Medicaid Planning Explained

As our seniors age, we have to accept the fact that many of them may end up needing long-term care. This can leave a dent in the wallet of an average household because monthly costs of nursing care can climb as high as $7k. 

There are plenty of options at your disposal, from purchasing long-term care insurance to putting more into your savings account. However, the least financially “painful” option is applying for Medicaid. This program can cover the costs of long-term care and limit your expenses. 

Sadly, due to the strict eligibility requirements, you may need to start planning as soon as possible. In other words, you need to minimize the amount of your assets to qualify. This isn’t easy because you can’t simply get rid of the assets to meet the criteria. Medicaid will closely evaluate your financial history during the period of five years to make sure you’re not trying to cheat the system. 

There is good news here. Some attorneys specialize in Medicaid planning and can help you fulfill your eligibility requirements while preserving the maximum amount of assets. 

Florida Medicaid Program Explained

Medicaid is a healthcare program for low-income individuals and those who can’t afford long-term nursing care. When you apply for Medicaid, your financial matters will be carefully assessed to confirm whether you meet the eligibility criteria. 

So, who is eligible for Medicaid in Florida?

In short, Medicaid is reserved for those who can demonstrate that they require nursing home services and have less than $2k in countable assets and a gross income of less than $2,829.

This doesn’t refer to all the assets. Some are considered non-countable, meaning they won’t add up to the $2k limit. These assets include:

• Homestead or private property
• Motor vehicle with limited value
• Prepaid funeral arrangements
• Life insurance policy up to $2.5k 

Keep in mind that there is some leeway in what’s considered a countable asset. Medicaid personnel generally prefer to look at the full picture and won’t accept individuals who have high incomes or those who are obviously trying to cheat the system.

What is Medicaid Planning?

Medicaid planning is the process of arranging income and assets in a certain way to become eligible for Medicaid benefits. There are plenty of techniques an attorney can use to accomplish this goal. For example, they may create a trust where you transfer your assets, create a Medicaid-compliant annuity, or strategically spend down assets until you fall under the limit 

Doing this helps you gain access to benefits for long-term nursing care, while also preserving your assets without them affecting your eligibility. 

Medicaid planning is very complex, with eligibility rules changing year to year. Plus, applying can be time-consuming, which is why you should let a specialist take over all the aspects of your Medicaid application. 

An attorney knowledgeable in Medicaid will prepare all the required documentation, as well as help you restructure your assets, manage transfers, and assist you in converting the majority of your countable assets into exempt assets. 

Exemptions To Gifting Away Assets

Plenty of people believe that if their assets exceed the requirements, they can simply give them away and everything will be fine. But as we said in the beginning, Medicaid has a strict look-back period where they’ll go through all your finances over the last five years. 

While the IRS permits gifting around $14k per year without triggering the gift tax, no such thing applies to Medicaid. In fact, if it’s found that you did something similar to minimize your estate, Medicaid will penalize you. In some circumstances, it may even be considered fraud, so it’s not something you want to do willingly. 

There are exceptions to this, though. Medicaid allows some assets to be transferred in select circumstances. For instance, you can transfer assets only to the following individuals:

• Spouses
• Minor children
• Disabled children (including those with permanent blindness)
• Adult child who has provided care to the applicant for 24 months before the date of applying for Medicaid benefits
• Sibling with an equity interest in the homestead residence and who has resided in the home for 12 months before the application was filed

Is Medicaid Planning Legal?

Purposefully rearranging your assets may seem illegal, but it’s not. There are no laws in Florida that prohibit families from leveraging these techniques in order to get their loved ones to qualify for the Medicaid program. 

Still, many people wonder whether this is ethical.

Viewing the matter through that perspective is not as clear-cut. Many attorneys and politicians have expressed concerns about planning for Medicaid. Considering it’s perfectly legal, you shouldn’t be concerned about the ethics of it all. Rather, think about your family and your overall financial situation. Think about how Medicaid will help you provide a family member with the care they require, and your concerns will pretty much dissipate in a few moments. 

Start Planning Now

Medicaid planning requires both time and expertise. If you believe Medicaid benefits can help you minimize the financial burden of long-term nursing home care but you also want to ensure you avoid penalties (or face a rejection), reach out to a Medicaid planning attorney. 

These legal professionals are deeply familiar with the technical rules applying to Florida Medicaid and will help you maximize your outcome. A clear, well-defined legal strategy goes a long way in preserving your assets while also moving you closer to Medicaid benefits. 

When strategy is the main concern, reach out to Doane & Doane. 

As one of the most effective estate planning law firms in Florida for over twenty years, we helped an unmeasurable number of clients use effective legal tools to maximize their estates and become legally eligible to receive benefits. With invaluable guidance, unprecedented experience, and knowledge of the applicable laws, we’ll take over your entire planning process and help your family preserve its financial stability while your senior loved one is in a safe place receiving the right type of care. 

Ready to get started? Call 561-656-0200 or fill out our contact form.

Note: 

The information in this blog post is for reference only and not legal advice. As such, you should not make legal decisions based on the information in this blog post. Moreover, there is no lawyer-client relationship resulting from this blog post, nor should any such relationship be implied. If you need legal counsel, please consult a lawyer licensed to practice in your jurisdiction.