Medicaid eligibility in Florida refers to the asset limits and income limits that the government uses to determine if someone may receive Medicaid assistance with their long term nursing home care. If an applicant does not exceed the Medicaid asset limits and income limits–and meets other qualifications–then the person can receive Medicaid assistance. Whether an applicant is eligible for Medicaid ultimately is determined by the Florida Department of Children and Families, although Medicaid services in Florida are administered by the Florida Agency for Health Care Administration.
Medicaid Asset Limits
The Medicaid asset limits in Florida for an applicant for Medicaid assistance is no more than $2,000 of countable assets. This limit may change from time to time because of inflation. Countable assets exclude (1) certain specifically exempt assets and (2) nonexempt assets that are legally unavailable to the applicant. Both of these kinds of assets are considered exempt for the purposes of Medicaid planning. All of the applicant’s non-exempt assets are counted toward the $2,000 asset limit based upon their value on the date of the Medicaid application. Generally, assets are valued at the time of the Medicaid application. The community spouse’s assets are valued at date of separation at their cash value and their fair market value, as applicable. Understanding Medicaid’s asset limits and exemptions is an important part of Medicaid planning. As a rule, individuals at the Federal poverty level meet the asset limit requirements.
There are separate limits on the amount of assets in Florida that can be owned by the applicant’s well spouse, often referred to as a community spouse. If the applicant is married, the applicant’s community spouse may have independent assets not exceeding a maximum referred to as the Community Spouse Resource Allowance, or CSRA. The CSRA covers the community spouse’s individually owned assets and one-half of the couple’s joint assets. The amount of the CSRA can fluctuate from year to year. The current (2017) CSRA in Florida is approximately $120,000. The community spouse’s assets are valued based on the date of separation—that is, the date the ill spouse leaves the home to reside in a managed care facility, or SNF. An applicant may request a hearing to increase the CSRA if he can show that the institutionalized spouse’s income may not be sufficient to meet their basic needs and that an increase in the CSRA will help alleviate the deficiency. Under a just say no option in Florida, a community spouse may have more than the CSRA but then refuse to apply their assets for the support of the institutionalized spouse.
The following assets are exempt or otherwise do not count toward a Medicaid applicant’s asset limit:
- Homestead. Up to $552,000 in equity can be exempt.
- Vehicles. Primary vehicle is exempt.
- Retirement Accounts. An applicant’s 401k and IRA can be exempt with proper planning, but otherwise may not be exempt.
- Annuities. Not an exempt asset, but may be determined to be legally unavailable to the applicant provided annuity payments are being made to applicant or community spouse.
- Promissory Notes. Can be an exempt asset if certain conditions are met.
- Burial Contracts and Funeral Costs. Most of these are exempt.
- Income Producing Real Estate. Not a countable asset so long as the rental income is being used to support the applicant.
- Life Estates. Generally exempt, but could be eligibility issue if property is sold during the applicant’s life.
- Trusts. Certain specialized trust agreements, such as Medicaid trusts and Miller trusts, can be used to exempt property from Medicaid eligibility tests.
- Miscellaneous. An applicant’s household goods and personal effects are not counted assets. Life insurance cash value less than $1,500 is also exempt. Any asset that is inaccessible to the applicant for any legal reason is exempt.
One of the most common questions that Medicaid applicants want to know is whether they may keep their home if they move to a nursing facility. Florida Medicaid rules do provide an exemption for the applicant’s homestead, but the Medicaid exemption is more limited than other homestead exemptions in Florida. In creditor protection law, Florida law exempts homestead property from creditors regardless of the homestead value—the exemption is unlimited. In Medicaid law, the Florida homestead is also an exempt asset, but there is a $552,000 ceiling on exempt homestead equity. The equity cap does not apply under federal law if the applicant’s spouse or minor child resides in the homestead. In that case, there is an unlimited homestead exemption from countable Medicaid assets. An applicant may claim this homestead exemption so long as he shows an intent to return to the property if and when he leaves the care facility.
An applicant may exempt his primary vehicle with no limit on the car’s value. The applicant is not required to drive the car if someone uses the car to provide the applicant’s transportation. A wheelchair accessible vehicle is often a prudent use of money. In Florida, the applicant also may exempt a second vehicle titled in his name for a community spouse’s use so long as the car is seven years old, is not a luxury vehicle, and meets other requirements. Applicants who own more than one car can exempt the more valuable car.
