How do you qualify for Medicaid?
The Medicaid program is often used as a device by those who cannot afford healthcare themselves to get aid in the event that their situation requires it. In fact, it currently covers 74 million Americans. This government assistance program has been around since the 1980s, but the requirements to qualify for it change each year. A major reason for the constant adjustment is that price levels change from year to year as a consequence of inflation, and thus the level of wealth that is deemed low enough for Medicaid benefits changes too.
What are the current income bounds to qualify for Medicaid in New York?
The state of New York follows the federal guidelines for Medicaid qualification. The current income levels required to qualify for Medicaid are in effect until June 30, 2018, and are, according the NY Department of Health, as follows:
|Household Size||Annual Gross Income|
For households with more than 8 individuals, add $7,733 to the required annual gross income for each additional member to determine eligibility.
What can you do to qualify for Medicaid if your income does not meet federal guidelines?
If your income is higher than the Medicaid requirement, do not fear. You may still be able to apply for Medicaid, and thus avoid the hefty fees that come with many of your medical costs, especially those that are a result of entering later stages in life. By properly structuring your assets in a way that reduces your claim to them, you can lower your available income and thus increase your eligibility for the government healthcare assistance program.
What kinds of trusts would allow you to qualify for Medicaid?
The most common types of trusts individuals use to qualify for Medicaid are irrevocable trusts, pooled income trusts, and first-party special needs trusts.
Although irrevocable trusts are used the most frequently of the above three options, they are actually the least likely to help immediately and require careful planning by those who seek to use them to qualify for Medicaid benefits. With an irrevocable trust, the trustee gives up ownership to a beneficiary. Although the idea is that by no longer having these assets, the trustee can make himself appear eligible for Medicaid, reality does not conform to this as cleanly as you would like. For instance, Medicaid treats the assets in an irrevocable trust where a spouse is selected as the beneficiary as available to the trustee and thus does not consider the creation of said trust as an action that lowers the trustee’s income. Even if the beneficiary is designated in a way that prevents the assets from being considered available, Medicaid still applies a transfer penalty, sometimes called a gifting penalty, which prevents the trustee from being eligible for a period of time proportionate to the value of the transfer.
By contrast, pooled income trusts and first-party special needs trusts avoid the Medicaid transfer penalty and provide a greater chance for the trustee to qualify for Medicaid. However, their drawbacks lie in the fact that not everybody can create one and that they leave much less room for flexibility on the part of the trustee. Pooled income trusts are managed by non-profit organizations, who ensure that the funds placed in them are used for the trustee’s basic needs, while Medicaid covers the long-term care costs. Similarly, while a first-party special needs trust may help qualify for Medicaid, it must be established before the age of 65 and thus constrains the trustee. The funds in this trust, contrasted with those in a pooled income trust, are specifically designed for “supplemental” needs, those which cannot be covered elsewhere.
Regardless of which route you are considering taking to make yourself eligible for Medicaid, consulting a Medicaid planning attorney is critical. Any option above has the option to go wrong without proper guidance, potentially resulting in high costs without providing the benefit of Medicaid eligibility.