A parent went into the hospital, then into rehabilitation, and now the facility is talking about long term placement and private pay rates. Families in this position often assume the window for planning has closed. It is narrower than it was, but it is usually not closed.
What you need to know
- Planning after an admission is generally called crisis planning. It aims to preserve what can still be preserved rather than to protect everything.
- Transfers made now will fall within the five year lookback for institutional Medicaid, which does not automatically make them pointless.
- Some transfers are exempt from penalty, including certain transfers to a spouse, to a child with a disability, or of a home to a qualifying caretaker child.
- Spousal protections and, in appropriate cases, spousal refusal, are often the most significant tools when there is a spouse at home.
- A valid durable power of attorney with adequate authority is frequently what makes any of this possible. Without one, a guardianship proceeding may be required.
- Applicable figures and allowances are revised periodically and must be confirmed for the year of application.
Start with the timeline, not the assets
The first thing counsel needs is dates. When did the hospital admission occur? When did rehabilitation begin, and how many covered days remain? Has the facility given notice that private pay is starting? Has any application already been filed, and by whom?
Rehabilitation coverage runs on its own clock, and facilities often begin discharge or private pay discussions before families are ready. Knowing exactly where the clock stands determines how much room there is to act.
Things not to do in the first two weeks
Families under pressure tend to act quickly, and the reflexive moves are usually the harmful ones.
- Do not move money out of a parent’s accounts without advice. Undocumented transfers during this period are exactly what the district reviews, and they can create a penalty at the worst time.
- Do not sign facility admission paperwork without reading it. Adult children are sometimes asked to sign as a responsible party. Federal law limits requiring a third party guarantee as a condition of admission, but the documents vary and should be reviewed.
- Do not let the facility file the Medicaid application unexamined. Facilities file applications routinely and their interest is in getting a bill paid, not in preserving family assets. A filed application starts a lookback window on a date the family did not choose.
- Do not deed the house to a child in a hurry. This is the most common crisis mistake and the hardest to unwind.
- Do not stop paying the parent’s ordinary bills. Property taxes, insurance, and utilities on the residence should continue to be paid from the parent’s funds.
The filing date is a decision. Once an institutional application is filed, the sixty month review window is fixed relative to that date. Choosing when to file, and what to do before filing, is often the most consequential judgment in a crisis case.
What may still be available
Options depend heavily on facts, and none of them can be promised to produce a particular result. That said, several categories come up regularly.
Exempt transfers
Some transfers do not create a penalty at all. Transfers to a spouse are generally exempt. So are transfers to a child who is blind or has a disability, subject to documentation. A residence transferred to a sibling with an equity interest who lived there for a defined period, or to a caretaker child who lived in the home and provided care that delayed institutionalization for a defined period, may also be exempt. These categories have specific requirements and require real proof, not family recollection.
Spousal planning
Where a spouse remains at home, the protections available are frequently substantial. Resources may be reallocated between spouses, the community spouse allowance may be relevant, and in appropriate cases spousal refusal may be considered. Spousal refusal carries consequences, including possible action by the county against the refusing spouse, and it should never be attempted without counsel evaluating whether it fits.
Converting countable resources
Certain uses of funds are not transfers at all because value is received in return. Paying off a mortgage on an exempt residence, making needed repairs to the home, purchasing an irrevocable prepaid funeral arrangement, or replacing a vehicle can convert countable resources into forms treated differently. These steps are legitimate when they are genuine and documented.
Partial transfer paired with a funded penalty
In some cases a family transfers a portion of the assets, accepts the resulting penalty period, and sets aside enough of the remaining funds to pay privately during that period. Whether the arithmetic works depends on the penalty divisor in effect, the facility’s actual rate, and the assets involved, and it requires careful modeling rather than an estimate.
The documents that determine what is possible
Almost every crisis case turns on whether the right paperwork already exists.
- A durable power of attorney, executed in New York’s statutory form, with gifting authority sufficient for the planning contemplated
- A health care proxy naming an agent who is available and willing to serve
- Deeds for any real property, showing exactly how title is held
- Statements for every account, going back sixty months where obtainable
- Any existing trust documents, with proof of the funding date
- Long term care or life insurance policies, including cash value information
- The facility’s admission agreement and any notices received
If a valid power of attorney does not exist and the parent no longer has capacity to sign one, the family may need an Article 81 guardianship proceeding in Supreme Court before any planning can occur. Guardianship is available and courts do grant authority for Medicaid planning in appropriate cases, but it adds months and cost. This is the single strongest argument for handling estate planning documents well before they are needed.
The house, again
The residence is usually the largest asset in a crisis case and the one families most want to address. It cannot be moved into a trust and treated as though the transfer happened years ago. What can be evaluated is whether an exempt transfer category applies, whether the intent to return home affects treatment, whether a spouse at home changes the analysis, and how estate recovery after death should be planned for.
Where a sale is contemplated, the mechanics matter and should be coordinated with counsel before a listing agreement is signed. The firm handles those closings through its real estate practice. Where a reverse mortgage is on the property, an extended absence from the home can trigger the loan’s occupancy requirements, a problem addressed in the firm’s reverse mortgage material.
Realistic expectations
Crisis planning does not usually preserve everything. Families who were told by a neighbor that a lawyer can save the entire estate after an admission have been misinformed. What careful work may accomplish, depending on the facts, is preserving a meaningful portion, protecting a spouse at home, avoiding penalties that could have been triggered by well meant improvisation, and getting an application filed properly the first time so coverage is not delayed by months of correction.
That is worth a great deal to a family carrying a facility bill, even when it is less than they hoped.
Speed matters, but sequence matters more. The order in which steps are taken, and the date the application is filed, frequently determine the outcome more than how fast the family moves.
If a parent has recently been admitted and the private pay conversation has started, the sooner counsel reviews the facts the more room there generally is to work. The firm offers a free and confidential initial phone consultation. Call 1-800-488-6734 or use the contact page to reach the East Setauket office, or to arrange an appointment in Hampton Bays. The firm’s elder law page describes this work in more detail, and related articles are collected on the firm’s blog.
Frequently asked questions
My parent is already in the facility. Is there really anything left to do?
Often yes, though the options are narrower than they would have been years earlier. Exempt transfers, spousal planning, permitted conversions of countable resources, and careful timing of the application can all matter. What is available depends entirely on the facts, which is why a review of the actual documents comes before any advice.
The nursing home offered to handle the Medicaid application for us. Should we let them?
Understand what that means first. The facility’s goal is to have its bill paid, which is legitimate but not the same as protecting family assets. A facility filing may lock in an application date before any planning is done. Families are generally better off having counsel review the situation before an application is submitted.
What if my parent cannot sign a power of attorney anymore?
Then an Article 81 guardianship proceeding in Supreme Court may be necessary to obtain authority to act, including authority to engage in Medicaid planning where the court finds it appropriate. It takes time and adds cost, but it is a real path when no valid power of attorney exists.
Can the county come after my parent’s house after they die?
Estate recovery is a real feature of the program and is separate from eligibility. New York may seek recovery from the estate of a deceased recipient, subject to exceptions including a surviving spouse and certain other circumstances. Planning for recovery is part of crisis work and is often handled alongside the firm’s estate administration practice.
We already made some transfers before we knew about the lookback. What now?
Disclose them to counsel completely and early. Returning the transferred asset may cure or reduce a penalty depending on how much comes back and when. Hardship provisions exist but are applied narrowly. What does not help is omitting transfers from an application, since the review is thorough and an omission can cause much larger problems.