Florida Medicaid Planning for a Secure Future
What Is Florida Medicaid Planning and Why Do You Need It?
Long term care is very expensive; the average cost for a good nursing facility in Florida can be from $6,000 to over $9,000 per month. This can deplete assets for seniors who have worked hard all their lives to accumulate what they have. You don’t wish to lose it all because of long term care – but you easily could. No one wants to have a major medical event that puts them into long term care, such as dementia, stroke or other event that leaves you needing care beyond your home and what family can provide. But these events are a fact of life – and no one knows who will suffer such an event and who won’t.
Florida Medicaid planning is a way to protect your assets and still take advantage of Medicaid long term care when and if the need arises. It doesn’t matter if your assets total $20,000 or more than a million, there are legal and ethical strategies for you to protect those assets.
Medicare only covers nursing home expenses for 100 days. After that, you either use your own assets to fund those expenses or qualify for and use Medicaid, which has an excellent long term care benefit. In 2014, the state of Florida implemented a new system for Medicaid long term care, covering Medicaid for Aged and Disabled (MEDS-AD) that entitles eligible aged or disabled persons to receive full Medicaid coverage for Medicaid’s institutional care program (ICP), hospice, or home and community based services (HCBS).
Florida Medicaid will pay for some in-home healthcare through a licensed Medicaid provider, a portion of the cost for an assisted living facility (ALF) that accepts Medicaid, and almost all of a nursing home facility, all of which must accept Medicaid as part of their Florida licensing requirements.
There are two types of Medicaid planning – advanced and emergency. So, you may wonder – why not just wait until you actually need to qualify for Medicaid to make a plan? Three reasons:
- Florida Medicaid planning tools are limited in emergency cases (“crisis planning”), compared to advanced planning (“proactive planning”), meaning you have less planning techniques available and more likely will need to spend down assets
- There is a five year “look back” period when you apply for Medicaid, and
- Beforehand planning means you can decide how you will cover all the possible expenses, while maintaining a desired lifestyle and protecting as many assets as possible to pass onto your heirs.
What Is a Five Year Look Back Period?
When you apply for Medicaid, they will look back over your finances for the previous five years. Any transfer of money and/or property from you to someone else without consideration or inadequate consideration in return will incur an eligibility penalty from Medicaid, which can hold up your Medicaid eligibility for a number of months for each violation. They use a formula that is based on the value of all of the money/property transferred that they consider in violation of requirements, divided by the average monthly cost of care.
The result is the number of months penalty that you’ll have to wait before you qualify for Medicaid coverage. The penalty months begin when you would have otherwise qualified for Medicaid. You won’t be disqualified all together, but you will be paying your own expenses until the penalty period is over.
Some transfers are exempt from the look back test, which is why, even in an emergency or crisis, you need an elder care attorney to advise you.
Medicaid Long Term Care Eligibility
Medicaid is a public benefit program that is administered and maintained jointly by the federal government and the state where you reside. Each state has its own requirements and coverage.
To be eligible in Florida, you must:
- Be a U.S. citizen or resident non-citizen,
- Pass the medical necessity test – otherwise, have medical needs that require Medicaid nursing home care – OR – physically or cognitively impaired to a degree that requires nursing home care, and
- You and your spouse must pass the income and asset requirement tests that are part of the application.
The application process is complex, especially when you haven’t prepared with advanced Medicaid planning. You’ll be dealing with the look back period, any transfer penalties, waiting periods, and required income and asset limitations. Medicaid looks at each case individually.
Income and asset requirements are based on many different factors:
- Whether you are married or single,
- If your spouse is disabled or in need of Medicaid long term care,
- Whether an asset is countable, non-available, or exempt:
- Countable assets are considered in the eligibility process and must meet the limitations requirement. Typically, it’s anything owned by the applicant (such as bank accounts, stocks and bonds, etc.).
- Non-Available assets are income producing assets, such as rental property – these are considered for the income limitations test but not the asset limitations test.
- Exempt assets are not considered for eligibility. Exemptions are:
- One home (up to a specified value of equity)
- Monthly income up to a specified value
- Life insurance policies
- Burial plans up to a specified value or irrevocable burial trust with no cap
- Retirement plans that are being used with the required minimum distributions on a monthly basis
- One motor vehicle (and a second vehicle based upon age and not a collectible)
- Household furnishings, including furniture
- Personal property, such as clothing, jewelry and other personal effects
- Non-saleable property, for instance, joint real estate where only one owner is seeking Medicaid eligibility or the joint owner refuses to sell their portion of the property, making it unsaleable
Organizing Your Assets Ahead of Time!
Unlike some other states, Florida Medicaid eligibility requires you not go over the Medicaid income cap at the time of application. However, with planning, you can address the excess income through a special trust.
With Medicaid advanced planning, however, you can legally reposition your assets and income ahead of your need by downsizing your estate and offloading assets now rather than later. These can include transferring assets to future heirs ahead of the five year look back period, shifting assets to exempt assets, and using specialized trusts and if appropriate, spending down assets.
Advanced planning typically includes obtaining long term care insurance to work with your usable assets and Medicaid coverage. A elder care attorney looks to ensure you have no gaps in your combined coverage for future long term care needs.
A few emergency planning tools are:
- Purchasing an immediate, irrevocable, Medicaid qualified annuity that is non-transferable
- A personal service contract that pays a family member in advance for providing you assistance with daily activities and care over time
- A promissory note that is a loan to a family member, which gets you qualified while providing your own money from repayments over a fixed period
- Some irrevocable trusts used for medical expenses and premium payments may be used – these are especially good when you have little income but lots of assets
It takes a knowledgeable and experienced elder care attorney to help you navigate all the complexity of Florida Medicaid planning, whether you’re doing it in advance or because of an emergency that puts you or your spouse in need of Medicaid long term care. Elder & Estate Planning Attorneys PA will provide you with the expertise and skill you need to protect your assets now and for the future.