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Medicaid- How to Calculate the Penalty Period

For purposes of calculating a transfer penalty period, the Department of Social Services (“DSS”) must use the regional rate in effect on the date the institutionalized individual applies for Medicaid (application date), or requests an increase in coverage for Medicaid payment of nursing home care. This includes applications and requests for an increase in coverage where an applicant/recipient (A/R) is requesting Medicaid coverage of nursing facility services in the three months prior to either the application date or the date of request for increased coverage. i

Example: Steven of Smithtown, NY made a prohibited transfer of assets in May 2015. Steven applies for Medicaid in February 2016, requesting coverage retroactively to November 2015. Since Steven applied for Medicaid in February 2016, the Medicaid regional rate for 2016 is used.

Example 2: Steven made a prohibited transfer of assets in May 2015 totaling $100,000.00. Steven applies for Medicaid in February 2016, requesting coverage retroactively to November 2015. Since Steven applied for Medicaid in February 2016, the regional rate for 2016 is used. Steven would be penalized for 7.92 months; the penalty is calculated as follows: $100,000.00 divided by the regional rate of $12,633.00 (regional rate for Long Island) = 7.92 months.

Example 3: Same facts as above except Steven now resides in Broome County. What is the penalty period? Answer: 10.81 months; penalty is calculated as follows: $100,000.00 divided by the regional rate of $9,252.00 (Medicaid regional rate for Central region) = 10.81 months.

To be continued ….
Aaron E. Futterman, CPA, Esq. is a partner in the law firm of Futterman & Lanza, LLP with offices in Smithtown, NY and clients throughout Suffolk, Nassau, Queens, Brooklyn, Bronx, Richmond, New York, Westchester and Rockland Counties. He concentrates his practice to Elder Law, Medicaid Planning, Medicaid Applications, Estate Planning, Probate, Estate Taxes, and Estate Administration.

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