• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Law Offices of Kobrick and Moccia

Long Island Estate Planning Attorneys

ESTATE, TRUST PLANNING &
ELDER LAW INFORMATION CENTER

Call Now: (800) 295.1917

  • Attend Our Free Webinars
  • Home
  • Our Firm
    • About Our Firm
    • Client Testimonials
    • Meet Our Team
  • Services
    • Blended Family Planning
    • Elder Law
    • Estate and Gift Tax Figures
    • Estate Planning Services
    • IRA & Retirement Planning
    • Legacy Planning
    • LGBTQ Estate Planning
    • Pet Planning
    • SECURE Act
    • Special Needs Planning
    • Trust Administration
  • Elder Law
    • Coping With Alzheimer’s
    • Guardianship
    • Medicaid Planning
    • Nursing Home Planning
  • Resources
    • Articles
    • Elder Law Resources
      • Commack Elder Law
      • Elder Law Reports
      • Harrison Elder Law
      • Hauppauge Elder Law
      • Rockville Centre Elder Law
      • White Plains Elder Law
    • Estate Planning Definitions
    • FREE Estate Planning Worksheet
    • FREE Seminars
    • Frequently Asked Questions
      • Elder Law
      • Estate Planning
      • Families Without an Estate Plan
      • Legacy Wealth Planning
      • LGBTQ Estate Planning
      • Medicaid
      • Probate
      • Trust Administration
      • Trust Administration & Probate
      • Wills and Trusts
    • Is My Estate Plan Outdated?
    • Legacy Wealth Planning Consultation Form
    • Medicaid Resources
    • Probate Resources
      • Harrison Probate
      • Hauppauge Probate
      • Long Island Probate
    • Probate Checklist
    • Special Reports
      • Advanced Estate Planning
      • Basic Estate Planning
      • Estate Planning for Niches
      • Trust Administration
    • Top Estate Planning Techniques
  • Communities We Serve
    • Nassau County
      • Garden City
      • Lynbrook
      • Malverne
      • Rockville Centre
    • Suffolk County
      • Commack
      • Dix Hills
      • Hauppauge
      • Nesconset
      • Smithtown
    • Westchester County
      • Harrison
      • Mamaroneck
      • Rye Brook
      • White Plains
  • Webinars
  • BLOG
  • Reviews
    • Our Reviews
    • Review Us
  • Contact Us
Home » Medicaid Planning » What Is the Medicaid Transfer Penalty?

What Is the Medicaid Transfer Penalty?

April 9, 2019 by Anthony Moccia

Hauppauge Medicaid lawyerPlanning for your retirement should include the possibility that you, or a spouse, will eventually need long-term care. That, in turn, should prompt you to include Medicaid planning within your comprehensive estate plan. Failing to do so could cause you to fun afoul of the Medicaid transfer rules. A Hauppauge Medicaid lawyer explains the Medicaid transfer penalty and how incurring the penalty could threaten your retirement nest egg.

Understanding the Need to Qualify for Medicaid

People often fail to include Medicaid planning in their estate plan because they have never before needed Medicaid benefits. As a senior, however, that could change rather quickly if you (or a spouse) need long-term care (LTC) at some point. What you may not realize is that Medicaid may be your best option for covering the high cost of that care. Nationwide, the average monthly cost of LTC was more than $8,000, or about $100,000 per year, for 2018. As you might well imagine, as a resident of the State of New York you can plan on paying considerably more than the national average. New Yorkers paid, on average, about $146,000 a year for LTC that same year.

Like most seniors, you will probably rely on Medicare to cover the majority of your healthcare expenses. Unfortunately, however, Medicare only covers LTC expenses under very limited circumstances, and even then, only for a very short period of time. Furthermore, most basic health insurance plans also exclude LTC expenses. Therefore, unless you purchased a standalone long-term care insurance policy prior to the need for coverage, you will be faced with the prospect of covering your LTC expenses out of pocket. For the average person, an entire retirement nest egg could be lost to LTC costs if forced to pay for them out of pocket. This is where the need to qualify for Medicaid comes in because Medicaid will help with LTC costs.

Medicaid Eligibility and the Five-Year Look-Back Rule

If you failed to plan ahead for the possibility that you will need to qualify for Medicaid down the road you will likely find that you have a problem qualifying because of the Medicaid eligibility requirements. Because Medicaid is a “need-based” program, eligibility guidelines require an applicant to have low income and few assets.  Like many seniors, however, you may have spent a lifetime building your assets and you aren’t keen to losing them.  Transferring them out of your name by gifting them to adult children or other beneficiaries may seem like the obvious solution to the Medicaid eligibility guidelines. Unfortunately, the Medicaid transfer rules impose a penalty for doing just that.