For many Medicaid applicants, retirement plans are one of their largest assets. Without competent planning, the value of a person’s retirement plan or IRA will be a non-exempt asset and would disqualify people from receiving Medicaid assistance.
Whether a retirement account is exempt or non-exempt and countable depends upon whether the retirement account is in “payout status.” Federal tax law requires that people begin withdrawals from retirement assets no later than age 70½, and persons may choose to take withdrawals without penalty after age 59½. An applicant’s retirement account is in “payout status” when they are taking periodic withdrawals. A retirement account or fund in payout status is an exempt asset in Florida for Medicaid eligibility.
A retirement account in accumulation status, not being paid out, is a countable asset and will likely disqualify most applicants from Medicaid assistance. An applicant with a countable retirement account may have to cash out the retirement fund, accelerate tax liability, and spend down the money. Alternatively, the applicant could transfer the money to his spouse where the money would be included in the spouse’s countable assets.
If a retirement account is in payout status, the money received by the applicant will count as income and may affect eligibility under applicable income limits.
Florida law provides generous exemption of annuity contracts from general creditors. Annuities are exempt from levy or execution by a judgment creditor regardless of the annuity’s value. Annuity exemptions under Florida’s Medicaid law are more restrictive – annuities are not exempt for Medicaid purposes. However, some annuities are considered unavailable to the Medicaid applicant. If the annuity is legally unavailable, the annuity value is not counted toward Medicaid asset limits.
Understanding Medicaid’s treatment of available or unavailable annuities requires some basic knowledge about the financial characteristics of annuity contracts. Annuities are insurance contracts for which one transfers a lump sum of money to an insurance company and receives a contractual right to receive a certain amount of money from the insurance company based upon a payment schedule for a period of time. Deferred annuities are contracts where the principal sum is invested and grows in value, tax deferred, without any withdrawals until the owner decides to annuitize the contract and begin scheduled payments to the named annuity beneficiary. Immediate annuities begin a scheduled series of payments to the beneficiary immediately after the owner funds the annuity contract.
There is an important difference between tax qualified annuities and non-qualified annuities. A qualified annuity invests the annuity principal in public securities for gain, and appreciation is treated for tax purposes like an IRA. Increases in the value of the annuity are tax-deferred until the owner annuitizes the contracts and begins withdrawals.
For Florida Medicaid eligibility, the rules distinguish treatment of non-qualified annuities based on the applicant’s access to annuity cash value. A typical deferred annuity has cash value which the owner may access by surrendering the annuity with or without a penalty. These types of annuities are available assets for Medicaid eligibility calculations. These annuities are not exempt for Medicaid.
However, traditional immediate annuities may be legally unavailable and exempt for Medicaid purposes because the owner has no access to the annuity principal other than the periodic scheduled payments.
Some of the requirements for Medicaid exempt immediate annuities include:
- The annuity contract must be irrevocable so that the applicant cannot cancel the annuity contract and access remaining principal.
- The annuity must be making monthly payments to applicant or spouse.
- The annuity must be actuarily sound so that is expected to be paid out within the applicant’ owner’s life expectancy, and his spouse’s life, according to Social Security administration tables.
- The annuity must name Florida as a beneficiary for the total amount of medical assistance provided by the State on the applicant’s behalf unless the applicant has a spouse, minor child, or disabled child in which case the State must be the secondary beneficiary.
The purchase of an immediate annuity transforms countable cash assets into an exempt income stream. Annuities have limited value for unmarried applicants because of the above-stated rule that the annuity has to name Florida as primary beneficiary after death and also because the annuity income counts in the applicant’s income eligibility. However, if the single applicant has transferred assets resulting in delay in benefits, an immediate annuity income may be useful source of payment for care during the penalty period.
For married applicants, annuities provide viable planning tools. If the community spouse is the annuity beneficiary, the immediate annuity income is not part of the applicant’s own income subject to Medicaid eligibility limits. Often, a community spouse will reduce her countable assets by using family money to purchase an annuity for their benefit.
A promissory note is a commonly used legal document that evidences someone’s promise to pay money to another person. Promissory notes are commonly used to establish a legal obligation to pay back a loan of money. Loans and promissory notes provide a Medicaid planning tool similar to, but more flexible than, annuities.
