(The information below is specific to Medicaid planning in Florida and is brief and general in nature. This information should not been taken as legal advice or Medicaid Planning instructions. ICP Medicaid is a Federally funded program which each State may administer differently. For this reason, Medicaid rules vary from State to State. There are many misconceptions about Florida Medicaid. It is essential to get the facts and not rely on community rumors.)
The mere fact that nursing home care now costs over $60,000 per year explains why even middle income families must learn about Medicaid when someone they love needs a nursing home. Many American families have much less than $60,000 put away for a rainy day. In just one year, a life savings can be forever depleted. Many families are under the misconception that they must spend all their money BEFORE they can get Medicaid. In many cases, this is simply not true. ICP Medicaid (Institutional Care Program Medicaid) can be approved for nursing home residents who have assets, as long as the application has been done properly and the assets are titled and managed according to the rules. Hiring a professional Medicaid consultant such as a Geriatric Care Manager or Elder Law Attorney to assist with Medicaid Planning and Application is no different than hiring a good accountant to help you pay fewer taxes. What is the difference between a skilled Geriatric Care Manager and an Attorney when filing for Medicaid? Answer: About $300 per hour.
On February 8, 2006, President Bush signed into law the Deficit Reduction Act of 2005 which is a Federal attempt to eliminate many previously used techniques for sheltering assets for Medicaid applicants. The law is now under fire and may eventually be declared un-constitutional. In the meantime, Floridians are expecting to have to adopt the new rules as of October 2006. The new rules eliminate many opportunities for unmarried applicants to shelter some assets but married applicants will still be able to shelter almost any amount of money.
As the Medicaid eligibility criteria tighten, denials for Medicaid are on the increase. Some Geriatric Care Managers and Attorneys who specialize in Elder Law are helping families get qualified while protecting some assets. The simple truth is that ICP Medicaid has become difficult to get without professional help. Families who try on their own and fail, must then pay private fees to the nursing home for the months they were denied. In the State of Florida, that is at least a $5,000 mistake.
Basic Medicaid Eligibility:
Medicaid Eligibility is based on several basic criteria: Monthly income must be under the limit of $2,022. Assets must be under the limit of $2,000 or less for unmarried applicants and $109,540 for married couple (with one person in a nursing home). If both spouses live in a nursing home they can only have $3,000. The applicant must medically require nursing home care. The applicant must not have given away any assets within the last five years.
INCOME
A single applicant who lives in a nursing home is allowed to have up to $2,022/ month in gross income. If they have more than $2,022, they can still get ICP Medicaid as long as they pledge their entire income (except $35) to pay the nursing home or other health care expenses. This pledge is made in the form of a Qualified Income Only Trust. As long as the amount of income which is over $2,022 is deposited into the Income Trust and then paid to the nursing home, the applicant can remain Medicaid eligible. If any money is left in the Income Trust upon the death of the Medicaid recipient, it must be turned over to the State of Florida, not the heirs.
ASSETS
A single applicant may have up to $2,000 plus a house and in some cases investment properties, businesses, IRAs, life insurance, life insurance and other assets. The positioning, titling and on-going management of these assets is critical. If not managed properly, these potentially "allowable assets" can cause an applicant to be denied or tohave the Medicaid withdrawn after it had been approved.
IT PAYS TO STAY MARRIED
A married couple (with only one spouse living in a nursing home) technically is only allowed to have $109,540. However, with proper Medicaid Planning, a married couple should be able to keep any amount of assets. Why is this possible? Because in Florida, we believe a person should not become impoverished just because their spouse becomes ill and requires nursing home care. There is absolutely NO REASON TO GET A DIVORCE FOR THE PURPOSES OF MEDICAID QUALIFICATION. Any professional who recommends this option to a happily married couple is doing them an unnecessary injustice.
GIFTING:
After October 2006, gifting of any kind (including adding someone to the title of your home or donating to a church) will result in Medicaid ineligibility. The "look back" period is now 5 years which means all gifts over the last five years will be totaled and divided by 5,000. The result of this equation is the number of months an applicant will be unable to get Medicaid once they move into a nursing home. This is called the "In-eligibility Period". The applicant will have to pay monthly rate to the nursing home out of pocket and cover all other medical costs not covered by insurance during this period. For some people, the nursing home fees plus medications and therapies total more than $10,000 per month.
EXAMPLE: A grandfather who gave up driving 4 ½ years ago gave his car, then worth $8,000 to his grandson. The grandfather now needs to live in a nursing home so he applies for Medicaid because he had no assets. The State can look back at that gift of a car which was worth $8,000 and divide that by 5000. The result is 1.6 months. That is how many months this grandfather will have to pay the nursing home before he can go on the Medicaid program. If the nursing home is charging $5,000/ month, the grandfather will pay $8,000 to the nursing home because he gave away an $8,000 car 4 ½ years ago. What if the grandfather does not have $8,000? The nursing home cannot evict someone without providing a safe discharge so they may have to keep him at no charge. For this reason, many have nicknamed the Deficit Reduction Act of 2005 the "Nursing Home Bankruptcy Act of 2006".
PROPER PLANNING CAN AVOID COSTLY DENIALS
Now that the "look back" period is up to 5 years, the need for Medicaid education and pre-planning is more important than ever before. Because under the new law the penalties for un-approved gifting and title transfers are now being counted from the time the applicant enters a nursing home, the impact of these penalties is greater than ever before. But if families are willing to look at their future healthcare and financial needs, they can avoid costly mistakes. Many Accountants and Financial Planners who serve families with assets, are not knowledgeable about the specialty of Medicaid Planning. Frankly, many techniques they may employ to help families save on estate taxes are absolutely counterproductive to Medicaid eligibility. These well meaning professionals leap to the assumption that their well-healed clients will never need a welfare program. Well, now that nursing home stays cost over $60,000 per year, even middle income families need to know about Medicaid Planning.
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