In the past, to avoid exceeding Medicaid’s income and asset limits, many individuals transferred their assets into the name of other relatives, particularly when nursing home care was immediately needed. Now, Medicaid takes into account all asset transfers made in the preceding five years prior to an application for Medicaid benefits (this period is called the “look-back” period). If such asset transfers were made, Medicaid may assess a penalty period, which will delay the commencement of Medicaid benefits.
However, as discussed below, it is crucial to understand that not all assets are counted for Medicaid benefits determination, and that some asset transfers will not impact (or be included in) the “look-back” period.
As Florida Medicaid Planning Attorneys serving Orlando, Winter Park, and the surrounding communities, we are frequently asked about how Medicaid planning may benefit clients, often in the course of contemplating, entering, or even after being admitted to a nursing home. We invite you to contact us about your Medicaid planning concerns, questions, or needs.
Asset Transfer Matters
How Are the Medicaid Look Back Penalty Periods Calculated in Florida?
The Deficit Reduction Act of 2005 made certain types of asset transfers more difficult to accomplish by creating a five-year “look back” period for all asset transfers. If applicable, penalty periods are calculated by dividing the transferred amount by the average price of Florida nursing home care.
For example, if an individual transfers $70,000 in assets, and the average nursing home cost in Florida is $7,000 per month, Medicaid assistance will be unavailable until the person pays the cost of the nursing home care for 10 months ($70,000 ÷ $7,000 = 10). These penalty periods are not capped, meaning that there is no limit to the number of months that the senior may be ineligible for benefits.
Are All Transfers Counted in the Medicaid “Look-Back” Period?
While the prospect of a penalty period may be cause for concern, an important caveat must be considered – not all transfers are counted in the look-back period. Assets not counted in the “look-back” period include transfers to:
- A spouse (or to a person acting for a spouse’s benefit)
- A child under the age of twenty-one
- A permanently disabled or blind child
- An adult child who lives in the home and who has provided care to the individual for at least two years prior to the submission of the Medicaid application
- A brother or sister who has an equity interest in the home and who has been living in the home for one year prior to the submission of the Medicaid application
If you have extensive assets and do not have adequate financial planning mechanisms in place, qualifying for Medicaid can be a problematic. If you anticipate needing Medicaid benefits, it is important to review your financial situation with an experienced Florida Medicaid attorney as soon as possible to help ensure that transfers are made in a manner that avoids the Medicaid look-back period or lessens its effects.
Will Medicaid Take My House?
In Florida, Medicaid will typically not take a person’s home in exchange for coverage and benefits, provided that the homestead protection is preserved, the equity in the home is worth less than the statutory value (currently $595,000 in 2020 for single applicants), and the home is not rented.
A common concern among elderly individuals applying for Medicaid is what will happen to their home. With proper planning, most individuals will not need to be concerned about the potential loss of their house, even upon death.
As a starting point, under the Federal Social Security Act, states are required to recover assistance payments made to, or on behalf of, a Medicaid recipient from their estate’s assets (the assets that are held at the time of death).
In Florida, while the state can bring a claim against a decedent’s estate to recover money expended on long-term care, a homestead property is exempt from the assets available for such recovery. In other words, a homestead property cannot be reached by creditors, even the State of Florida (on behalf of Medicaid).
As a result, if you die and your home is passed to a family member, the state is typically not entitled to take your homestead property, provided that:
- Your will and testament does not direct that the home be sold; and
- Your home must not have been rented, as renting a home can cause a property to lose homestead status protection.
Even if the single individual continues living in an assisted living facility, the homestead will remain protected and will not be counted, unless it is rented.
Can the Spouse of a Medicaid Recipient Living in Nursing Home Remain in the Couple’s House?
Yes.
If a senior is married and needs nursing home or assisted living care, the spouse is entitled to continue living in the homestead property.
How Much Can a House be Worth in Florida Before it is Counted as an Asset for Medicaid Purposes?
In general, if a Medicaid applicant is single, that person can have equity in a home up to a value of $595,000 (in 2020) without it being counted as an asset. If that person is married, the person’s spouse can remain in the house, and the house will not be counted in the asset calculations – no matter what the value of the house is, or how much equity the person has in the house.
Because there are nuances to these matters, it is important to seek professional guidance to ensure that you do not take action that may leave your home vulnerable.
Can I Get My Spouse’s Income if They Are in a Nursing Home on Medicaid?
Medicaid provides special accommodations for the spouses of Medicaid applicants to ensure that they have the minimum support needed to continue living while their loved one is receiving long-term care. In many cases, these special protections allow for the transfer of income from a nursing home resident to the resident’s spouse.