If a Medicaid applicant gifts an amount of money to a family member, the applicant relinquishes use and benefits of the money and the gift may be an impermissible asset transfer subjecting the applicant to a benefit penalty. However, if the same amount of money is loaned to a family member in exchange for a promissory note, the transaction may not be considered a transfer provided the note meets certain conditions.
Medicaid’s conditions for qualifying exempt promissory notes include the following:
- The note must have a repayment term that is actuarily sound based upon the applicant’s life expectancy.
- The promissory note must provide for equal payments without any deferral provisions or balloon payment.
- The note must prohibit its cancellation or forgiveness upon the applicant lender’s death. The note also must have a reasonable interest rate.
Burial and Funeral Costs
Most prepaid burial contracts are exempt including contracts for burial plot and funeral expenses. Funeral expenses may include funeral goods and services such as embalming, cremation, flowers, obituaries, etc. The contracts must be irrevocable so that the applicant does not have the right to take back his payment. In Florida, an applicant can also exempt up to $2,500 in a financial account where the money is designated to pay for funeral and burial costs. An applicant may have an additional account for his community spouse.
Income Producing Real Estate
Investment real estate (or other income-producing business asset) is not a countable asset when the property is producing net rental income that is used for the applicant’s support. The applicant can deduct from a property’s gross income all expenses that the IRS would consider deductible business expenses such as repairs, insurance, and property taxes. The asset’s value, regardless of equity amount, is an exempt asset for purposes of Medicaid eligibility.
The net rental income does count toward evaluation of the Medicaid applicant’s income eligibility. So even though the investment property is an exempt asset, some of the rental income above applicable income limits may be payable to the nursing home facility to help pay for care. If a community spouse owns the rental property the net income may offset the amount of income the applicant can pay to the spouse pursuant to a Community Spouse Income Allowance (discussed elsewhere on this website).
The investment property exemption can be the basis of Medicaid planning. For instance, an applicant could own a home and rent it to family members who need a place to live. The asset can appreciate for the benefit of the applicant’s heirs even though some net rental income may be taken to pay for the applicant’s long-term care at the nursing facility. If the real estate is kept out of probate, the State of Florida will have no claim on the property at the applicant’s death to recover paid Medicaid benefits.
An applicant can own an exempt life estate in real property. A life estate gives the life-owner the right to the property during his lifetime, but the life estate expires at death when full ownership of the property passes to a named beneficiary. For example, an applicant could deed a non-exempt real property to his heirs and retain a life estate so that he may use the property for the balance of his life. Vacation homes are suited for life estate planning.
Life estate interests are exempt assets. There may be an eligibility issue if the property is sold while the applicant owns the life estate because the applicant would receive some of the sales proceeds based upon the value of the life estate.
An applicant’s interest in a trust agreement may or may not be exempt depending upon the type of trust. A revocable living trust is popular because it is a way to avoid probate upon death and to avoid court supervised guardianships during lifetime. The living trust provides that the trustmakers (that is the applicant or applicant and spouse) are the trustees and beneficiaries during their life. The living trust reserves to the trustmaker the right to amend or revoke the trust, and the full right to access income and trust assets. Since an applicant with assets titled in a living trust can easily control and access the assets, all living trust assets and income count towards Medicaid eligibility. For almost all purposes, the law considers living trust assets and income to belong to the trustmaker.
On the other hand, income and assets in certain irrevocable trust do not affect Medicaid eligibility calculations. An applicant may have established an irrevocable trust for the benefit of his children or other heirs. A trustmaker has no right to amend or revoke a trust agreement that is expressly not revocable, and the trustmaker cannot use trust assets and income that is expressly for the benefit of someone else. Assets in an irrevocable trust established by the applicant are not a countable asset for Medicaid eligibility so long as the trust agreement includes no possibility or contingency that would allow the trustee to apply trust assets for the applicant’s benefit.
An applicant’s transfer of assets to an irrevocable trust for the benefit of another person is deemed to be a gift to that beneficiary. Transfers of assets within five years of a Medicaid application will result in a penalty that denies the applicant Medicaid benefits for a period of time. Transfer penalties are discussed elsewhere on this website.
There are certain specialized Medicaid trust agreements that provide useful Medicaid planning tools and that can protect assets and applicant income. These trusts are referred to by many names including special needs trusts, Medicaid trusts, and Miller trusts. These trusts should be entered into only after careful consultation with a Medicaid planning attorney.
