Florida Medicaid law covers qualification for Medicaid and the amount of Medicaid benefits that an applicant can receive in Florida for care in a nursing facility. Applicants work with an elder law attorney to best plan for Medicaid coverage and to become eligible for Medicaid.
What is Medicaid?
Medicaid is a social health care and nursing care program for individuals with limited resources. There are two aspects of Medicaid:
- Medicaid health coverage helps people without medical insurance.
- Medicaid nursing home coverage pays all of the nursing home costs for eligible applicants after the recipient contributes his income and assets to cost of care.
Medicaid Recipient Requirements
A Medicaid recipient must be:
- U.S. citizens or of U.S. legal resident.
- Maintain their primary residency in Florida.
- Require long term nursing medical care because of a medical or cognitive condition.
- Eligibility is conditioned upon applicant meeting income tests and asset limits.
Medicaid Income Eligibility
In Florida, Medicaid income eligibility includes the following requirements
- Medicaid applicant’s own monthly income cannot exceed $2,200 (2017) There is no limit on Medicaid applicant’s well spouse (“Community Spouse”).
- Married Medicaid applicant is allowed to credit some portion of monthly income above $2,200 the to support a well spouse if spouse’s monthly income is less than approximately $2,000.
- Any excess Applicant income after allowance for community spouse support must be paid to the assisted living facility or used to fund a Medicaid Trust established by the applicant. Trust income used to support Medicaid recipient during his lifetime.
Medicaid Asset Eligibility
Proper estate planning can reduce assets to more easily meet Medicaid asset limits. In Florida, Medicaid programs place limits on the assets that an applicant can have:
- Medicaid applicant cannot own more than $2,000 of assets in addition to any assets that are not counted because the law considers them either exempt or not available.
- A married Medicaid applicant’s Community Spouse may not retain more than approximately $121,000 of assets.
- Definition of “assets” includes all assets titled in applicant’s name or jointly with another person.
- Excess assets must be liquidated and the proceeds used to pay for long-term care.
Medicaid Exempt Assets
The following assets are exempt from the Medicaid program asset limits and do not need to be liquidated:
- Homestead: a Florida homestead is exempt up to $560,000 of equity. There is no equity ceiling if the home is occupied by the recipient’s spouse or a minor child.
- Motor vehicle: Medicaid exempts one vehicle regardless of age, type, or value. Medicaid exempts a second vehicle over 7 years old, except luxury or antique vehicles.
- Personal property: the recipient’s personal property is exempt except for particularly valuable items of jewelry, art, or collectibles.
- Burial plans: recipient may exempt irrevocable burial contract regardless of amount, and he may exempt an additional $2,500 held in reserve for funeral and burial expenses. Recipient may also exempt same amounts for burial plan and expense reserve for community spouse.
- Life insurance: cash value not to exceed $2,500 in life insurance policies owned by recipient and spouse are exempt from Medicaid.
- Retirement plans: IRAs, 401k plans and other tax-deferred retirement investment are considered exempt if the applicant is not taking withdrawals.
- Income producing investment assets: income producing real estate is exempt if it is generating net income and the income is being used to help support the Medicaid recipient. Income is counted in income eligibility test.
- Annuities: annuities are not exempt unless the applicant or community spouse is receiving monthly annuity withdrawals in an acutarially sound basis. The annuity contract also must meet Medicaid guidelines. If annuity is not being annuitized and generating income then it is not an exempt asset.
A Medicaid applicant may properly plan for Medicaid eligibility by transferring assets to family members or trusts. If, however, transfers were intended primarily to achieve Medicaid eligibility will be disallowed, and the transferred assets will affect Medicaid eligibility and benefits. Transfers of assets within five years of a Medicaid application (“look-back period”) will be presumed to have been intended primarily for achieve Medicaid eligibility. Transfers during the five-year look back period will result in reduced Medicaid benefits.
Medicaid Planning Options
Often the need for long term care in a skilled nursing facility (SNF) is unexpected and immediate. People tend to underestimate the cost of long-term medical care without qualifying for a Medicaid program. They incorrectly assume they have sufficient assets or insurance to pay for long term care, but when the time comes, their assets have decreased or they find that their insurance benefits are inadequate. They then find themselves seeking an elder law attorney in a Medicaid crises situation. It is too late for advanced Medicaid planning techniques, as any asset transfers will occur within the five-year penalty period. What can be done under these circumstances? Here are six suggestions for last-minute Medicaid planning options.
- Spending down assets as quickly as reasonably possible. There is no Medicaid penalty for spending money on activities such as travel and entertainment. Spending money on personal care items that will make life more comfortable in an assisted living facility, such as televisions, computers, and audio equipment for the applicant’s use, is also permissible. Since furniture and other personal property are Medicaid exempt assets, the applicant can buy new furniture for the home, or he could buy himself comfortable furniture to move with him into the managed care facility. Money spent for professional fees to assist last-minute planning is usually money well spent and part of asset reduction.
- Pay off all current debts including credit cards and medical bills. The applicant can use funds to reduce, if not pay off, the mortgage on his homestead, credit card debt, and medical bills. Paying debt is not a transfer subject to benefit penalties. Make sure that you are paying current debt obligations as money used to prepay a debt that has not accrued could be considered an available resource or a penalized transfer.
- Purchase exempt assets. Purchases should first include burial plots and funeral contracts because these expenses otherwise will have to be paid by other family members. The applicant may use significant amounts of money to purchase a new car as there is no dollar limit on Medicaid’s vehicle exemption. Often a new van that is wheelchair accessible is a wise purchase in any event. The community spouse may be allowed to keep the existing car if its old enough.
- Home improvements make sense. The applicant can use funds at any time to repair or improve their principal residence so long as the applicant would otherwise qualify for Medicaid homestead exemption. Some homestead investments add value such as substantially remodeling the primary rooms including the kitchen, master bath, and master bedroom. Spending available assets on home improvement has multiple benefits: it protects money for Medicaid purposes, enhances the applicant’s homestead if he returns to live there, and increases the value passed on to his heirs.
- Invest in income producing rental property. Substantial funds can be spent down with large down payments for rental property. The asset is exempt if the rental income is used to support the applicant, although the amount of income is counted for purposes of determining the applicant’s income eligibility. The purchase of property is not a transfer subject to penalty because the payment is to an unrelated third party in consideration for the receipt of an asset of equivalent value.
- Spousal transfers coupled with a “just say no” notice. An applicant may convey unlimited assets to his spouse at any time prior to application, and then the spouse may subsequently decline to apply those assets for the care of the applicant during their residency in a nursing facility. Even though the Medicaid applicant’s home is exempt up to $560,000 equity, a married applicant should consider transferring the home to a community spouse. The community spouse gets control over the home and can sell it after the applicant becomes eligible for Medicaid. The community spouse’s estate plan should then be changed so that if they predecease the applicant spouse, the home would pass to the children directly rather than to the institutionalized spouse.