In Florida, the average annual cost of a private room at a long-term nursing facility now hovers upwards of $90,000 annually, with a semi-private room around $83,000. With the oldest Baby Boomers turning 70 and the escalating incidence of chronic and extraordinarily expensive diseases such as Alzheimer’s, more and more families face financial disaster when a loved one needs long-term care. It is fair to say that this is a national crisis, but one our political leadership is not yet seriously addressing. For the foreseeable future, America’s families are on their own.
If a family lacks the extensive financial resources necessary to cover long-term care costs, or if a person needing care has failed to obtain, or has not been able to qualify for or afford long-term care insurance, Medicaid is often a viable option. Securing Medicaid benefits for long-term care in a nursing home can preserve a good portion of a family’s assets before virtually everything is lost to nursing home costs. Obviously, preserving assets is especially critical when the person needing care is married, so that there are sufficient funds left for the spouse to live on.
With this in mind, below I address some of the most common myths about Florida Medicaid benefits for long-term care. The list is by no means exhaustive, but is a good starting point if you are concerned about how to pay for your own or a loved one’s long-term care, whether you’re planning in advance or facing an immediate crisis.
MediCARE covers long-term nursing care
False! Medicare covers only skilled nursing care, and even then, only for a limited period of time following a three-day hospital stay. In contrast, long-term care is custodial care. It is not intended to make a person “better.” Its goal is to help a person with activities of daily living such as bathing, eating, toileting. Medicare does not cover long-term care. If you or your loved ones are relying on Medicare to cover long-term care expenses, think again.
Once you are in a long-term care facility, it is too late to take any steps to preserve assets and obtain Florida Medicaid
False! While it is always better to plan in advance, that is not how things generally unfold in the real world. Most often, we assist families with crisis planning, i.e., when a loved one is already in, or about to enter, a nursing home. Even at that point, a variety of techniques can help preserve assets.
You must spend down and become totally impoverished before applying for, let alone becoming eligible for Medicaid
False! Spending down is just one method of becoming Medicaid eligible. Numerous other methods may be available that do not involved dissipating one’s assets. In fact, many times we are able to assist families who have been privately paying a nursing home for months or longer because they did not realize there was an alternative to spending down.
Any transfers made within five years of applying will make you ineligible for Medicaid for five years
False! This myth is based on an incomplete and incorrect understanding of Florida’s Medicaid rules. Any uncompensated or below-market-value transfers will be considered by the Medicaid office when it examines the application. These transfers will be used to determine a waiting period during which Medicaid benefits will not be available and the applicant will have to pay privately. But that does not mean you have to wait five years to apply. More importantly, some transfers are exempt and will cause no delay in obtaining Medicaid.
Florida’s Medicaid rules are the same as the rules in other states
False! Medicaid is a federal program, but because each state also participates financially in Medicaid funding, there are many areas in which the rules vary from state to state. A friend’s experience in another state does not necessarily apply to Florida. And even in Florida, you can’t assume a rule that applied last year is true this year, because the rules change from time to time.
Long-term care facility residents on Medicaid receive inferior care compared to private pay residents
False! Federal law prohibits nursing facilities from discriminating against a patient based on source of payment. In all my years working with clients who have loved ones residing in nursing homes, I have never come across a situation where this has occurred. In fact, many of my clients’ families have been able to provide a greater quality of care for their loved one by using preserved assets to pay for part-time private duty care to supplement regular nursing home care, as well as other “extras.”
Medicaid rules let me give away $14,000 a year without impacting eligibility
False! This common misconception arises when Medicaid rules are confused with federal estate and gift tax rules. Under federal law, you can give away $14,000 per year to as many people as you like without it affecting your lifetime unified estate and gift tax exemption. However, this rule is completely unrelated to Medicaid rules. As far as Medicaid is concerned, any transfer for less than fair market value is examined when the application is submitted, and may be used to compute a penalty period during which the applicant will be ineligible for benefits.
My spouse’s assets and income won’t matter if I apply for Medicaid
False! The assets and income of both spouses are considered. However, there are steps that may be taken to protect the assets of the well spouse. In Florida there is currently “spousal refusal” whereby a spouse has the right to refuse to pay for a spouse’s long -term care costs. My law firm has assisted numerous families with this strategy.
If I am incapacitated, my agent under my Durable Power of Attorney can do Medicaid planning for me in order to preserve assets
Not necessarily! Your Durable Power of Attorney (DPOA) would have to give the agent certain powers, including the power to make gifts. If a DPOA does not confer these powers or is not executed properly and does not meet all Florida legal standards, your agent will not be able to perform these actions. You would have to create and execute a new DPOA – which obviously would not be possible if, at that point, you lacked the requisite mental capacity. That is why it is always advisable to have a Florida Bar Certified Elder Law Attorney review your DPOA while you are competent, so that you can change it if necessary.
Assets in a living trust are protected from nursing home costs
False! However, there are certain kinds of trusts – for example, a Medicaid Asset Protection Trust which, if done in advance and properly structured, may preserve assets.
I can just “hide” assets so Medicaid doesn’t know they exist
False! This is a crime. You could be charged with fraud. Any “advisor” who suggests hiding assets is giving you bad advice. There are many perfectly legal ways to restructure and move assets that can hasten Medicaid eligibility and preserve a good portion of assets. No other approaches should be taken.
I will lose my house if I get Medicaid benefits
False! Under Florida law, your homestead is a protected asset if the equity is under $552,000. It cannot be taken away during your lifetime. Nor is it subject to Medicaid recovery upon your passing, if it is left to your constitutional heirs at law.
I don’t need an attorney to help with Medicaid planning
False! Florida Medicaid law is complicated. Any mistakes you make with regard to transfers and assets can be costly ones. Rely on a Florida Bar Certified Elder Law Attorney such as myself to guide you through the process.