentation would be required, the documentation regarding an applicant or unearned income is required.
If they are on social security, a copy of their social security check or annual award letters would be necessary along with any another monthly income that an individual would be receiving, such as veterans administration, payments, workers compensation, railroad, and union benefits, pension benefits, New York State Disability Benefits etc. In addition, any other monthly income, for instance, proof of monthly income from rental properties, or if the individual receiving support, alimony, maintenance, or child support via the court order, that would have to be submitted if they are currently receiving any other income, be it they are employed, or if they are getting unemployment insurance.
As discussed above, if an individual is applying for full-blown institutional Medicaid, the five-year look back penalty period that is attached to such applications would require a full five-year look back on an applicant’s financial transaction history over the course of sixty months, or five years, which would include reviewing sixty months of bank statements, checking account statements, IRAs, CDs, and money market accounts etc. In addition, upon review of that documentation, any large transfers, or withdrawals of over a $1,000 will be scrutinized, and have to be explained as to where or what happens to those funds in order for them not to be considered transfers made for less than market value or without consideration.
Upon the application, such withdrawals, or transfers will have to be explained to the Medicaid examiners and documentation supporting such transfers or gifts will have to be submitted and explained because such transfers will affect Medicaid eligibilities. With that being said, obviously money or withdrawals made for living expenses to pay regular household bills is permitted. However, large withdrawals that are not within the course of paying regular bills are the type of withdrawals that will be scrutinized, and then could ultimately be penalized by the local Medicaid agency. That could impose a transfer penalty period that would affect Medicaid eligibility for nursing home care. For example, if an individual has any unexplained withdrawal of anything above $1000.00 could be treated as gifts, and incur a transfer penalty period, if there is no valid explanation, or paper trail showing where those assets have gone.
Such withdrawals are generally only scrutinized if they are over $1,000. Therefore, a complete analysis is necessary in order to review all of this financial documentation when an application is made in order to determine whether an individual will qualify, or if they will not qualify for Medicaid. If they do not qualify, how much of a penalty period will be imposed. This is a problem when an individual is going to a nursing home, and a family member who has not been involved in their family members’ finances, and they are unaware of what was going on, it becomes problematic because it could be a mystery to them as well.
Unfortunately, the documentation that an individual obtains will have to be explained. This becomes problematic if the documentation does not explain it definitively. In addition to these financial records, insurance also factors into the equation. Documentation involving a Medicaid applicant’s life insurance that has cash value will also be scrutinized and submitted. With that life insurance or whole life policies that have cash value are considered resources that Medicaid will look at in order to establish eligibility. Therefore, documentation showing the cash value of any such whole life policy would also need to be reviewed in order to determine whether it would be considered an asset that would disqualify them for Medicaid, or cause a penalty period for an applicant applying for Medicaid.
In addition, individuals would have to submit proof of a burial plot, or prepaid funeral, which falls under the category of an exempt resource. Therefore, if an individual does not have a prepaid funeral, they would have the benefit of allowing purchasing one as long as it is an irrevocable prepared funeral contract, and that purchase would not cause the penalty period, or would not be a reason an applicant would be disqualified, or a penalty imposed for Medicaid eligibility.
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