Medicaid and Your Assets

Medicaid and Your Assets

Consider These Statistics...

It is estimated that 6 out of 10 people age 65 or older have the risk of entering a nursing home (Consumer's Guide to Long Term Care Insurance, H.I.A.A.)
The U.S. House of Representatives' Select Committee on Aging reports the average long-term care bill amounts to $56,000
The majority of chronically ill persons who enter a nursing home are impoverished within 13 weeks
Medicare pays less than 2% of the nation's long-term care costs (Health Care Financing Review, Summer 1987, Vol.8, No.4)

A recent American Association of Retired Persons (AARP) poll found that an average family's life savings would be wiped out within four months of one spouse's admission to a nursing home. There are several legal alternatives to the "spending down" of a family's entire life savings. Certain firms can assist by:

1. Analyzing family financial resources and implementing proper planning to qualify for Medicaid assistance.

2. Preparing the formal Medicaid application and following clients through the Medicaid process.

3. Preparing Qualified Income Trusts (QIT) to successfully overcome "income cap" problems.

4. Reviewing and implementing long-term care (nursing homes) insurance needs.

5. Reviewing nursing home contracts. Too often, a lifetime of savings and hard work result in family impoverishment because of inadequate planning during life. Find out the facts. Then take the necessary steps to protect your assets. After all, you spent your entire life earning them.

Medicaid And Your Assets
If I go into a nursing home, will they take my home away from me? What about my CDs? Will they take them?

These questions generally arise when a person's family is considering placement of an elderly relative in a nursing home. The costs involved can be intimidating, and nursing home costs, including medications and physicians, can quickly dissipate a moderately sized estate. Many families turn to Medicaid and state assistance for their elderly parent's care.

What is Medicaid ?
Medicaid is a program under which Federal funds are managed by the states to provide medical care for people who otherwise couldn't afford it. The regulations change annually in most states, reflecting cost of living increases. In Florida, Medicaid assistance is not available to a person who has assets in excess of $2,000 (excluding certain exempt assets) and an income of over $1,590 per month (without the use of a Qualified Income Trust). There no longer is a "true" income cap in Florida. (Ask Ted how a Qualified Income Trust (QIT) works for individuals receiving more than $1,590 in income per month.) If income is less than $720 per month, the person can have assets of up to $5,000.
Under Florida law, a homestead is exempt from claims of creditors as long as it retains its homestead status. As long as the potential Medicaid applicant considers the home a residence and has not given up hope of returning there, it remains exempt. Additionally, if the home is occupied by a spouse or other relative, it remains exempt.

Through the years in an attempt to qualify for Medicaid payments, many people have attempted to transfer their assets. In determining Medicaid eligibility, the Florida Department of Children and Families (DCF), which administers the Medicaid program in Florida, is required to check back for 36 months for assets transferred without full consideration. In other words, DCF searches for assets given away to family members and others. Any transfer for less than full market value within 36 months of application for Medicaid will result in disqualification, unless the transfer was to the spouse of the applicant.

Protecting Your Assets
Transferring assets to a spouse is still possible without disqualification. However, transferring to any other person for less than full value will disqualify the applicant from receiving Medicaid benefits. Certain exceptions exist regarding transfers to a minor or disabled child.

The spouse of an institutionalized person is permitted to have assets of approximately $87,000. Any individual who is considering applying for Medicaid should discuss the exact limitations and current rules with Ted.

It is still possible for the applicant to "spend down" their assets in order to reduce the assets owned to the $2,000 level. This can be accomplished by spending available funds on a new home, redecorating an existing home, purchasing a new automobile, or similar tangible assets. Purchasing intangible assets such as certificates of deposit, stocks or bonds, or putting the funds into a savings account, however, will not reduce the assets necessary for qualification.

New Developments
The most recent changes in the law covering Medicaid require the states to aggressively pursue assets for reimbursement of money advanced to pay for medical expenses. While the homestead is still exempt from claims, under the Florida Constitution and statutes, all other assets of an individual may be targeted by DCF.

Diligent efforts will be made to get reimbursement for the largest amounts of funds advanced to help the resident.

There are still several ways to quickly qualify for Medicaid benefits. Schedule an appointment with Frank to discuss how you can protect your assets from nursing home expense and qualify your loved one for Medicaid.

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