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The Elder Law Minute TM
The Eff ect of a Spouse’s 401(k) on Medicaid Eligibility and Recovery
BY RONALD A. FATOULLAH, ESQ.
Medicaid is a jointly funded, Federal
and New York State program which
off ers broad medical services to individuals
who are blind, aged (over 65),
or disabled. Medicaid also has a program
for low-income individuals, but
this article will focus on Medicaid
for the blind, aged and disabled. In
New York, an applicant can own up to
$15,150 in non-exempt assets to qualify
for Medicaid. An applicant’s spouse
can own up to $74,820 in non-exempt
assets, or one-half of the couple’s assets,
up to a maximum of $123,600 (called
the Community Spouse Resource
Allowance). Any amount in excess
of the Community Spouse Resource
Allowance may be subject to recovery
by Medicaid for the applicant’s care.
A question that oft en arises in connection
with Medicaid planning for
one spouse is whether a non-applicant
spouse’s 401(k) account is considered
an asset for purposes of determining
an applicant’s eligibility for Medicaid
and whether the non-applicant’s 401(k)
is subject to recovery by Medicaid.
Th e answer, as will be seen, is that it
depends on the status of the 401(k).
A 401(k) account is a type of employer
ELDER LAW
sponsored retirement account. It
is similar to a traditional retirement
account (IRA) in that individuals can
invest pre-tax dollars to promote the
growth of the retirement account faster,
since individuals are able to contribute
more of their income. Th e
taxes are paid at the time the retiree
withdraws funds from the retirement
account. Also, similar to a traditional
retirement account, a retiree
may begin withdrawing from the
401(k) at the age of 59 without penalty,
but must start withdrawing at the age
of 70 ½ (with few exceptions). When a
retiree starts taking withdrawals from a
401(k) account, the account converts to
what is called “payout status”, and it is
this conversion that determines whether
or not Medicaid considers the retirement
account as an asset for purposes
of qualifying. In other words, if a
non-applicant spouse’s 401(k) account
is in payout status, the account is not
considered as an available asset for the
applicant’s eligibility for Medicaid. It is
exempt. In addition, when the 401(k)
account is in payout status, the amount
in excess of the Community Spouse
Resource Allowance ($123,600) is not
subject to recovery by Medicaid to pay
for the applicant’s medical expenses.
An example may help illustrate the
diff erence of a non-applicant spouse’s
401(k) on the applicant’s eligibility for
Medicaid and the possibility of recovery
by Medicaid against the 401(k)
when it is in non-payout status versus
payout status. If, for example, an
applicant’s spouse has a 401(k) in the
amount of $500,000 that is in non-payout
status, the 401(k) may be considered
an asset and the amount in excess
of the Community Spouse Resource
Allowance may be subject to recovery
by Medicaid. In contrast, if the same
applicant’s spouse has a 401(k) in the
amount of $500,000 that is in payout
status, the 401(k) is not considered an
asset for determining an applicant’s eligibility
for Medicaid. Further, in the
latter example, the 401(k) is not subject
to recovery by Medicaid.
As shown, the status of a non-applicant’s
401(k)—payout versus non-payout
status—can have a tremendous
impact on an individual’s Medicaid
plan. It should also be noted that even
though a non-applicant spouse’s 401(k)
may be in payout status, and thereby
protected, the income derived from
the 401(k) also plays a critical role in
an applicant’s Medicaid plan. Th e rules
governing Medicaid are highly complex.
Th e failure to implement a proper
Medicaid plan may have an eff ect on an
applicant’s eligibility for Medicaid and
potentially expose assets to a Medicaid
recovery. It is therefore important to
consult an experienced elder law attorney
when planning for Medicaid.
Ronald A. Fatoullah, Esq. is the
principal of Ronald Fatoullah &
Associates, a law firm that concentrates
in elder law, estate planning,
Medicaid planning, guardianships,
estate administration, trusts,
wills, and real estate. The author
would like to thank Jeffrey P. Gorak,
Esq. for his contribution to this article.
The law firm can be reached
at 718-261-1700, 516-466-4422, or
toll free at 1-877-ELDER-LAW or
1-877-ESTATES. Mr. Fatoullah is
also a partner with Advice Period, a
wealth management firm, and he can
be reached at 424-256-7273.
RONALD FATOULLAH
ESQ, CELA*
editorial
New Anti-Sexual Harassment Measures in New York
As part of the nationwide
response to the #MeToo
movement, both New
York State and New York
City are implementing
new workplace anti-sexual
harassment measures that
you should be aware of.
Th e NYS budget, which was
approved on April 12, 2018
includes a number of workplace
anti-sexual harassment
directives including:
• Annual anti-harassment
training for all employees:
Th e law will require
New York employers to
conduct annual anti-harassment
training for all employees and to distribute
written anti-harassment policies.
Th e New York State Division
of Human Rights and Th e New York
State Department of Labor will work
together to create a model sexual
harassment training and prevention
program and a model written policy.
• Extend liability for employers
regarding sexual harassment
against “non-employees”:
Th e New York State
Executive Law has been
amended to permit sexual
harassment claims by
“non-employees” in their
workplace. Under the
amendment, an employer
may be held liable to a consultant,
vendor, contractor,
or other person providing
services under a contract
in the employer’s workplace
with regards to sexual
harassment where the
employer, its supervisors or
agents knew or should have
known about the harassment and
failed to take appropriate and immediate
corrective action.
Additional measures include:
• Workplace anti-sexual harassment
measures for public employers and
state contractors
• Prohibit mandatory arbitration
clauses included in claims for sexual
harassment in the workplace
• Prohibit nondisclosure clauses in
sexual harassment settlements or
agreements
In addition to the NYS mandates,
New York City has passed the Stop
Sexual Harassment in NYC Act which
will require that employers provide
mandatory Sexual Harassment training
as well as other measures. Th e key
elements of the law include:
• All businesses in New York City
that employ at least 15 people must
conduct annual training to prevent
workplace sexual harassment. Th e
NYC Commission on Human Rights
will be developing publicly available
online training modules, which
employers may use to satisfy the
requirement of the law.
• Employers will be required to provide
additional annual workplace
sexual harassment training to managers
and supervisors that details
their duties and responsibilities in
preventing such conduct and the
appropriate manner in which to handle
complaints from employees.
• New York City employers will be
required to maintain records of compliance
with the law.
• Employers in New York City will be
required to display a poster outlining
anti-sexual harassment responsibilities
and rights in the workplace.
• An information sheet on sexual
harassment must be distributed to
every NYC employee at the time of
hire.
Employers will need to be aware of,
and fully compliant with, the requirements
of both the state law and city
law.
If you would like additional information
or want to schedule anti-harassment
training for your workforce,
please contact Mindy Stern SPHR,
SHRM-SCP at mstern@aimresourcegroup.
com. Mindy is the president of
AIM Resource Group Inc. and a trusted
HR Advisor with over 20 years’
experience helping companies to be
compliant with Human Resource regulations.
Please visit the website at
www.aimresourcegroup.com for more
information.
EMPLOYMENT
MATTERS
MINDY STERN
SPHR, SHRM-SCP,
link
link
link
/www.aimresourcegroup.com
