Some Medicaid Planning Basics In Florida
A semi-private room in a Florida nursing home costs over $11,000 a year. And, with most people living much longer, some long-term care is almost inevitable. These costs add up over time, and it does not take long for this expense to erode a financial legacy that it took a lifetime to build. Medicaid usually covers these costs, but it is difficult for middle-income families to qualify financially. Difficult, but not impossible.
Countable and Noncountable Assets
To qualify for this state-administered federal program that provides medical care to low income individuals and families, the nursing home resident must have less than $2,000 in assets. Moreover, the community spouse (nonresident spouse) must generally have less than $120,900 in assets, because that is usually the Community Spouse Resource Allowance in Florida.
Most assets count toward these caps, but some do not. Some notable exempt assets include:
- IRA: Such assets are noncountable if the applicant receives periodic payments or if the applicant has transferred part of the IRA to a spouse via a Qualified Domestic Relations Order.
- Personal Possessions: Tools, clothes, furniture, and even a motor vehicle are exempt. Cars are noncountable only if the family regularly uses the vehicle. In some cases, if there is a medical necessity, two vehicles may be noncountable.
- Home Equity: In many instances, this asset is the largest one in the family, and in many instances, it is noncountable. Any equity below $552,000 (as of 2017) is automatically noncountable. The cap may be higher if the nursing home resident intends to return to the house or a dependent relative also resides there.
Some life insurance benefits, along with certain “inaccessible” assets, are also noncountable.
Income limits also come into play here. In most cases, the resident spouse must earn less than about $2,000 a month.
What Asset Transfer Strategies Are Available?
It is legally and morally acceptable to transfer assets in order to qualify for Medicaid, just like it is legally and morally acceptable to make tax-deductible contributions to a 401(k). In both these cases, however, such payment or transfers must take place within the confines of existing law. Some possible Medicaid strategies include:
- Spend Down: Many people take cash out of savings accounts and put new tires on the family car, purchase new furniture for the living room, put a new deck on the house, and so on. This approach is also acceptable in other areas, such as bankruptcy.
- Move Assets to Spouse: This arrangement often allows the resident spouse to retain control over the asset but gives it another legal owner. This strategy is only successful if the other spouse never needs long-term care, because otherwise, the family will be back in the same boat.
- Transfer Assets to Children: In these situations, and many other asset transfers, there is a five-year lookback period, and auditors will not recognize any transfer that falls short of this waiting period.
- Miller Trust: Also known as a Medicaid trust or a d4B trust, this vehicle is an irrevocable trust that can hold both income and assets. The Florida state government must be the trust’s contingent beneficiary, and when the settlor (person who creates the trust) dies, the trust must reimburse the government.
Florida law includes substantial penalties for noncompliance, whether it was inadvertent or intentional.
Rely on Experienced Attorneys
Now is the time to start thinking about paying for long term care. For a free consultation with an experienced elder law attorney in The Villages, contact the Millhorn Elder Law Planning Group. After-hours appointments are available.