Medicaid Benefits for Long Term Care Nursing Home Costs

In Florida, Medicaid eligibility for long-term nursing home care is based on the assets and income of the Medicaid applicant, as well as the assets and income of the Medicaid applicant's spouse.  If the Medicaid applicant or spouse has excess assets, many legal steps may be available to allow the applicant to become Medicaid-eligible without spending all funds on the nursing home! 

Call our Florida elder law attorneys for a consultation. With our help, you may be able to preserve assets and save thousands of your hard-earned dollars.

CAUTION: Medicaid eligibility criteria for nursing home long-term care are complex and change frequently. An improperly filed application may result in denial of benefits. Consult with The Karp Law Firm. Our Florida elder law attorneys are knowledgeable in Medicaid law and the legal implications of transfers.

Here's a brief summary of Medicaid eligibility requirements for long-term nursing home care. 

 

Categorical Requirements

The Medicaid applicant must be a citizen or resident alien of the U.S., and must have medical needs requiring nursing home placement, or must be physically or cognitively impaired to the degree that nursing home placement is required.  

 

Income Requirements

  • Medicaid Applicant: 

    The Medicaid applicant's gross monthly income cannot exceed $2,163.00 (effective Jan. 1, 2014). If the applicant's income exceeds that level, a qualified income trust, composed solely of the applicant's income, must be established in order to qualify for eligibility

     

  •  Medicaid Applicant's Well Spouse ("Community Spouse"):

    There is no limit on the well spouse's gross monthly income. If the well spouse's gross monthly income is below $1966.00 (effective July 1, 2014), a portion of the applicant's income may be diverted to the well spouse. This portion is known as the Minimum Monthly Maintenance Needs Allowance. Under certain circumstances, this diversion can bring the spouse's income higher than $1966.00.  

     

 Asset Requirements

  • Medicaid Applicant:

The Medicaid applicant cannot own countable assets in excess of $2,000.00 in addition to exempt and countable assets.

  • Medicaid Applicant's Well Spouse ("Community Spouse"):

The Medicaid applicant's well spouse may retain up to $117,240.00 (effective January 1, 2014) in assets plus exempt, non-available and income-producing assets. 

 

 Types of Assets 

  • Countable Assets 

Medicaid considers countable assets to be available to the applicant and/or spouse, and therefore countable assets are considered for Medicaid eligibility purposes. 

  • Non-Available Assets 

These assets produde fair market income, and Medicaid considers them to be exempt assets.  Examples of an income-producing asset is rental property.  Florida Medicaid Recovery Lien will attach to these assets at the death of the applicant if they are in the applicant's name only. Note that assets that produce income are not counted as assets by Medicaid, but as income. 

  • Exempt Assets

    Exempt assets are not counted in determining Medicaid eligibility. Medicaid considers the following to be exempt assets when assessing an individual's application for long-term care Medicaid benefits:

Homestead:

Homestead: Medicaid considers the homestead to be an exempt asset; however, applicants with equity interest in their home in excess of $525,000 (rises to $543,000.00 effective January 1, 2014) are not eligible for long-term care benefits, even though those applicants may qualify for Medicaid benefits other than nursing facility or other long-term care services.  Home equity is calculated using the current market value of the home, minus any debt.  The current market value is the amount for which it can reasonably be expected to sell on the open market in its geographic area.  If a home is held in any form of shared ownership, Medicaid considers only the fractional interest of the applicant requesting long-term care Medicaid benefits.

Exceptions to Home Equity Policy:  Medicaid's home equity policy does not apply if any of the following are residing in the applicant's home: The Medicaid applicant's spouse;  the Medicaid applicant's child under age 21; the Medicaid applicant's blind or disabled child of any age.

The home equity policy may be waived by Medicaid when denial of long-term care eligibility would result in demonstrated hardship to the individual. 

Motor Vehicle: 

Medicaid considers one motor vehicle to be an exempt asset, regardless of the vehicle's age or type. Medicaid also considers exempt a second vehicle over 7 years old, except for certain luxury and antique cars or customized vehicles (except for use by person with a physical disability.)

Personal Property:

Personal property is considered an exempt asset for Medicaid eligibility purposes, except for certain valuable art/jewelry.

Life Insurance:

Life insurance owned by the Medicaid applicant: 

When assessing an applicant's qualifications to receive Medicaid benefits for long-term nursing care, Medicaid considers exempt the total combined face value of all life insurance policies owned by the applicant, up to $2,500.00. Term policies are exempt.

Life insurance owned by the well spouse:

When assessing an applicant's qualifications to receive Medicaid benefits for long-term nursing care, Medicaid considers exempt the total combined face value of all life insurance policies owned by the well spouse, up to $2,500.00. Term policies are exempt.

