Florida Medicaid Planning for Long-Term Care: Protecting Your Assets

Nursing home care in Florida costs $8,000-$10,000 per month. Medicare covers only short-term skilled nursing care. Long-term care insurance covers those who planned ahead. For everyone else, Florida Medicaid is the primary payer for long-term nursing home care -- but qualifying requires meeting strict asset and income limits.

Medicaid planning -- working with an elder law attorney to structure your finances to qualify for Medicaid while protecting assets -- is legal, ethical, and widely practiced. Here is how it works.

Florida uses an income cap for Medicaid long-term care eligibility. In 2019, the income limit is $2,313/month (this amount adjusts annually).

If your income exceeds the cap, you can still qualify by establishing a Qualified Income Trust (QIT) -- also called a "Miller Trust." Income above the cap is deposited into the trust each month, making you eligible for Medicaid.

Countable assets: $2,000 for a single individual; $3,000 for a married couple (when both are applying).

Non-countable (exempt) assets:

• Primary residence (with equity up to $585,000 in 2019, if you intend to return home or a spouse/dependent lives there)
• One vehicle
• Personal belongings and household goods
• Life insurance with face value up to $2,500
• Prepaid burial arrangements
• IRAs and retirement accounts (in certain circumstances -- complex rules apply)

Florida Medicaid reviews all asset transfers made within the 5 years before your application. Gifts or transfers of assets for less than fair market value during this period result in a penalty period -- a period during which Medicaid will not pay for nursing home care.

This is why planning early matters. Assets transferred more than 5 years before applying are outside the lookback period and do not create a penalty.

When one spouse enters a nursing home, the community spouse (the one remaining at home) is entitled to keep a portion of the couple's assets -- the Community Spouse Resource Allowance (CSRA).

In Florida (2019), the community spouse can keep between $25,284 and $126,420 in countable assets, plus the home, one vehicle, and personal belongings.

The community spouse also receives a Minimum Monthly Maintenance Needs Allowance (MMMNA) -- a minimum income to live on.

Spending down assets on allowable items does not create a penalty:

• Home improvements and repairs
• Prepaying funeral and burial expenses
• Paying off debt (mortgage, car loan, credit cards)
• Purchasing exempt assets (a better car, household goods)
• Paying for care privately before Medicaid eligibility

Assets transferred to an irrevocable trust more than 5 years before applying for Medicaid are outside the lookback period. This is a common long-term planning strategy for people who anticipate needing care in the future.

If an adult child lived in the parent's home for at least 2 years before the parent entered a nursing home and provided care that delayed institutionalization, the home can be transferred to that child without a Medicaid penalty.

Certain Medicaid-compliant annuities can convert countable assets into an income stream for the community spouse, reducing countable assets while providing income.

Medicaid planning is complex -- the rules are intricate, change frequently, and vary by individual circumstances. Mistakes can result in penalty periods that leave you without coverage when you need it most.

An experienced Florida elder law attorney can:

• Analyze your specific situation
• Identify the best strategies for your circumstances
• Implement a plan that complies with Florida Medicaid rules
• Help you apply for Medicaid when the time comes

The Florida Bar's Elder Law Section (floridabar.org) can provide referrals to qualified elder law attorneys in your area.

This article is for educational purposes only and does not constitute financial or legal advice. Consult an elder law attorney for personalized guidance.