By: Sanford R. Altman, Esq., retired

In your last column about Medicaid provisions in the proposed state budget, you referred to several provisions which could hurt those of us who may be depending on Medicaid for help in case we need care in a nursing home. I did, in fact, contact my state senator and assembly person about it. Now that the budget has passed what was the result?

Although there were plenty of photo ops and self congratulations from Albany for completing the budget in time, the fact is that much of it was “smoke and mirrors” and it is still not finished.

A prime example is the “expanded estate recovery” proposal which I mentioned in my last column on the subject. Previously, Medicaid could not recover funds that it spent on you from your Irrevocable Trust or from your home which you had transferred to your children while retaining a life interest (life estate). The new law changes that. However, we have no idea how this will now work because the law is only in outline form. The Department of Health is empowered to fill in the blanks without the necessity of input from the legislature or public comment.

What does this mean for us? I participated in a meeting with elder law attorneys from around the state, some of whom were familiar with the potential regulations and the predictions were dire. While our Elder Law Section of the State Bar Association submitted proposed regulations (largely favorable to our clients), the feeling was that the state would do whatever would bring in the most money regardless of the consequences to seniors and their families. Viewed as likely was a loss of protection from recovery by the state of assets in Irrevocable Trusts and deeds with retained life estates, regardless of when they were created. For example, fifteen (15) years ago you could have created an Irrevocable Trust from which you only receive income knowing that all the principal will be protected and be passed on to your children upon your death. Instead, Medicaid may now have the right to come in and recover every dollar ever spent on you (which could be a considerable amount if you spend any time in a nursing home) before your children can receive a penny. The same holds true for your home if you have retained a life estate – Medicaid first, children last.

At the risk of stating the obvious, if you have a trust, deed with retained life estate or any other vehicle designed to protect your assets, it is essential that you consult a qualified elder law/ estate planning attorney as soon as possible.

There is, however, some good news in the budget on the Medicaid front. In my earlier column on the budget, I related that they were considering eliminating the long standing “spousal refusal” provision. In the end, they left it as it was. This means that, if your spouse is in need of Medicaid for long term care and you decline to make your “extra funds” available for his or her care, your spouse can still be eligible for Medicaid. While this seems to allay the fears of being personally penalized if your husband or wife becomes ill, there is a catch. Counties still have the right to sue the spouse in such circumstances for support of the husband or wife who is receiving Medicaid. While Orange County has traditionally refrained from dragging the elderly into court in this way, I have just been advised that they decided to change this policy. Is this is just another example of trying to balance the budget on the backs of seniors whose finances are already stretched thin? I will keep you posted on the progress and what to do about it.