Strategies for Medicaid Planning During the NY Medicaid Lookback Period

Serving Families Throughout Melville

You have worked hard to accumulate assets and build your retirement fund. Understandably, you want to protect these assets to pass them down to your loved ones. Unfortunately, we cannot predict when an unexpected illness or disability can cause us to lose these assets if we haven’t taken the necessary steps to protect them. This is where Medicaid Planning during the NY Medicaid lookback period comes in.

Medicaid Planning allows individuals and families to safeguard assets while qualifying for Medicaid benefits. For those needing long-term care, nursing home coverage, in the future, understanding how the NY Medicaid lookback period may impact their eligibility and asset protection is vital. This sixty-month (60) lookback period requires individuals to undertake advanced planning to transfer assets within the required timeframe before applying for Medicaid benefits for Nursing Home Coverage/Chronic Care Medicaid.

No matter how much you might have already saved and planned for retirement, Medicaid planning can be a complicated process. To maximize your financial security during this crucial life stage, it’s wise to begin planning as soon as possible – ideally, at least five years before reaching age 65 or needing long-term care services, to ensure that all transfers meet the applicable guidelines under NY state Medicaid laws. 

In this blog, our New York Medicaid attorney discusses strategies for successful Medicaid Planning in New York prior to the sixty-month (60)  look-back period. What most individuals call a 5 year lookback period, but the statute states sixty-months (60). Keep reading to understand how Medicaid Planning works and why it's crucial in protecting your assets as you age, then contact us at (631) 519-9831 to schedule a consultation. At Schneider, Garrastegui & Fedele, our boutique firm combines a personalized approach with large firm benefits.

What Is the Sixty-Month Lookback Rule? 

The sixty-month lookback rule, also known as the Medicaid lookback period, applies to those seeking to qualify for the Medicaid program in New York for nursing home coverage/Chronic Care Medicaid. It intends to prevent people from transferring their assets to be eligible for the program. The NY Medicaid lookback period requires applicants to submit all financial transactions they have made within the sixty-months (60) immediately preceding their application date. These financial transactions include gifts or asset transfers such as money, property, or other valuable items.

The sixty-month (60) lookback rule’s purpose is to ensure that applicants are not hiding their assets to receive Medicaid benefits for which they would not otherwise be eligible. If the government determines that an applicant gifted assets during this period, they may subject them to a penalty period where they cannot receive benefits until it has expired. 

In New York, the sixty-month (60) lookback period for Medicaid eligibility begins on the date of application, when the applicant is in the nursing home and is otherwise eligible for nursing home/chronic care Medicaid and extends backward sixty-months (60). For example, if an individual applies for Medicaid benefits for nursing home coverage on May 31, 2023, their lookback period would begin on May 1, 2018.

Rules & Regulations Related to Gifting & Transfers During Lookback Period

Gifts or asset transfers made during the sixty-month (60) lookback period may be subject to a penalty period of ineligibility. Generally, any asset transferred for less than fair market value within sixty months (60) before applying for Medicaid for nursing home coverage will result in a penalty period with no paid benefits. These assets include cash gifts and transfers, such as selling property below market value or giving away assets without receiving anything in return.

However, exceptions may apply depending on the situation. For example, the government does not count transfers between spouses toward the sixty-month (60)  lookback period and would not impose a penalty for this type of transaction. Additionally, you can use specific trusts to protect assets from inclusion in the sixty-month (60) lookback period. Consult with an experienced New York Medicaid attorney focusing on elder law before making any decisions regarding gifting or transferring assets during this time frame.

Strategies for Medicaid Planning During NY Medicaid Lookback Period

  1. Asset Protection Trusts (APTs)

Asset Protection Trusts (APTs) protect an individual's assets from creditors, nursing homes, and other potential financial liabilities without concealment or tax evasion. These trusts differ from other types of trusts because they are irrevocable and cannot be changed or revoked once you create them. The individual would transfer their assets into the trust. The trust does not allow the grantor/individual access to the principal of the trust.

  1. Gift Planning

Gift planning plays a vital role in New York estate planning and Medicaid planning. It involves gifting money or other assets to family members or  friends during your lifetime. You can make these gifts in cash, stocks, bonds, real estate, or other assets. Gift planning reduces the size of an individual’s estate and thereby reduces the taxes due upon death. It can also provide for loved ones.

In the short term, gift planning allows individuals to share their wealth with family members without waiting until after death. In the long term, it can lessen the tax burden on estates by reducing their size before a person dies. You can use gift planning during the NY Medicaid lookback period to minimize nursing home and long-term care costs by transferring assets out of one’s name before applying for Medicaid benefits.

We can implement several types of gift planning in New York. For example, two common strategies we’ve used with clients are gifting real estate or transferring assets into an irrevocable trust. Other methods include gifting cash or securities directly to individuals. Each strategy has advantages and disadvantages depending on individual circumstances; discuss these options with an experienced NY Medicaid Planning Attorney before implementing any plan.

  1. Annuities

Annuities are valuable tools for Medicaid planning. An annuity is a contract between an individual and an insurance company, where the individual pays a lump sum to the insurance company in exchange for a guaranteed income stream for either a fixed period or for the remainder of their life. There are two types of annuities: 

  • Immediate: the individual pays a purchase price in one lump sum, and the income begins immediately
  • Deferred: the individual pays the purchase price over time, and the income does not start until later 

Because they allow individuals to convert their countable assets into an income stream, annuities may be beneficial during Medicaid’s lookback period by helping them qualify for Medicaid eligibility if they otherwise have too many assets. 

However, using annuities in Medicaid planning comes with specific challenges. If an individual purchases an annuity before applying for Medicaid benefits, it may be subject to penalties or disqualification from Medicaid coverage depending on how it was structured and when it was purchased.

While annuities can benefit Medicaid planning, they present particular challenges you should consider before purchasing one. Consulting with a knowledgeable and experienced Medicaid planning attorney who can advise you on how to structure your annuity for maximum benefit while complying with all applicable laws and regulations is critical.

  1. Promissory Notes

Promissory notes are written agreements legally binding two parties to a financial transaction. In New York Medicaid planning, we use them to reduce assets and help individuals qualify for Medicaid benefits for nursing home coverage. We gift a certain amount of the assets which create a penalty period. Then  we use promissory notes to transfer assets from an individual’s name to another person’s name without penalty. We accomplish this by having the person loan money to another person (usually a family member) with the understanding that they will  repay the loan. The loan MUST conform to the Medicaid rules.

Promissory notes can be helpful tools for NY Medicaid planning if created correctly. If you’re considering this option, consult an experienced Medicaid lawyer who focuses on NY Medicaid Planning before deciding. 

Schneider, Garrastegui & Fedele: Your New York Medicaid Planning Attorneys 

As we explained, you have several strategies to protect your assets while meeting Medicaid eligibility requirements in New York, including asset protection trusts, gift planning, annuities, and promissory notes. However, Medicaid planning can be a complicated and overwhelming process without the assistance of an experienced New York Medicaid attorney. 

At Schneider, Garrastegui & Fedele, PLLC, our New York Medicaid planning attorneys have decades of experience helping clients navigate the complexities of Medicaid planning in New York. Do you need help understanding how best to protect your assets during the NY Medicaid lookback period? Contact us at (631) 519-9831 or complete our online form to schedule a consultation. 

Schneider, Garrastegui & Fedele, PLLC: a boutique firm that combines a personalized approach with large firm benefits. 

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The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting based on any information included in or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country, or other appropriate licensing jurisdiction.

135 Pinelawn Rd #250s
Melville, NY 11747
(631) 519-9831

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