MEDICAID AND
NURSING
HOME PLANNING
Financial planning
for nursing homes
BY: STUART R.
MORRIS, ESQ., CPA, CELA,
ELDER LAW ASSOCIATES, P.A.
Do you plan to be in a nursing
home? Are you aware of the cost of a nursing home?
And how much money do you have saved for a nursing home,
should you need to go there? All questions that we should
all answer.
Older Americans are in a crisis
situation. Though we are living longer due to advances in medical
technology, we are also surviving in situations where we are not
able to care for ourselves. The family unit has also changed
dramatically.
Generally, our children do not
live in close proximity to us and are not taking care of parents
in their home. This has led to the creation of long term
institutionalization among older Americans in nursing homes. And
nursing home cost can be
astronomical. The nursing home costs in South Florida average
$5,000 per month.
One method to combat the cost of
nursing home and/or in-home care is the purchase of long term care
insurance. If we are healthy enough to afford the insurance and
young enough to qualify, it can be an excellent investment.
However, if we do not qualify and cannot afford the insurance,
what alternatives exist?
The primary alternative is
through the Medicaid program. In Florida, in order to be enrolled
on Medicaid, the Institutional Care Program, three criteria must
be met: (1) medical criteria; (2) income criteria; and (3) asset
criteria.
The medical criteria will be met
if an individual is determined to be medically needy by the
Department of Health and Rehabilitative Services ("HRS")
or is unable to do a majority of the activities of daily living.
In addition, the individual must be residing in a Medicaid
qualifying nursing home.
In order to satisfy the income
criteria, an individual who is applying for Medicaid must have an
income of less than $1,635 per month. This includes social
security, pension, disability payments, interest, dividends and
other income payments. If the individual has a spouse who is not
currently living in a nursing home, said spouse's income is
unrestricted.
If the spouse is living in a
nursing home, the spouse's income is also limited to $1,635 per
month. However, is the applicant has income in excess of the
limit, he or she may still qualify for Medicaid through the use of
a Qualified Income Trust. This trust collects the income of the
individual and permits the trustee to make the appropriate
payments to the nursing home. This trust avoids Medicaid
disqualification of individuals with income in excess of the
income cap.
With regard to the asset
criteria, a single individual living in a nursing home is only
permitted to have $2,000 in assets. A married couple living in a
nursing home is only permitted to have $3,000 in assets.
If an individual is living in a
nursing home and has a spouse living in the community (not living
in a nursing home), the individual is permitted to own $2,000 in
assets and the spouse living in the community is permitted to own
$89,280 in assets.
In addition to these asset
limits, an individual may retain exempt assets such as a
residence, one automobile, personal property and household
furnishings and pre-need burial arrangements and burial
plots.
If an individual exceeds the
asset limit as stated above, and subsequently transfers his or her
assets to his or her spouse, there is no penalty. However, if the
couple’s combined assets exceeds the asset limit stated above
and one spouse transfers assets to a non-spouse, there is a
thirty-six (36) month look-back period and period of ineligibility
that may be incurred.
If these transfers come from a
trust to a non-spouse or if the transfers are to a trust, the
look-back period is extended to sixty (60) months. The look-back
period and ineligibility period may be shorter, depending on the
amount of assets that have been transferred.
The calculation to determine the
period of ineligibility is the amount transferred to a non-spouse
divided by $3,300. The solution to this equation equals the number
of months of ineligibility for the Medicaid applicant. In
addition, a transfer of an exempt asset to a non-spouse may also
incur an ineligibility period.
We employ many different
techniques in our office to preserve the assets of nursing home
residents and potential nursing home residents within the Medicaid
laws.
Spending down one’s assets in
order to qualify for Medicaid is one option but there are many
more options that will allow one’s life savings and hard earned
assets to go to their spouse and/or children and grandchildren and
allow the ill party to qualify for Medicaid in one to three
months.
The rules stated above are the
general rules to qualify for Medicaid in Florida. There are many
alternatives and planning opportunities to utilize to qualify for
Medicaid. Before any action is taken, you should consult a
qualified Elder Law Attorney who can explain the Medicaid program
and alternatives for preserving your assets.
Stuart R. Morris is an Attorney
and a Certified Public Accountant practicing is the areas of Elder
Law, Nursing home planning, wills and trusts, estate
administration, tax planning, international estate planning and
asset protection. He is AV rated and board certified by The
Florida Bar in both Elder Law and Wills, Trusts and Estates. He is
also a Certified Elder Law Attorney through the National
Foundation of Elder Law Attorneys. He is a member of the National
Academy of Elder Law Attorneys and the Elder Law Section of the
Florida Bar. Mr.. Morris has lectured extensively to attorneys,
Certified Public Accountants and the public in the areas of Elder
Law, nursing home planning, wills and trusts. Mr.. Morris has
offices in Aventura, Boca Raton, Fort Lauderdale, Weston and West
Palm Beach. You may reach him at 1-800-ELDER LAW (353-3752).
Copyright © 2002 Pitt Dickey -
Used with permission
