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Qualifying for Florida Medicaid Despite Higher Income and Assets Over the Limit

Medicaid is a robust state-sponsored insurance program that can pay for long-term care in nursing facilities, at-home care and certain medical expenses.  

Medicaid is generally intended for applicants with low or no income and assets. 

In Florida, Medicaid applicants in 2022 are required to make less than $2,523.00 in gross income, with some deductions considered, in order for their application to be successful. However, if total gross income exceeds this amount, even by a dollar, the application will be denied.

Likewise, if an applicant’s non-exempt assets exceed the limit of $2,000, and if the spouse of the applicant has assets of over $137,400, then the application would also be denied. 

Exempt Assets

Not all assets count toward the limit. Below is a list of assets that may be considered as exempt in Florida.  Working with an experienced estate attorney that specializes in Medicaid planning is the best way to determine which assets are exempt when applying for Medicaid.

  1. The Medicaid Recipient’s Homestead:

– when the Medicaid recipient’s spouse still lives there.

– when the applicant intends to return

– when a dependent child lives there, including SSI-disabled adult children.

  1. One automobile
  2. Additional automobiles – must be at least seven old, and not be a luxury model, antique or customized
  3. A single burial plot per family member
  4. A wedding ring
  5. Certain annuities
  6. Certain Life insurance policies where the total cash value of all policies is at most $2,500
  7. Certain Retirement Accounts
  8. Irrevocable burial contracts, bank accounts designated for burial and final expense insurance policies.
  9. Other property if rented or listed for sale at fair market value.
  10. Property used for Trade or Business
  11. Up to $2,500 which has been allocated for burial expenses

Five-Year Lookback Period

In Florida, Medicaid applicants may have their application denied if they have transferred assets for less than fair market value to family members and other recipients during the five years prior to the application.  This five-year period is referred to as the Medicaid Lookback Period.  As people approach retirement and the age in which long-term care may be needed, it is advisable that they consult an estate planning attorney with experience in Medicaid planning to avoid making asset transfers that may result in a future Medicaid application being denied.

“Medicaid is generally intended for applicants with low or no income and assets.” 

Provisions for Individuals Who Exceed the Limits

The State of Florida recognizes that many people who may have non-exempt assets and income over the limits have a genuine need for Medicaid coverage.  To provide for these individuals, certain provisions have been made.  Those with income and assets over the limits can take advantage of these provisions with the help of an elder law and estate planning attorney with experience in Medicare planning. 

Miller Trusts

Also known as Qualified Income Trusts (QITs) or DB4 Trusts, Miller Trusts are designed to make applicants eligible for Medicaid even if their income is greater than Medicaid’s restrictions allow.  The portion of an individual’s income that exceeds the Medicaid eligibility threshold is deposited monthly into the QIT.  Miller Trust funds are not restricted and thus can be accessed by the individual paying into the trust.  When the Medicaid recipient dies or otherwise no longer requires Medicaid, funds in the QIT are paid to the State of Florida up to the amount necessary to compensate the state for Medicaid payments made by the state to cover the recipient’s care.

Setting up a Miller Trust begins with an attorney drafting the trust as a document. As part of this process, a trustee is designated who may be anyone besides the Medicaid recipient themselves. This document is then taken to a bank which will then open a Miller Trust Account.  From that point on all additional income above the Medicaid limit is paid into the trust each month.  It is essential that all income above the limit is paid into the trust each and every month.  In months that there is not full payment of the over-the-limit amount, Medicaid will not cover the nursing home and/or other expenses it would otherwise pay for that month.

With the average monthly cost of a nursing home stay now exceeding $8,000, a simple error in accounting can result in significant costs to the Medicaid recipient and their family members.

To avoid a situation in which Medicaid does not pay a month of expenses, Medicaid recipients could pay in slightly more each month to err on the side of too much rather than too little being paid into the account.

Example:

Mr. Smith is applying for Medicaid and makes a gross income of $4,120 per month.  He goes to an estate planning attorney who identifies that at least $1,597 of this gross income could be paid into a QIT account each month.  In fact, the decision is made to pay $1,650 into the QIT account on a monthly basis.  For the purposes of Mr. Smith’s Medicaid application, his gross monthly income can now be declared as being $4,120 – $1,650 = $2,470.  Since $2,470 is below the $2,523 income limit for 2022 (the year in which he is applying for Medicaid), Mr. Smith will pass the income portion of the means test.

Learn more about Qualified Income Trusts (Miller Trusts) by clicking here.

Note that in the example above, Mr. Smith will still have to pass the asset portion of the means test. To also pass the asset test, there are other steps that can be taken with the assistance of an estate attorney with experience in Medicare planning.

Irrevocable Asset Protection Trust

Before a person with assets applies for Medicaid it is advisable that those assets, including certain exempt assets such as a homestead, are placed in an Irrevocable Asset Protection Trust.  Irrevocable Asset Protection Trusts are designed to protect assets from:

  • Having to be liquidated in order to pay for long-term care in a nursing home
  • Being repossessed by Medicaid in compensation after the death of the Medicaid recipient
  • Taxes on the beneficiaries of the trust who decide to sell trust assets when they are received

Those placing assets in the trust five years or more prior to a Medicaid application can additionally benefit from not having those assets count towards the asset limit.  Those entering retirement and planning for potential long-term care can speak to an experienced estate planning and elder law attorney about the benefits of an Irrevo

South Florida Law

South Florida Law is a full-service estate planning, business and real estate law firm that can assist families in employing a variety of strategies during Medicaid means-testing to become Medicaid eligible. We can also proactively work with families, couples and individuals to protect their homes from Medicaid’s Estate Recovery Program.  The best time to begin planning for Medicaid is years before nursing home services are needed. That said, when long-term care services are needed urgently, Medicaid’s complexity and the potential savings that can come from expert advice make it essential that you consult with an expert before taking the first step. Contact us today for a consultation by calling (954) 900-8885 or via our contact form.

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