As of January 1, 2025, there are changes in Florida’s Medicaid eligibility rules for long-term nursing home care. The changes relate to caps on (1) home equity; (2) applicant income; and (3) assets of the well spouse. We describe these changes below.
Home Equity Rule
For Medicaid applicants and their families, losing their home is perhaps their biggest fear. Will they be forced to sell the home if their loved one goes on Medicaid? Will the sale proceeds have to be turned over to the nursing home? If the applicant has a well spouse, where will the spouse go? And what happens to the home after the applicant passes away? Fortunately, for most people, there is no cause for concern, provided certain conditions are met:
Cap On Equity Interest:
The first condition is that the equity interest in the home may not exceed a certain amount. Effective January 1, 2025, the home equity cap increased to $731,000 (up from $713,000). Home equity is based on the fair market value of the home, minus debt. However, equity interest is just one factor that Medicaid considers. The home equity cap is waived if one of the following conditions are met:
- The Medicaid applicant’s spouse resides in the home.
- The Medicaid applicant’s child under age 21 resides in the home.
- The Medicaid applicant’s child who is blind or disabled, regardless of age, resides in the home.
Medicaid Beneficiary’s Intent to Return Home:
It is also necessary for the applicant to demonstrate to Medicaid that he/she intends to return to the home. However, do not confuse the intention to return home with the likelihood of returning home. To meet this requirement, steps must be taken to preserve the home for the applicant’s possible return. For example, renting the home to someone on a long-term lease would not be advisable because it would signal to Medicaid that the applicant does not intend to return. Plus, doing so would produce income which could also be problematic for eligibility purposes.
After Medicaid Recipient Passes Away:
In order to be reimbursed for funds spent on the beneficiary, Medicaid has the right to place a lien on the home after the beneficiary passes away. However, this is not necessarily what it seems at first glance. Medicaid will not recover the home if the property (1) is still the homestead property of the applicant when he/she passes away; AND (2) the applicant has passed the house to constitutional heirs at law (spouse, children or grandchildren, siblings, nieces or nephews).
This explains why it is an unfortunate legal blunder when an applicant, hoping to protect the home from a Medicaid lien and acting without the guidance of a qualified elder law attorney, rushes to deed the home to children. Giving away the home during the five-year lookback period preceding application will be considered a gift and will count against the applicant’s eligibility!
Applicant’s Gross Monthly Income Cap
Effective Jan 1, 2025, the applicant’s gross monthly income may not exceed $2,901 (up from $2,829). The applicant may retain $160 per month for personal expenses.
However, even having excess income is not necessarily a deal-breaker in terms of Medicaid eligibility. Florida law allows for the establishment of a qualified income-only trust to hold the applicant’s excess income. This is an irrevocable trust (sometimes called a Miller Trust). The applicant’s income in excess of the limit is directly deposited into the trust and held in a non-interest-bearing account. The funds are then used to pay the nursing home and other medical expenses. Someone other than the applicant must serve as trustee.
The income-only trust may be established by the applicant; by the applicant’s spouse; or by the applicant’s agent under the applicant’s durable power of attorney, provided the power of attorney gives the agent that authority. When the nursing home resident passes away, Florida is entitled to whatever residual funds are in the trust. Only a qualified elder law attorney should set up a qualified income-only trust.
Community Spouse Resource Allowance (CSRA)
The total value of assets that may be owned by the applicant’s well spouse has increased. Effective January 1, 2025, the CSRA cap is $157,920 (up from $154,140). This covers countable assets such as stocks, bonds, bank accounts, etc.
Again, this rule is not as black-and-white as it appears. The CSRA does not include exempt assets such as the homestead; one vehicle; life insurance policies whose cash value in total do not exceed $2,500, or irrevocable prepaid funerals of any amount; IRA’s if properly managed; and potentially other assets. Additionally, the State of Florida gives the well spouse the right to exercise “spousal refusal,” which can enable an applicant to qualify for Medicaid benefits even if his/her spouse has assets over the CSRA limit.
There are many more rules that govern whether a Florida resident will qualify for Medicaid nursing home benefits. And as you can see, legal techniques exist that may be used to hasten an individual’s eligibility. “Spending down” is not necessarily your only recourse! A substantial portion of a family’s nest egg can sometimes be preserved, even when nursing home admission is imminent or the applicant is already residing in a nursing home. The Karp Law Firm has handled numerous Medicaid cases and we are experienced in these techniques. Call us for a consultation at 561-625-1100 or email us at [email protected].
