When an elder needs Long-Term Care Medicaid in Florida, the government has established a number of financial qualification rules based upon the applicant's income and assets. We have a list of Florida Medicaid financial requirements on this webpage, which is updated semi-annually. The basics on Medicaid "spend-down" is that a single Medicaid applicant is only allowed $2,000 in countable assets while the community spouse (the spouse at home) is allowed to have some $123,600 in countable assets (2018). Only when the Medicaid applicant's income is below the applicable income and asset limits will he or she become eligible for Medicaid.
Countable Assets for Medicaid
Countable assets are assets that count towards the applicable limit outlined above. The list of countable assets includes:
- All financial accounts (bank accounts, CDs, brokerage accounts, bonds, etc.)
- Jointly held accounts (even if a co-owner is on the accounts, the asset is 100% countable to the applicant)
- Cash value in life insurance policies (but only if the policy face value exceeds $2,500)
- Second car under 7 years old
- Vacant land
- Assets held in a revocable living trust
Non-countable Assets for Medicaid
Non-countable assets do not count towards the applicable Medicaid asset limit. Non-countable assets include:
- Homestead property under $572,000 (2018) for a single person - unlimited for married couple
- Any one car
- Second car over 7 years old (unless a collector's car)
- Irrevocable funeral/burial policies
- Funeral plots
- Individual Retirement Accounts (IRAs) - in some cases
- Personal property
- Life insurance with face value less than $2,500 (regardless of cash value inside)
- Burial account set aside with less than $2,500
Medicaid Look-Back Period
When an elder is in the nursing home or just looking to apply for Medicaid, one very, very important rule is that you cannot give assets away with 5 years of a Medicaid application! We have a great deal more on the Medicaid transfer penalty on this webpage. The key to Medicaid is that the family should not look to gift or transfer assets away in order to protect them - and we do not lie to the State of Florida in order to protect assets (a felony!).
Appropriate Spend-Down Planning
Appropriate spend-down planning generally means legally spending money before Medicaid is applied for. An example of spend-down planning is as follows:
Sally, age 82, had a stroke and needs long-term care in the nursing home. Sally has a home worth less than $572,000, a car with an outstanding loan of $5,000, and only $10,000 in the bank (i.e., only $10,000 in countable assets). Here, the family can legally spend-down Sally's assets by paying off her car loan of $5,000 and purchasing a pre-paid, irrevocable funeral policy worth $3,000. Sally's bank account will now have only $2,000 and she will now be eligible for long-term care Medicaid.
This is a simple example of spend-down planning but it shows the legal spending of a small amount of assets that could have been helpful to Sally and her family.
When you Need an Elder Law Attorney
We can generally say that an elder law attorney is necessary to the Medicaid application process when:
- The applicant's countable assets exceed the bare minimum, such as the example above with Sally, to legally protect assets and then apply for Medicaid
- Income exceeds the applicable income cap and a qualified income trust is needed
- The family is confused and needs help in a difficult time. There is no such thing as an easy Medicaid application and getting help from a good elder law attorney can be helpful in all situations
- The spouse at home (the "community spouse") wants or needs to keep more income than Florida allows
- The family has care issues and concerns and does not know where to turn
Food for Thought
Many people equate Medicaid spend-down planning with losing all of your money to the nursing home. The reality is that a good elder law attorney can help legally protect assets under most circumstances. If you or your loved one is in a nursing home, or may be in one soon, you will want to consult a good elder law attorney, no matter the situation, to review your circumstances and provide advice.
Ways to Pay for Long-Term Care
We have more on Medicaid, VA and other matters to consider to pay for long-term care on this blog post.
Protecting the Assets Before the 5 Year "Look-Back" Period
If you are not having health issues and want to protect assets before you get sick you may want to create an irrevocable asset protection trust. Please see our free guide to irrevocable asset protection trusts in Florida.
Medicaid Payback and the Medicaid Lien
Some people think that Medicaid planning cannot be done because the state of Florida has a lien upon assets upon death. This should not be a worry for most people! You can learn more about the Medicaid lien at this blog post.
You may also want to read:
- My elder just went to the nursing home - what happens next?
- Medicaid and Assisted Living Facilities in Florida
- Can assets be protected within the 5 year look-back period?
Want to Learn More?
- Get a free copy of my book, the Top 20 Rules for Protecting Your Florida Estate
- Sign up to attend one of my free monthly seminars on estate planning and elder law!