If a Medicaid applicant is married, the countable assets of both spouses are totaled as of the date the ill spouse enters a hospital or long-term care facility. Generally, the spouse not requiring care may be able to keep one-half of the couple’s countable assets, up to a maximum of $128,640 (in 2020).
What Are the Income and Asset Requirements for Medicaid in Florida?
Single Medicaid applicants (aged sixty-five or older) are typically required to have a limited income and less than $2,000 in countable assets to remain eligible for benefits. However, many assets are exempt from being counted and, if the spouse is married, higher asset limits may apply. Medicaid planning may be helpful in reaching these goals, without having to give up all assets.
Florida residents who are eligible for Supplemental Security Income automatically qualify for Medicaid coverage without having to file an application (unless nursing home services are needed). Otherwise, an applicant’s monthly income and assets must fall below the following limits:
Institutional/Nursing Home Medicaid (as of 2020)
- Single:
- $2,349 per month income
- $2,000 asset limit
- Married (both spouses applying):
- $4,698 per month income
- $3,000 asset limit
- Married (one spouse applying):
- $2,349 per month income
- $2,000 asset limit for applicant and $128,640.00 for non-applicant
Home and Community Based Services (as of 2020)
- Single:
- $2,349 per month income
- $2,000 asset limit
- Married (both spouses applying):
- $4,698 per month income
- $3,000 asset limit
- Married (one spouse applying):
- $2,349 per month income
- $2,000 asset limit for applicant and $128,640.00 for non-applicant
Regular Medicaid: Aged, Blind and Disabled (as of 2019)
- Single:
- $891 per month income
- $5,000 asset limit
- Married (both spouses applying):
- 1,208 per month income
- $6,000 asset limit
- Married (one spouse applying):
- $1,208 per month income
- $5,000 asset limit
It’s important to understand that these limits are subject to periodic adjustments.
What Income is Considered in Calculating Income for Medicaid Eligibility in Florida?
For Florida Medicaid eligibility purposes, any income that a Medicaid applicant receives is counted as income, including:
- Employment wages
- Alimony
- Social Security Income
- Social Security Disability Income
- Supplemental Security Income
- Pension Disbursements
- IRA Withdrawals
- Dividends
However, if only one spouse is applying for coverage, only the income of the applicant is considered (and the non-applicant spouse’s income will be disregarded). Non-applicant spouses are also entitled to a Minimum Monthly Maintenance Needs Allowance (“MMMNA”), which ranges from $2,113.75 to $3,161, depending upon living and utility expenses. To ensure that spouses have sufficient funds to survive, applicants can transfer income to their spouse to cover living necessities.
What Assets are Counted in Determining Medicaid Eligibility in Florida?
When calculating assets, Florida Medicaid will count:
- Cash
- Stock
- Bonds
- Investments
- Savings and Checking Accounts
- Real Estate (if not residing on the property)
- The value of a current home (provided that a homestead amount will not be included. This amount is current $595,000 for an individual Medicaid applicant as of 2020)
What Assets are Not Counted in Determining Medicaid Eligibility in Florida?
Assets not counted in Medicaid eligibility include:
- Personal Belongings
- Home Furnishings
- An Automobile
- Irrevocable Burial Trusts
- The Primary Home (if not rented and valued at less than $595,000)
- $128,640 in Joint Assets (if married)
Do I Have to Give Up All My Assets to Get Equalized for Medicaid?
Under Florida law, applicants are not required to completely impoverish themselves to equalize Medicaid; rather, certain assets are exempt from the process.
An experienced Florida Medicaid attorney will rarely, if ever, advise you to give away all your assets. Many assets are exempt from Medicaid qualifications, including:
- The Homestead Property
- Certain Retirement Accounts
- Irrevocable Burial Contracts or Bank Accounts Designated for Burial by Notation in Title
- Burial Expenses (up to $2,500)
- One Burial Plot
- One Automobile
- Other Property if Rented or Listed for Sale
- Life Insurance (if total face value of all insurance policies is less than $2,500)
- Certain Annuities
- One Wedding Ring
Even if certain assets are not exempt, various strategies and legal mechanisms (such as annuities, irrevocable trusts, promissory notes, etc.) can be utilized to protect your property from equalization.
If your assets exceed the Medicaid asset thresholds or you are concerned about whether you can qualify for coverage, we can help assess your assets and make a determination regarding your eligibility, and help you take advantage of any Medicaid planning opportunities that may be available. Whether you are planning for the future or you or a loved one needs immediate care, the Flammia Elder Law Firm can help.
Article provided by Kathleen Flammia, Attorney at Law, one of Florida’s TOP Elder Law & Estate Planning Attorneys. Attorney Flammia is a Member of the National ElderCare Matters Alliance, and she and her firm are Featured in ElderCareMatters.com – America’s National Directory of Elder Care / Senior Care Resources to help families plan for and deal with the issues of Aging.
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