Medicaid: The Middle Class Safety Net

As this article in today’s New York Times points out, Medicare is getting the bulk of the attention in this election campaign, while more attention needs to be focused on the problem of Medicaid.

“Medicaid has long conjured up images of inner-city clinics jammed with poor families. Its far less-visible role is as the only safety net for millions of middle-class people whose needs for long-term care, at home or in a nursing home, outlast their resources.”

As Robyn Grant,  the director of public policy and advocacy for the National Consumer Voice for Quality Long Term Care points out “More than $80,000 a year on average for a nursing home– who can sustain that?”  On Long Island that cost is closer to $150,000 each year on average.  She continues to say “We’re forced most of us to go onto Medicaid.” People don’t realize this.

The article also suggests that some lawyers specialize in setting up trusts that shelter certain assets, and that the government has closed some loopholes that allow these trusts.

Sheltering assets through trusts is still a viable option.  The loophole is in the length of time needed to fully protect your assets.  Currently, that length of time is 5 years before your home and other liquid assets can be protected.

The Five-Year Lookback– Frequently Asked Questions

One of the  questions I am frequently asked in my elder law practice is “what is the five-year lookback?”

Simply put, if you give away money or property during the five years before you apply for Medicaid, that transfer triggers a penalty period during which you are ineligible for Medicaid.

How Does the Penalty Period Work?


The penalty period is calculated by dividing the amount you have gifted or transferred by the average cost of nursing home care in our area, as published yearly.

The 2011 Nassau and Suffolk County average nursing home cost is $11,445.00

So, for example, if you give $91,560 to family members, at $11,445 a month you wouldn’t qualify for Medicaid for eight months.  If you give your home to your children, and retain a life estate, you have also given a gift, the fair market value which is countable towards the transfer penalty.

When Does the Penalty Period Start?


The Penalty period starts the day you apply for Medicaid.  New York State will review the Medicaid application to see if any gifts or transfers for less than fair market value are made for the five years prior to the application.  In other words, the full five years must pass before the gift is protected.  The penalty period does NOT start on the day you transfer the assets.

What Happens After Five Years?


If you need nursing home care, you will be eligible for Medicaid at the end of the five years after the transfer, as long as you have no other unprotected assets.  Contacting an elder lawyer while you are still well enough to transfer assets into an irrevocable trust is essential.

Is the Doctor In? Not if You’re on Medicaid

A major difficulty for people on Medicaid is the inability to find doctors and dentists willing to accept the plan.  For those people who need primary care, the result is often hours and hours in clinics waiting to see a general practitioner and month-long waits for specialists.


According to the New York Times, having a Medicaid card does not in any way assure access to care.  Medicaid patients cannot find surgeons willing to operate on them, or find mental health specialists willing to see them.


Unfortunately, the new health laws that depend heavily on Medicaid to help the already uninsured are only likely to put a bigger burden on states that are looking for ways to cut back.