Navigating Long-Term Care in New York

New York was one of the original long-term care partnership states offering asset protection when owning a qualified LTC policy. Long-term health care costs in New York are increasing rapidly due to increasing demand for services and rising labor costs.

Quality care options are available throughout New York, and several insurance solutions are available. However, the exploding costs for care services statewide are becoming burdensome on residents and their families for those who do not have Long-Term Care Insurance.

Care options that are available in New York for those people who require long-term health care services include:

• adult day care centers
• assisted living facilities
• continuing care retirement communities
• home health care providers
• memory care facilities
• rehabilitation facilities
• traditional nursing homes

Top insurance companies have several options to help residents safeguard income and assets, protect lifestyles, and preserve a legacy. Plus, policyholders will have access to quality care options giving loved ones the time to be family instead of caregivers.

Federal Partnership Program

The State of New York was one of the four original long-term care partnership states. The New York State Partnership for Long-Term Care is a program that combines private LTC Insurance and Medicaid Extended Coverage.

The program's purpose is to help New York residents prepare financially for long-term care services (nursing home care, home health care, and assisted living). If you own a New York State Long-Term Care Partnership policy and use the benefits according to the program's conditions, you can apply for MEC, which may assist in paying for your ongoing care.

Unlike regular Medicaid, MEC allows you to protect some or all of your assets, depending on whether you select a dollar-for-dollar asset protection plan or a total dollar asset protection plan. However, MEC does require that you contribute your income to the cost of your care according to Medicaid income rules.

Policy Example

New York State Long-Term Care Partnership plan provides two options: Total Asset Protection or Dollar-for-Dollar Asset Protection. With total asset protection, your partnership policy would protect 100% of your assets if you were to exhaust your policy benefits during a claim on your policy. With a dollar-for-dollar policy, the total amount of benefits paid by the policy would be the amount of assets you can shelter.

For example, if your policy paid $550,000 in benefits, you could keep that same amount and still qualify for Medicaid Extended Coverage (MEC). All this without state recovery.

With total asset protection, all your assets are protected.

IMPORTANT: As of January 1, 2021, no insurance companies are currently offering new policy purchases of Partnership qualified Long-Term Care Insurance products in New York State – meaning that there are no new Partnership policies available for purchase at this time. This does not affect current, active insureds who are Partnership qualified.

Reciprocity

Most states have reciprocity with other states' long-term-care partnership programs, including New York. If you move from or to New York, your partnership asset protection also follows you. In reciprocal states, Total Dollar Asset Plans will be considered dollar-for-dollar plans. These plans allow for the disregard of assets under Medicaid up to the total amount of benefits paid out by the insurer on behalf of the covered person.

To see a map of states that participate in reciprocity, click here: www.nyspltc.health.ny.gov

Medicaid

Long-Term Care Medicaid spend down is $16,800. A spouse's minimum asset allowance is minimum is $74,820 up to a maximum of one-half of countable assets up to $137,400. Your spouse's minimum monthly income allowance is $3,435. * The home equity limit is $955,000.

For more information about the Medicaid program visit www.medicaid.gov.

New York Medicaid Estate Recovery Program

Under Section 369 of the Social Services Law, Medicaid benefits paid for long-term health care may be recovered from the assets in your estate upon your death. The reimbursement from the deceased estate happens following the probate process.

The assets subject to recovery will include your home and other real estate, bank accounts, and other financial assets, including vehicles, cash, and household goods.

Remember, Medicaid will provide long-term care services only if you have little or no income and assets. However, the state will never require a living spouse to move out of their home.

Products Approved in New York

A variety of products are approved in New York State for long-term care planning. These include traditional plans, partnership-certified policies, and asset-based "hybrid" policies (keep in mind that no partnership plans are available at the moment).

Tax Incentives

A tax credit for 20% of Long-Term Care Insurance premium paid for a qualified policy approved by the state superintendent of insurance. Persons paying the premium for others are also eligible for the tax credit (as well as their own policy, if applicable) regardless of others' tax dependency status; i.e., the adult child could pay a premium for parents and get a tax credit even if parents are not dependents. A tax credit is not refundable; unused credits may be carried forward.

Deduction

Determination of adjusted gross income generally conforms to the federal income tax code.

Credit

A credit for personal income tax is allowed equal to 20% of the premium paid during the taxable year for qualified LTC insurance. A credit is allowed against the corporation tax equal to 20% of the premiums paid during the taxable year for qualified LTC insurance. The credit may not reduce the tax payable to less than the state minimum tax, but any excess credit may be carried forward. An S-corporation is allowed a credit against the personal income tax.

The taxpayer can only claim the credit if their New York adjusted gross income (NYAGI) is less than $250,000. The credit amount cannot exceed $1,500.

Nonresident taxpayers and part-year resident taxpayers are subject to the limitations for resident taxpayers and compute the credit by multiplying the credit amount determined for a resident by the nonresident's New York source fraction as defined in New York Tax Law section 601(e)(3).

Tax on Those Who Do Not Own LTC Insurance

New York is one of several states considering following the State of Washington in implementing a tax on income for any person who does not own a qualified Long-Term Care Insurance policy.

What is unknown is if New York implements the tax plan, will they offer any reasonable time for state residents to purchase qualified policies if they do not already own one.

It is highly recommended to speak with a qualified specialist to consider your options - Work With a Specialist | LTC News

State Resources for Aging and Long-Term Care in New York

• New York State Office for the Aging

Every county in New York State has an office for The Area Agency on Aging. Older adults and their families can obtain assistance with Medicaid information, health insurance counseling, and various other services through this agency.

• Long-Term Care Ombudsman Program

The Ombudsman Program is an effective advocate and resource for older adults who live in nursing homes, assisted living, and other licensed adult care homes.

The New York Long-Term Care Ombudsmen help residents understand and exercise their rights to quality care services to protect their dignity and quality of life.

• NY Connects

The program provides New Yorkers with free, unbiased information about long-term health care services and supports in New York State.

The services include assistance in finding various types of health services and legal assistance, including help with Medicaid applications and the eligibility process.

Reverse Mortgages in New York

Reverse mortgages are available in New York. A reverse mortgage is a home equity loan where the borrower does not have to make payments.

This type of mortgage can increase monthly income, eliminate mortgage payments, and even fund Long-Term Care Insurance. However, there are many rules in New York on these products, and you should seek the help of a qualified and licensed mortgage broker.

If you have significant equity in your home and you and your spouse are at least 62 years old, you can get a reverse mortgage to turn your equity into funding long-term health care, pay for an LTC Insurance policy, pay bills and add to your retirement lifestyle.

The home must be the principal residence without any tax liens.

Learn more about reverse mortgages by clicking here.

_{*The federal government sets a new minimum and maximum amounts each year, but states can set their own minimum requirements at any level between the federal limits. This information is based on the best available sources.}