In Florida, Medicaid is a federal and state level program that offers health care assistance to members of the program. Medicaid is a complicated program that is administered differently on a state-by-state basis. There are many common misunderstandings regarding Medicaid. This article will help to debunk some common myths and set the record right.
1) Status of a Home in Florida
FALSE. One common myth is that Florida residents cannot own a home and also qualify for Medicaid. This is not true. Florida does place a cap on the amount of gross income and assets a person can own and qualify for Medicaid. A person with too many assets or income is ineligible to receive Medicaid benefits.
The good news is that a person’s homestead does not count toward the asset test if it is worth under a certain amount. A homestead in Florida is exempt, and thus a person can keep his or her home even if they receive Medicaid. A homestead must be a person’s primary residence, and the property the house is located must not be too large. This is different than in most states so don’t listen to people from another state.
2) In Florida Medicare Covers Long-Term Nursing Care
FALSE. Medicare only covers skilled nursing care, and only for a limited period of time following a three-day hospital stay. Long-term care is legally considered custodial care and is not intended to make a person better. Medicare does not cover custodial care and is only meant to help a person with activities of daily living such as bathing, eating, and using the bathroom. A person cannot rely on Medicare to cover long-term health care expenses.
3) Transfers Made Within five years of Applying Will Make You Ineligible for Medicaid
TRUE and FALSE. This is another myth based upon an incomplete and incorrect understanding of Florida’s Medicaid rules. The Medicaid office will consider any uncompensated or below-market transfers when the office goes over an application. This does not mean that all transfers will cause a problem. Certain transfers will be used to determine a penalty period. Unfortunately, Medicaid benefits are not available during the penalty period, so the applicant will have to pay privately. This does not always mean that a person should wait five years to apply. Be careful because if you are applying to soon you could have a longer penalty period than waiting the five years. You need to speak with someone who can do the proper calculations to determine when it is best to apply.
4) You Must Spend Of All Of Your Assets to Qualify
FALSE. A person can have some assets and still qualify for Medicaid. A single person applying for Medicaid may only have $2,000 of countable assets. As of January 2016, a spouse known as a “well spouse” can have up to $119,220 of countable assets. There are also many exempt assets or noncountable assets that a person or couple may own.
It is important that not all assets count toward the countable asset limits. For instance, most homesteads do not count toward the limit.
One way to help a person qualify for Medicaid is through an iPug or Asset Protection or Medicaid trust. These trusts are irrevocable trusts that hold assets for a person so he or she can qualify for Medicaid under the means test. The trust legally owns the assets, and while you can be in control of the trust, the status of the assets will change from countable to non-countable assets over time. The Medicaid recipient can then receive government assistance, and the trust can then make distributions to the beneficiaries.
The iPug Medicaid Protection Trust also protects assets from other creditors. The result is that a recipient can preserve additional assets beyond the state exemptions without spending down the assets to qualify for Medicaid. This helps a surviving spouse by not causing a family to spend all of their assets to care for an institutionalized spouse’s care. A person can save the assets for his or her benefit, and hopefully, have some assets to leave as well.
5) Florida’s Medicaid Rules Are The Same As The Rules In Other States
FALSE. Medicaid is a federal program so common sense would say that the program should be applied the same throughout the United States. Instead, each state participates in Medicaid funding, and thus every state has its rules on how these funds are administered. A person that lives in another state may not have to meet Florida’s requirements for Medicaid. Further, the rules in Florida change every year, so it is important to consult with an estate planning attorney before taking any action.
For more information on Medicaid planning and iPug trusts contact the at The Law Office of David M. Goldman PLLC today.