New York's 2011 Budget Includes Modest Changes to Long-Term Care Medicaid Rules

In my last post, I described the significant changes that were proposed by Governor Cuomo's "Medicaid Redesign Team" as they pertained to the Community Long-Term Care Medicaid program.  Specifically, the proposals included the elimination of "spousal refusal" and the imposition of transfer penalties for the Community Medicaid program.  Longstanding New York law has permitted the "well" spouse to refuse to contribute their income and assets towards the care of the "ill" spouse.  In addition, a person applying for Community Medicaid is permitted to transfer any amount of assets to children or other family members without having those transfers result in a period of Medicaid ineligibility for the person seeking Community Medicaid benefits.

To the surprise of many elder law attorneys and other senior advocates, the budget bill approved last night by the Legislature did not include either the repeal of spousal refusal or the imposition of transfer penalties for Community Medicaid.  One change that we will see will be the expansion of "estate recovery" against the assets of a deceased Medicaid recipient to include "non probate" transfers including transfers from trusts, retained life estate interests and similar "testamentary substitutes."  Under existing law, estate recoveries are permitted only against probate assets, or those that pass via intestacy.