Many Florida seniors who require nursing home care incorrectly assume they will not qualify for Florida Medicaid benefits because they do not initially appear to meet all the financial criteria. This post tells you about recent changes in those criteria, and tells you how, with guidance from The Karp Law Firm, Medicaid benefits can often be obtained for someone who at first seems ineligible. “Spending down” is not necessarily the 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.
As of January 1, 2021, there are three notable changes in Florida Medicaid eligibility requirements:
Home Equity Rule
For Medicaid applicants and families, losing their home is perhaps their biggest fear. Will they be forced to sell it if their loved one goes on Medicaid? Will the proceeds go to the nursing home? If there is a well spouse, where will he/she 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.
The first condition is that the equity interest in the home may not exceed a certain amount. On January 1, 2021, the home equity cap increased to $603,000. Home equity is based on the fair market value of the home, minus debt. If a home is held in any form of shared ownership, Medicaid considers only the fractional interest of the applicant requesting long-term care Medicaid benefits.
However, equity interest is just one factor that Medicaid considers when evaluating eligibility. The home equity rule is waived if one 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.
It is also necessary for the applicant to demonstrate to Medicaid that he/she intends to return to the home. But do not confuse the intention to return home with the likelihood of returning. 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; it would signal to Medicaid that the applicant does not intend to return. Plus, doing so would produce income which could also be problematic in establishing eligibility.
Medicaid has the right to place a lien on the home after the Medicaid benefits recipient passes away, in order to recover funds the state has spent on the individual. But here again, everything is not as it seems at first glance. Medicaid cannot recover the home if (1) the property is still the homestead property of the applicant when he/she passes away; and (2) the applicant has passed the house, through a will or trust, to constitutional heirs at law (spouse, children or grandchildren, siblings, nieces or nephews.) This is why it is a tragic mistake when an applicant, hoping to keep the home from being taken by Medicaid and operating 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
Effective Jan 1, 2021, the applicant’s gross monthly income may not exceed $2,382.00. The applicant may retain $130 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 for 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, 2021, the CSRA cap is $130,380. 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 or prepaid funerals up to $2,500 in value; IRA’s if properly managed; and potentially other assets that are deemed unavailable. 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.
There are many more rules that govern whether a Florida resident will qualify for Medicaid nursing home benefits. And you can see, legal techniques exist that may be used to hasten an individual’s eligibility before assets are spent down and lost to nursing home expenses. 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 klf@karplaw.com.
