Helping your loved one when they are starting to receive long-term care is difficult for everyone. Every day we see caring family members trying to get good care for their loved ones, often after a quick down-turn in health. When your loved one needs long-term care, families will often think about trying to access Medicaid to help, which may mean looking to protect assets from the high costs of long-term care. We also see a number of myths and falsehoods about Medicaid and asset protection planning that we want to dispel or clarify so you can get good advice in helping your loved one.
First, some ground rules:
- Long-term care is expensive (easily $11,000/month for nursing home care)
- Medicaid may help pay for long-term care in the home, assisted living or in the nursing home
- Medicaid will only help pay for care when the applicant has assets under the income and asset limit
- Good elder law attorneys may have legal ways to help protect assets in certain circumstances
- When your loved one is in the nursing home, families often do not know where to go to get good advice. To make matters worse, people (nursing home staff, friends, family, non-elder law attorneys) can give bad or incorrect advice.
This outline is being written to help dispell some of the myths you may be hearing when/if you are thinking about Medicaid for your Florida resident.
Lie #1: You can give away $15,000 per year to protect your assets from the nursing home
The $15,000 per year gifting limit (2021) is based upon the federal estate and gift tax and has nothing to do with Medicaid in the Medicaid application process. The reality is that you're not able to give away any assets at all within five years of applying for Medicaid for your loved one. If you are giving assets away, then the assets must be returned in order to apply for Medicaid. We have a previous blog post on calculating the Florida Medicaid transfer penalty.
Lie #2: Having your name on the elder’s assets can protect them from the nursing home
Having your name as a co-owner of the elder's assets when she goes into the nursing home does not protect these assets. Medicaid considers any asset that your loved one as co-owner as their sole asset. If your name is on these assets, you must prove that these assets are yours in order to exclude them for Medicaid purposes. The basis for the rule is that many elders add their children to their assets as a matter of convenience. Thus, even if you are a co-owner of your loved one’s bank accounts, 100% of the asset is countable for Medicaid purposes unless you can show otherwise.
Lie #3: The state of Florida can take your home upon your death if you get on Medicaid
While there could be concerns here, it is rarely an issue. The state of Florida is a creditor in the Medicaid applicant's estate and as a creditor, this may be an issue as part of the probate process. The further truth, however, is that a Medicaid applicant’s homestead property is not subject to the decedent’s creditors, which includes the state of Florida as a creditor. Thus, even if your loved one was in a nursing home for a long time, and the state of Florida has a claim in their estate, Florida will not be able to take the protected family homestead as part of the probate process.
Lie #4: Nursing homes that accept Medicaid give bad care
It is illegal for nursing homes to discriminate care based upon payer source. Thus, if your loved one is receiving rehabilitation due to Medicare, an HMO, or is receiving long-term care through private pay or Medicaid, the nursing home and does not discriminate for care purposes. The further reality is that care in nursing homes certainly varies, but this is not based upon Medicaid versus private pay. If you want to make sure your loved one is getting good care in a nursing home come you should look at hiring a life care planning attorney to assist you.
Lie #5: If your income exceeds the income cap, you cannot get Medicaid
If your gross income exceeds the Medicaid qualification income, which is $2,382 per month for 2021, then Medicaid will only be allowed for nursing home purposes if a qualified income trust is established. With a properly established and funded qualified income trust, the elder’s income can greatly exceed the income cap. The qualified income trust is a special type of trust that allows for Medicaid qualification. When the applicant’s gross income exceeds the income cap, the applicant and or their family should hire an elder law attorney for assistance. Visit the elder law section of our website for Medicaid income and asset limits.
Lie #6: If my loved one goes into the nursing home we can simply place her money into a Special Needs Trust
While special needs trusts exist for Medicaid planning purposes, there is no “magic” special needs trusts that can protect your loved one’s assets. There is a pooled special needs trust which can be helpful, but it is not an asset protection device for the family to inherit. There are, however, great asset protection planning options that can help, even when your elder is already in the nursing home or assisted living facility, even within the five year “look back” period. A good board certified elder law attorney can assist with Medicaid asset protection planning.
Lie #7: You should avoid an attorney and get a cheap or free power of attorney from the internet
One of the most important estate in and capacity planning documents that you can create is a durable power of attorney. Going the cheap route by visiting a free or low-cost website, or even an inexperienced attorney, may cost your family thousands and thousands of dollars. The reality is that a great durable power of attorney, which includes many advanced options for asset protection, will be necessary under many circumstances. Thus, you would definitely be penny wise and pound foolish and getting an in adequate power of attorney. If you have a bad power of attorney, you may not know it and it may be too late for your family to protect assets in the event you become incapacitated.
Bonus Lie: The Nursing Home will take all of mom's money!
While the nursing home can be very expensive, it never actually "takes" anyone one's money. The resident must simply pay for their stay until they become eligible for Medicaid benefits. If you have the money to pay, you can just pay. If you want to protect assets from the nursing home, you should see a good elder law attorney. It is never too late to protect assets and apply for Medicaid!
Remember, if a family member or other loved one is in a nursing home or assisted living facility, it is never too late to get good advice on asset protection, estate planning and care planning. Call us today to schedule a consultation or attend one of our free monthly seminars on Medicaid and estate planning!
Second Bonus Lie: If my spouse is in the nursing home, I should divorce him/her so I do not go broke
We have a lot more on Medicaid and Medicaid/divorce on this blog post. Basically, there are legal ways to protect assets from the high cost of nursing home care without one spouse divorcing the spouse in the nursing home. All you need is a good elder law attorney to help steer the ship.
People who read this may also be interested in:
- My Elder Just Went to the Nursing Home - Now What?
- Long-Term Care Planning Options For You
- Medicaid Spend Down Planning in Florida
And Download Our Free Book!
If you or your family member is looking to protect their assets from the nursing home, please download our free book, Protect Your Nest Egg from the Nursing Home: Your Florida Survival Guide.