The Medicaid Transfer Penalty Explained

Because applicants were frequently engaging in last-minute assets transfers in order to qualify under Medicaid’s countable resources limit, Medicaid instituted a “look-back” period to prevent such transfers. If you apply for Medicaid, your finances will be subject to scrutiny for the 60 month period prior to the date of your application. Any asset transfers completed during that time period for less than fair market value could trigger a penalty in the form of a waiting period. The length of the waiting period is calculated by dividing the value of your excess assets by the average monthly cost of LTC in your area. By way of illustration, the average monthly cost of LTC in New York was $12,189 for 2018. Imagine that you apply for Medicaid today but a review of your finances uncovers that fact that you transferred assets valued at $250,000 to your adult children two years ago. That transfer could trigger a waiting period penalty. The length of the penalty will be determined by dividing $250,000 by $12,189 which gives you 20.51, meaning you would incur a 21 month (rounding up) waiting period before Medicaid would start helping you pay your LTC expenses. During the waiting period, you would be responsible for paying your LTC costs. Sadly, your retirement nest egg could be significantly depleted as a result of those asset transfers that triggered the waiting period. The good news is that incorporating a Medicaid planning component into your estate plan now can protect your assets and ensure your eligibility for Medicaid in the future.

Contact Hauppauge Medicaid Lawyer

Please feel free to download our FREE estate planning worksheet. If you have additional questions or concerns regarding the Medicaid transfer penalty, contact a Hauppauge Medicaid lawyer at the Law Offices of Kobrick & Moccia by calling 800-295-1917 to schedule your appointment.

  • Author
  • Recent Posts
Anthony Moccia
Anthony Moccia
Anthony Moccia is an attorney and partner at The Law Offices of Kobrick & Moccia.His practice focuses on estate planning and elder law.He is a member of the New York State and Nassau County Bar Associations.He frequently presents free seminars on wills & living trusts to area residents and his seminars are said to be “informative, entertaining & easy to understand.”
Anthony Moccia
Latest posts by Anthony Moccia (see all)
  • “Last Will and Testament” Origin - April 1, 2021
  • Do I Need a “Durable” Power of Attorney? - April 2, 2020
  • Joint Tenancy Pros and Cons - March 31, 2020

Filed Under: Medicaid Planning

Other Articles You May Find Useful

Harrison Medicaid lawyers
Will Medicaid Pay for Assisted Living Expenses?
countable asset for Medicaid
What Is Considered a Countable Asset for Medicaid?
Harrison Medicaid attorneys
Protecting Your Assets from Medicaid Spend-Down
Medicaid attorneys
Medicaid Attorneys Explain When a Waiting Period May Be Imposed
Harrison Medicaid attorneys
Harrison Medicaid Attorneys Uncover Top 5 Medicaid Myths
Law Offices of Kobrick and Moccia
Protecting Your Spouse When You Apply for Medicaid

Primary Sidebar

Law Offices of Kobrick and Moccia

Download our free estate planning worksheet

There's a lot that goes into setting up a comprehensive estate plan, but with our FREE worksheet, you'll be one step closer to getting yourself and your family on the path to a secure and happy future.

  • This field is for validation purposes and should be left unchanged.

Follow Us

  • Facebook
  • LinkedIn
  • RSS
  • Twitter

Blog Subscription

  • This field is for validation purposes and should be left unchanged.

GARDEN CITY

1305 Franklin Avenue Suite 170
Garden City, NY 11530
United States (US)
Phone: (516) 248-9500
Fax: (516) 248-7606

HAUPPAUGE

150 Motor Parkway Suite 401 (Regus)
Hauppauge, NY 11788
United States (US)
Phone: (631) 941-3400
Fax: (516) 248-7606

HARRISON

600 Mamaroneck Avenue, 4th Floor
Harrison, NY 10528
United States (US)
Phone: (914) 701-0777
Fax: (516) 248-7606

MAP

kobrick_sidbr_map

Office Hours

Monday9:00 AM - 5:00 PM
Tuesday9:00 AM - 5:00 PM
Wednesday9:00 AM - 5:00 PM
Thursday9:00 AM - 5:00 PM
Friday9:00 AM - 5:00 PM

Footer

footer-logo
  • Facebook
  • LinkedIn
  • Twitter

The information on this Attorneys & Lawyers / Law Firm website is for general information purposes only. Nothing on this or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. The information on this website is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship.

Kobrick and Moccia, Attorneys at Law. Privacy Policy | Contact Us | Disclaimer | Site Map | Powered by American Academy of Estate Planning Attorneys

Law Offices of Kobrick and Moccia
Attorney Advertisement
© 2023 American Academy of Estate Planning Attorneys, Inc.