Many people have misconceptions about the rules for obtaining Florida Medicaid benefits for nursing home costs. This is not surprising, considering that the Medicaid program is vast, and its rules are complex and differ from state to state. Before clients seek our help, these misconceptions have often fueled hours of unnecessary worry. And that’s on top of worrying about the family member who needs care, and going broke from nursing home costs. A chief worry for the clients we’ve counseled is that once the Medicaid recipient passes away, the state will take their home and other assets. This process is called Medicaid recovery. It is true that federal law requires each state to recover funds expended on behalf of the Medicaid benefits recipient. However, with the guidance of our elder law attorneys, there is nothing to fear. To understand why, let’s look at the mechanics of the Medicaid recovery program, and how it actually applies to most people.
Your Home Can Be Protected
Understandably, the possibility of losing one’s house is frightening. The good news is that in Florida, the homestead is an exempt asset in most cases when a Medicaid applicant goes on Medicaid. Moreover, the home is also exempt from Medicaid recovery so long as the homestead is left to a “constitutional heir-at-law.” A constitutional heir at law could be your spouse, child, grandchild, cousin, niece, nephew, sibling. So long as you do not leave it to a non-relative (note that a charity is also defined as a non-relative), it will not be recovered upon the death of the Medicaid recipient.
Our elder law attorneys will ensure that the applicant’s estate plan is properly structured to protect the homestead from Medicaid recovery. The applicant’s last will and testament must NOT direct all assets to pass to his/her children and to be sold and divided among the children. Doing so means that the home is not left to the constitutional heirs at law; it effectively sells the property, which will trigger Medicaid recovery of the sale proceeds upon the Medicaid recipient’s passing.
Medicaid Has Not Pursued Non-Probatable Assets
Historically, Medicaid has only gone after the Medicaid recipient’s probatable assets – in other words, those assets that actually go through the probate court in order to pass to beneficiaries. Needless to say, Medicaid applicants leave little if anything in the way of probatable assets , since to be eligible, the Medicaid recipient may have no more than $2,000 in assets. Although there is technically nothing stopping Medicaid from pursuing non-probatable assets, the process would be very difficult, and to our knowledge it has never been done in Florida.
Annuities Are A Special Case
Annuities are a unique non-probatable asset that may be subject to Medicaid recovery. Florida and federal law require that if the applicant or his/her spouse owns an annuity, the initial beneficiary upon the death of the owner must be the surviving spouse or, at the option of the owner, the state. If the spouse is the primary beneficiary, the state must be made the secondary beneficiary. Under no circumstances may anyone else be named before the state is designated. Our elder law attorneys are familiar with techniques that may help protect against Medicaid recovery; if appropriate, we will discuss these techniques with you prior to applying for benefits.
Don’t Worry – Call Us!
Do not assume that you will lose everything if you qualify for Medicaid benefits, either when you apply or after the recipient passes away. Also do not assume that you are not eligible, or that you cannot be made eligible. Your conclusions may be based on incorrect or incomplete information. Call The Karp Law Firm attorneys at (561) 625-1100 and schedule a consultation to get the facts and explore your options. To read more about long-term care benefits, including Medicaid eligibility and the Medicaid Asset Trust, click here.