As of April 1, 2011, the New York State legislature passed the 2011-2012 Budget Bill which made significant changes to Medicaid. These changes may have a significant impact on Medicaid planning and it will be necessary to review and update our client’s estate and Medicaid planning documents; documents traditionally used to protect assets so that they will be able to pass to intended beneficiaries free of Medicaid claims after the Medicaid recipient has passed away.
The most troubling change involves Medicaid’s authority to seek recovery of amounts paid on behalf of a Medicaid recipient. Prior to the change in the law, Medicaid had only been permitted to look to assets, if any, passing through the Medicaid recipient’s Last Will and Testament (probate estate) on death. Clients, planning for Medicaid services, commonly used non-testamentary planning techniques, such as living trusts and life estates, in order to protect their assets from claims by Medicaid upon their death. The new law expands Medicaid’s ability to recover the cost of care provided to the Medicaid recipient. Non-testamentary assets, are expected to be available for recovery by Medicaid.
It is unclear how Medicaid will value assets passing outside of the Medicaid recipient’s probate estate as well as how Medicaid will seek recovery from these assets upon the death of the Medicaid recipient. Regulations are expected to be issued to address these uncertainties, but as of the date of this writing these regulations are yet to be issued.
The attorneys at Futterman, Lanza & Block, LLP will keep you apprised of the new law, the regulations, and its effect on asset preservation plans.