The Elder Law Minute TM
Can I Use the Money I Was Given for Medicaid Planning Purposes?
BY RONALD A. FATOULLAH, ESQ.
AND STACEY MESHNICK, ESQ.
THE ART OF ELDER LAW
For more than 30 years the elder law firm of Ronald Fatoullah & Associates has been providing
New Yorkers with legal solutions that protect, relieve and endure for generations.
Our dedicated attorneys are skilled in the art of giving legal advice and are accomplished in
elder law, Medicaid eligibility, estate planning, trusts, estate mediation, wills, asset protection,
guardianships, probate and most issues associated with the challenges of aging.
Our distinguished reputation is based on a commitment to the highest ethical and professional
standards and our core values of honesty, integrity, and excellence.
“We won’t settle for anything less”.
LEFRAK CITY COURIER | WWW.QNS.COM | APRIL 2018 17
Medicaid is a jointly funded, Federal-
New York State program which off ers
broad medical services to individuals who
are blind, aged (over 65), or disabled.
Most people, however, tend to associate
Medicaid with home health care aides
(Community Medicaid) and nursing
home care (Institutional Medicaid).
In New York, to fi nancially qualify for
Medicaid individuals can own no more than
$15,150 in assets. If individuals have assets
exceeding this amount, called the resource
allowance, they must divest themselves
of the excess, which ordinarily involves a
transfer of the applicant’s assets to someone
else. While some transfers are permitted by
Medicaid without a penalty, including, for
example, transfers to spouses and disabled
children, most other transfers are not.
For Institutional Medicaid there is a fi veyear
look back period whereby Medicaid
reviews the applicant’s fi nancial statements
ELDER LAW
for the fi ve-year period preceding
the application. Th e purpose of this review
is to identify any non-exempt transfers of
assets, which, if any, will create a period
of ineligibility. For example, for individuals
living in New York City, every $12,319
they transfer will create a one-month period
of ineligibility.
If applicants are unable to utilize exempt
transfers, they can choose either to privately
pay a nursing facility until such time
as they fall below the resource allowance
or to engage in what has been commonly
referred to as promissory-note planning.
In the promissory-note plan, the applicant
transfers a portion of his or her assets,
roughly one-half (1/2), which transfer is
a gift . Th is gift creates a period of ineligibility.
Th e remaining portion of the applicant’s
assets is loaned to the same individual,
which funds are used to pay for the
applicant’s nursing home care during the
period of ineligibility caused by the gift . At
the expiration of the penalty period, concurring
with the repayment of the loan, the
applicant becomes eligible for Medicaid.
A question that oft en arises in promissory
note planning is whether the gift portion
really is a gift . In other words, can the
gift be spent by the recipient? Th e simple
answer is yes, but any experienced elder
law attorney will advise against spending
the gift , at least temporarily. Th is is
because when the promissory-note plan
is submitted to Medicaid along with the
Medicaid application, it may take months
to receive the plan’s approval. If, however,
the plan needs to be recalculated because,
for instance, the applicant forgot to identify
a particular asset or forgot to recall a
particular gift made in the past fi ve years,
a portion of the gift ed asset may have to
be returned to the applicant. If the gift ed
money is unavailable because it was spent,
the applicant’s Medicaid eligibility may be
placed in peril.
A promissory-note plan, when properly
prepared, is an extremely useful way
to preserve a portion of an applicant’s
assets while qualifying for nursing home
Medicaid. Th e plan, however, is also very
complex. It is therefore recommended that
applicants desiring to use a promissory
note plan in connection with nursing
home Medicaid seek the services of an
experienced elder law attorney.
Ronald A. Fatoullah, Esq. is the principal
of Ronald Fatoullah & Associates, a law
fi rm that concentrates in elder law, estate
planning, Medicaid planning, guardianships,
estate administration, trusts, wills,
and real estate. Jeff rey P. Gorak is an elder
law attorney with the fi rm. Th e law fi rm
can be reached at 718-261-1700, 516-466-
4422, or toll free at 1-877-ELDER-LAW or
1-877-ESTATES. Mr. Fatoullah is also a
partner with Advice Period, a wealth management
fi rm, and he can be reached at
424-256-7273.
RONALD FATOULLAH
ESQ, CELA*
1-877- ELDER LAW
1-877-ESTATES
Queens Long Island Manhattan Brooklyn
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