With advancing life expectancy and the baby boomer population also aging, a fair number of elderly people will require long-term nursing care. What many do not realize, however, is that long-term nursing care is very expensive.
On average, the costs per month can vary from $5,000-$7,000, which can quickly deplete any savings. Therefore, seniors should consider: 1) buying long-term care insurance, 2) paying for the costs from their savings, or 3) applying for Florida Medicaid.
In some circumstances, Florida Medicaid planning can help cover the costs of long-term nursing care and can relieve an enormous amount of financial stress.
While Florida Medicaid is a good option for some seniors, it does require pre-planning because the program has strict eligibility requirements. For example, if your assets are more than $2,000, you are not eligible for Florida Medicaid long-term nursing care benefits.
However, by consulting with a Florida Medicaid attorney who deals specifically with Medicaid issues, he or she can legally help you plan your finances in such a way that you can become eligible. This does not mean that you simply give away all your assets and property to your children and then claim to have no assets.
Medicaid will look back over the last five years of your financial history to ensure that you have not disposed of your assets just to become eligible for its benefits.
An experienced Florida Medicaid attorney can help with planning, which can help preserve your estate, while at the same time also helping you meet the eligibility requirements for Medicaid long-term care nursing benefits. The key to Florida Medicaid planning is to start early because it requires a significant amount of administrative work.
When trying to understand Florida Medicaid, you first need to know the types of basic programs that exist, their requirements, and eligibility. Second, you have to grasp the basic strategies that the lawyers will utilize to preserve your assets while ensuring eligibility for Florida Medicaid.
It is important to understand that Medicaid is not the same as Medicare. Medicaid was established many years ago to help cover healthcare costs of children, handicapped/ incapacitated people, and those classified as living below the poverty level. However, Florida Medicaid also has a program that can pay for long-term nursing care for seniors.
The Florida Medicaid Program
Medicaid is essentially for low-income persons and/or those who are not able to afford long-term care assistance. Medicaid simply does not give away money to everyone who applies; you have to qualify and there are stipulations and rules.
Florida Medicaid planning can assist seniors who cannot afford to pay for long-term nursing care on their own. Each applicant is individually assessed. If the individual meets the eligibility criteria, the Medicaid program can pay some or all long-term nursing care costs. To qualify, the applicant has to: 1) show that he/she needs the services of a nursing home; and 2) is financially eligible.
Florida Medicaid eligibility has very strict asset and income limitations. To qualify for Medicaid assistance in Florida, the individual cannot have more than $2,000 in countable assets. It is important to understand, however, that some assets are not countable or can be exempt from Medicaid eligibility rules. The non-countable assets include the following:
- Prepaid funeral arrangements for you and your family, up to $2,500 each or in any amount of the plan(s) is/are irrevocable.
- Personal property, such as a primary home (in Florida, referred to as a “homestead”). This may not apply if you are single and have no plans to return to the home.
- One motor vehicle with a limited value.
- Life insurance is owned by the applicant or the well spouse, up to $2,500.00 each. Term policies are exempt.
- If you do plan to stay at home and have nursing care in your home, then the home equity is not counted.
There is no “one size fits all” absolute rule on what is a countable and uncountable asset. Medicaid looks at the individual and his/her circumstances before making a decision. You definitely can’t have lots of money in the bank or have a high income and yet be eligible for Florida Medicaid planning.
As of January 2021, Florida has an income limit of $2,382 for an individual applying for Medicaid benefits. However, if married, the couple may be allowed to maintain some portion of their income without it being counted against them. No income limit exists for the well spouse; however, if that income is below $2,178.00 (as of July 1, 2021), some of the applicant’s income could be diverted to the well spouse.
If you are already on Medicare and then qualify for Medicaid, the long-term nursing care facility will accept both benefits and, in most cases, the senior will not have to move, even though Medicaid pays less. While there is no law, nursing homes will usually not transfer established patients who become eligible for Medicaid.
How Can a Florida Medicaid Attorney Help?
Because there is an income cap, a Florida Medicaid attorney can create what is called a Qualified Income Trust (also known as a Miller Trust) to diversify any excess income over the cap, so that it is not countable by Medicaid. This is both a legal and ethical way to qualify for Medicaid benefits.
