Florida and The Medicaid Look Back Period -“Why you Can’t Just Give It All Away”

Florida and The Medicaid Look Back Period -“Why you Can’t Just Give It All Away”

Many people simply try to give their assets away to their children in an attempt to safeguard their estate. The Medicaid people have caught on to this. Many years ago, a popular planning technique was to transfer your assets into an irrevocable Medicaid Trust. This technique attempted to move your assets out of your name and control so that the would not be counted towards the asset test. Now any transfer to a Florida Revocable Trust is a disqualifying transfer for Medicaid purposes.

In 1993, the federal government partially closed this loop hole. Prior to February 2006, there were “look back” periods of 36 months or 60 months. Florida implemented these guidelines as of November 2007. This means is that if you have transferred assets to anyone other than your spouse (for less than value) within 36 months of applying for Medicaid, you will be denied Medicaid benefits and subject to an exclusionary period. The exclusionary period is equal, in months, to the dollar amount of the transfers divided by the average cost of a month of nursing home care (currently $3,300.00 in Florida). It is important to note that this number was rounded down and the exclusionary period was calculated from the date of the gift.

In February of 2006, the law changed! The Federal government has radically altered Medicaid qualification with the passage of the Debt Reduction Act of 2005 (DRA 2005). This law only applies to any transfer of assets after February 8, 2006 though the Department of Children and Families will enforce these and the other provisions of DRA 2005 only on asset transfers after November 2007. The “look back” period is now five years (60 months) for everyone. If you have transferred any assets for less than fair market value after November 2007, they will sum up the total of the transfers and divide by $3300. The resulting number is the number of months that you are disqualified from receiving Medicaid benefits from the time you apply for Medicaid. While it is impossible to know who will have a long term care event five years before it happens, do not transfer any assets after February 8, 2006. This includes gifts to your children, a charity or a church. You could be in a nursing home and private pay for three years (roughly $220,000) and still be denied benefits because you gave your church $5,000 four and a half years ago! Furthermore, DCF will no longer round down. This means any gift, no matter the value, will result in a disqualification period!

Gifts or transfers prior to November 2007 can be remedied by time. The current rate is $5000 for each month. You should Contact a Florida Estate Planning Lawyer to discuss how your specific needs are affected by any transfers.

Transfers include adding children’s names to the title of assets such as deeds or bank accounts, removing your name from the title of an asset, or simply giving your children a check.

* Example: John adds his adult children, Beth and David, to the deed to his house within five years (60 months) of applying for Medicaid. The house is worth $132,000. Providing John remains on the deed as well and resides in the house, his portion would be exempt (Homestead). However, the portion transferred ($99,000 or 2/3 of $132,000) would not be exempt providing that the children did not reside with her and provide care for her. Thus, John would be denied benefits for a period of 30 months ($99,000/$3,300) from the time of application. Remember, the homestead is not counted. It is exempt. So there is no need to transfer it to your children.

Often clients do these types of transfers to avoid probate. There are other ways of accomplishing the goal of avoiding Florida Probate without risking the Medicaid ineligibility.

If you are a concerned relative or friend of an elderly person and need help with Florida Estate Planning, Elder Law, or Medicaid and are in the Jacksonville, Orange Park, St. Augustine, Fernandina Beach areas of North Florida, you should Contact a Florida Estate Planning Lawyer to discuss your Medicaid and Florida Estate Planning needs.

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