Burial Plans:

Burial Plan for Medicaid applicant:

Plan up to $2,500.00 and irrevocable plan in any amount.

Burial plan for well spouse:

Plan up to $2,500.00 and irrevocable plan in any amount.  

  • IRAs, 401Ks, 403Bs

These are qualified plans and are considered "hybrids" under Medicaid laws because they can be treated as either assets or income. Medicaid considers the following to be exempt assets when assessing an individual's application for long-term care Medicaid benefits.

Income: 

Generally, if the applicant or spouse draws from the qualified plan on a monthly basis in an amortized fashion using the Social Security Administration tables for longevity rather than the IRS minimum withdrawal tables, the plans can be treated as income.

Asset:

If the qualified plan is not being drawn from as income, it is considered an asset.

 

Medicaid Look-back and Penalty Periods for Transfers

Under certain circumstances, the Medicaid applicant and/or spouse may transfer assets to others to help establish Medicaid eligibility. Below are current guidelines Medicaid uses to determine whether a transfer may be considered, and any penalty period to be applied.  

  • Transfers prior to January 1, 2010 

If a Medicaid applicant or the applicant’s spouse made an uncompensated transfer or a transfer for less than fair market value to an individual or individuals prior to January 1, 2010, that transfer is exempt, because all transfers made prior to January 1, 2010, had a three-year look-back period. Since the three years has now elapsed, transfers made prior to January 1, 2010 are exempt.

 

If the transfers were made from a trust or to a trust, the look-back period is five years, and the penalty period resulting from the transfer begins on the later of the following dates:

The date the individual would otherwise meet all other eligibility requirements, except for the transfer.

 

The first day of the month in which the individual transferred the asset.

 

The first day following the end of an existing penalty period.

All uncompensated transfers, including those within the applicable look-back period, will be aggregated to determine the penalty period, which will only begin to run when the applicant is otherwise eligible for Medicaid ICP benefits.

 

As of September 19, 2013, the penalty divisor is $7,638.00.

 

Example #1:   Charles transfers $27,500.00 to his son on December 1, 2009. That transfer is exempt, because a three-year look-back applies to transfers prior to January 1, 2010 if made from an individual to an individual.

 

Example #2: Charles transfers $27,500.00 from his revocable living trust to his son on December 1, 2009. He applies for Medicaid in October 2013, at which point he meets all Medicaid eligibility requirements except for the uncompensated transfer. The penalty period now begins to run. Medicaid will deem him ineligible for benefits for the next 4 months ($27,500.00 divided by $7638.00 per-month exemption = 3.7 months, which is rounded up to 4 months). Charles will be eligible for benefits, assuming all other criteria are still met, in February 2014.  

 

  • Transfers on or subsequent to January 1, 2010 

All transfers made by the applicant or the applicant’s spouse on or subsequent to January 1, 2010, whether from an individual or to an individual or from a trust or to a trust, have a five year look-back period.  All of the other rules for calculating the ineligibility period are the same as those rules which apply for transfer prior to January 1, 2010 (see above). 

 

An example:  Diane transfers $60,000.00 to her son in February 2010 and $30,000.00 to her daughter in March 2010. She then applies for Medicaid in January 2014, at which point she meets all eligbility requirements except for the uncompensated transfers.  The penalty period begins to run at that point.  Medicaid would deem him ineligible for benefits for the next 13 months ($90,000.00 divided by $7638.00 per-month exemption = 11.8 months, which is rounded up to 12 months). She will be eligible for Medicaid benefits, assuming she still meets all other criteria, in February 2015.  

In the event that an applicant and his/her family face a situation where gifting is going to create a delay in Medicaid eligibility, or if Medicaid has been denied and the delay of eligibility has been determined by the Department of Children and Family Services, legal steps may be taken to eliminate or reduce the period of ineligibility. If you face such a situation, contact our Florida Elder Law Attorneys.  

 

 

Annuities

Annuities are considered an asset unless they are annuitized and the applicant or applicant's spouse is taking equal monthly installements in an actuarially sound fashion.  Applicants and their spouses must disclose to the State of Florida any interest they have in annuties.

If the annuity was purchased on or after November 1, 2007, or if other transactions that change the course of an annuity payment or treatment of income or principal have been made on or after November 1, 2007, the State must be named as the remainder beneficiary either at the time of Medicaid benefits approval, or upon recertification.

Also, the State must be named as a remainder beneficiary in the first position for the total amount of Medicaid assistance paid by the State on the applicant's behalf. If the applicant has a spouse, minor child or disabled child, the State must be named as the remainder beneficiary either in the first position, or the second position after the spouse, minor child or disabled child.

Balloon annuities are considered an available asset if purchased or annuitized after Nov. 1, 2007. Immediate annuities which have a level payout may be considered a nonavailable assets under certain circumstances.

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