What to Know About Florida Medicaid Pre-Planning
Many seniors do not apply for Medicaid long-term nursing care assistance because of misconceptions about the program, which include the following:
- Your primary residence will be seized by Medicaid. This is completely false. The primary home is exempt from asset calculations when planning for Florida Medicaid if a spouse or child currently lives there.
- If the well spouse decides to sell the home, Medicaid will want all money from the sale. This is not true. The sale of the couple’s home will have no negative effect on the Medicaid applicant. However, if the well spouse needs Medicaid later, the “look back” period (if within five years) may discover this event and decide upon disqualification.
- The nursing home will demand 50 percent of all my assets. Not true.
- I cannot spend down my assets before applying for Medicaid benefits. Not true. If you have assets above the Medicaid limit, you can use the extra money to pay your debts, any medical bills, home renovations (with a few caveats), and any burial and funeral expenses for the entire family. As long as the money is spent on essential things, Medicaid will not penalize you. But you cannot have a swimming pool installed or purchase a beach home.
- If I transfer my assets to my spouse or children, I will lose my Medicaid eligibility. Not true in certain situations. If you have a child under 21 or a child who is blind or handicapped, you can transfer some of your money and assets without being penalized.
- With Medicaid assistance, my ill spouse will be offered the worst nursing home in the county. Not true. Medicaid pays enough to ensure that the ill spouse will reside in a safe and clean nursing home. No extra frills, however, are likely to be given.
Gifting Away Assets
To meet the Medicaid cap guidelines, some people may consider giving away their assets as gifts. The IRS does permit gifting of $14,000 without a gift tax, but the same rule doesn’t apply to Florida Medicaid benefits. If you do give away your assets as gifts, Florida Medicaid will look back for any transfers and penalize you. Only under certain circumstances does Medicaid allow gifts to be given to a child under 21, or one who is blind or handicapped. An outright gift just to avoid the Medicaid cap for benefits is not recommended and will be found.
What is the “Look Back” Period?
Most seniors believe that if they have too many assets, they can simply give them to their children or relatives, and then they will be eligible for Medicaid. But Medicaid has a look-back period, where the agency will thoroughly look at all your finances, for the previous five-year period.
If you have given away assets just to qualify for Medicaid, you can be disqualified and even penalized. You simply cannot transfer any money or property just to qualify for Medicaid – your application could be denied, and it could even be considered fraud, which would carry a huge penalty.
The good news is, however, that some assets can be transferred or are considered non-countable. The transfer of these assets to the following will not trigger a penalty:
- The spouse.
- A minor child under age 21.
- A permanently blind or disabled child.
- An adult child who has been living in the home and provided care to the person for at least 24 months before applying for Medicaid benefits.
- A sibling who also has an equity interest in the residence and has been a resident in the home for at least 12 months before applying for Medicaid benefits.
Florida Medicaid planning requires time and effort. If you are considering applying for Medicaid long-term care benefits and want to make sure things are done the right way, consult with a knowledgeable Florida Medicaid attorney. A lawyer who knows the “ins and outs” of the Medicaid rules in Florida can be an immense help.
They can develop legal strategies to preserve your assets and, at the same time, help you apply for Medicaid benefits. They can also ensure that the healthy spouse who will still live in the home has adequate financial resources to maintain their situation without undue stress on others.
While you can apply for Medicaid benefits yourself, any mistake in the application, even if not intentional, can result in disqualification and/or charges of fraud. Florida Medicaid planning can be very complicated and, to ensure everything that can be done has been done, it is wise to consult with a Florida Medicaid attorney.
Even if you are a healthy senior, there is no way of predicting the future. if an illness occurs or one develops dementia, then urgent decisions will have to be made. If you have Florida Medicaid planning prepared ahead of time, there will be less stress and your savings can be preserved.
Without assistance from a Florida Medicaid attorney, if the senior needs urgent long-term nursing care, your finances can be wiped out in no time. Call Elder Law attorneys at (561) 588-7512 to learn more today.