In Florida, like in all other states, there are certain qualifications before Medicaid will cover one’s nursing home expenses. A paramount consideration is the amount of assets and income at the disposal of the potential Medicaid applicant.
According to a Florida Bar Advisory Opinion, Medicaid Planning involves
The assessment of all facts relevant to a client’s situation, including personal, financial, familial, and historical;
Application of those particular facts to the laws governing Medicaid;
Developing a plan to structure or spend those assets in compliance with those laws or planning to reverse actions already taken to correct potentially unauthorized activity to minimize negative legal consequences;
Drafting legal documents to execute the plan;
Assisting the client in correctly executing a particular plan. (Cite)
The most important factor in qualifying for Medicaid coverage is the income/asset cap. Generally, an applicant’s gross monthly income cannot exceed a certain amount. Likewise, an applicant’s assets cannot exceed a certain amount. For example, as of January 1, 2015, an individual applicant cannot have a higher gross income of $2,199.00 per month. If the applicant has a spouse who will not be using the institutional services, the so-so called “community spouse,” the combined income and assets are analyzed differently.
If an applicant’s assets do not exceed the asset cap and their income exceeds the income cap but is still less than the cost of nursing home care, there are options. One such option is known as a qualified income trust, which basically places the applicant’s income into a trust. Doing this allows the trust beneficiary (person receiving care) to qualify for assistance. The income passes through the trust to the nursing home minus a personal needs allowance, and the state pays the difference.
There are very specific rules governing this type of instrument and one should discuss the option with a qualified attorney to learn more.
An important planning tool for those interested obtaining skilled nursing care through Medicaid is to utilize the applicant’s exempt assets. An exempt asset is an asset that is not counted by Medicaid in the application. These include:
Life Insurance up to certain amount
Pre-Paid Burial Plans up to certain amount
What this means from a practical standpoint is liquid assets that may push an applicant above the asset limit could be transferred to an exempt asset that can be passed on to their loved ones after death. Keep in mind, however, gifts (transfers to others) are subject to the five year look back provision, meaning that any gifts made within five years before the Medicaid application creates a penalty period during which the applicant will be disqualified equal to the number of months after the date of the application that the transferred funds would have covered the cost of care.
Another method for qualifying for skilled nursing care through Medicaid is to enter into a front-loaded personal service contract with a close family member. This allows the applicant to transfer liquid assets to a close family member (who would likely inherit the property after the applicant’s passing) in exchange for the close family member providing future personal care services for the potential applicant. This, like any other contract, should be prepared by an attorney, so that the transfer doe not create a penalty period.
An attorney with experience in Medicaid planning can help you throughout all steps of the process including completion of and the agency’s review of the Medicaid application and the supporting documentation provided to the agency.
Just as with all other aspects of Estate Planning, it is important to seek qualified legal counsel. Let our Medicaid attorneys at Knellinger & Associates assist you with planning for your love one’s care.
The Law Office of Knellinger & Associates provides legal advice and representation for individuals, entrepreneurs, and business owners in Gainesville, Florida, and communities throughout north central Florida, including cities such as Ocala, Starke, Palatka, Lake City, Middleburg, Trenton, Bronson, Lake Butler, Cross City, Williston, Chiefland, Alachua, Jasper, Live Oak, and Jacksonville, Florida.
Alachua County ● Putnam County ● Clay County ● Bradford County ● Union County ● Columbia County ● Gilchrist County ● Levy County ● Marion County ● Hamilton County ● St. Johns County ● Dixie County