Medicaid Income Limits
In Florida, Medicaid eligibility also depends on an applicant’s income. Medicaid is designed to assist people with low incomes. Medicaid has ceilings on applicant income levels and regulations about the use of income. There are two facets of Medicaid eligibility income analysis:
- Whether the applicant’s income is low enough to qualify for Medicaid assistance with long-term care.
- If the applicant passes income eligibility, then how much of his available income is allocated to pay for his own care in lieu of government payments.
Different states impose varying limits on the amount of income you can make and still receive Medicaid assistance with long-term care costs. Florida is one of many income cap states that puts an upper limit on an applicant’s gross income. The current income cap is approximately $2,200 of monthly income for a single applicant, or approximately $4,400 for joint married applicants. People with higher monthly incomes do not qualify for Medicaid in Florida without Medicaid planning. The income cap may vary each year because it is derived from a calculation tied to Supplemental Security Income (also known as SSI) income levels established by the federal government.
Florida Medicaid income eligibility considers the applicant’s periodic income from all sources, with some minor exceptions. Income for Medicaid is defined as gross income rather than a net income received after taxes and other deductions or basic expenses. Income is counted for Medicaid eligibility even if the source of the income is exempt for other Medicaid purposes or if the income source is exempt from judgment creditors. As an example, Medicaid income includes gross social security amounts, annuity proceeds, alimony, and retirement plan withdrawals. Each of these income sources is exempt from general civil creditors in Florida, but not for Medicaid income limits. In the case of a married applicant, the income of the community spouse (the spouse remaining at home) is not counted in determining the applicant’s Medicaid income eligibility regardless of the amount. Even a community spouse earning substantial income will not affect the applicant spouse’s income eligibility. A community spouse may have to share her asset as discussed elsewhere on this website.
For applicants in Florida whose income exceeds the income cap there is still a way to qualify for Medicaid care by using Medicaid trusts. Trusts used to qualify people for Medicaid are referred to by several names such as Medicaid Trusts, Qualified Income Trusts, and Miller Trusts.
In cases where the community spouse is unemployed and has no independent means of support, Medicaid law provides protection for the spouses of Medicaid patients to make sure that the community spouse has adequate income for basic support and maintenance. States determine how much income Medicaid patients may divert to support a non-institutionalized spouse who requires support. The amount of patient income allocated to a community spouse is referred to as the Minimum Monthly Maintenance Needs Allowance (“MMMNA”), or the Community Spouse Income Allowance (“CSIA”). How much the community spouse is entitled to depends on what the state Medicaid agency determines to be a minimum income level for the community spouse. The federal government sets minimum and maximum dollar amounts each year for an applicant’s monthly CSIA. In 2017, the minimum monthly CSIA is approximately $2,000 and the maximum is $3,000.
In exceptional circumstances, a community spouse may seek an increase in their CSIA by either appealing to the state Medicaid agency or by obtaining a court order of increased spousal support. The agency will set a hearing before an administrative law judge. The applicant and community spouse need to produce evidence of their reasonable expenses, excluding luxury items, that warrants an increase in the community spouse’s CSIA.
In addition to basic CSIA, an applicant may also be permitted to use up to approximately $600 per month to pay for his community spouse’s shelter costs. An applicant may be permitted an increased shelter cost allowance if he can show that the community spouse’s housing expenses are higher than standard ranges.
Therefore, for married Medicaid applicants the effect of their spouse’s income can be confusing. On one hand, if the community spouse has independent income and is self-supporting then Medicaid does not attribute the income to the Medicaid applicant. On the other hand, if the community spouse cannot independently support herself financially, the law permits the Medicaid applicant to allocate some, or all, of his available income to spousal support in the community.
An applicant that qualifies for Medicaid and enters a nursing home or SNF must share his income with the facility providing care. There are Medicaid rules that determine how much income a patient can keep for himself, how much he can use to support a spouse, and how much must be used to contribute to the cost of his care. The applicant may retain $105 each month for miscellaneous personal needs such as hygienic products, books, magazines, and snacks. The applicant can use his available income to pay health insurance premiums, including prescription drugs, and supplemental medical coverage.
In summary, a Medicaid applicant that meets income eligibility for long-term care Medicaid coverage will pay to the providing SNF all of his gross income after deducting allowed income support for his community spouse, a personal needs allowance, and other permitted expenses such as medical care and insurance.