Medicaid “Crisis” Planning
Medicaid “Crisis” Planning is defined as when an individual is already in a skilled nursing facility or will be entering within a short time-period and needs to qualify for Medicaid benefits immediately. This event may also involve failing to qualify for Medicaid benefits because of either too much income or too many assets, or both.
In the case of a married couple, an applicant may be able to also increase the well spouse’s Community Spouse Resource Allowance or redirect some of the nursing home spouse’s income away from nursing home costs, and back towards the well spouse, using the Minimum Monthly Maintenance Income Allowance.
A large percentage of Florida seniors will require long-term care at some point in their lives. To be able to pay the enormous expense, most will need to rely on Medicaid for help. Unfortunately, many residents in this state did not take prior steps to ensure they will qualify for the program. In such cases, there are some Medicaid “Crisis” solutions that can be used even at the last minute to help seniors become eligible.
Nursing homes in Florida can cost up to $10,000 per month or more. And typically, Medicare will not pay for it. For most families, this means they need to either qualify for Medicaid or try to come up with the money out of their own pocket
Medicaid Crisis Planning Strategies
When a senior has an immediate need for long-term care, the government does not intend for you to transfer your assets one day, enter the nursing home the next day, and apply for Medicaid benefits the following day. Therefore, there is a five-year “look back” period for most asset transfers. If you transfer assets within the “look back” period, you are subject to a penalty.
Fortunately, there are certain types of asset transfers that are exempt from the “look back” period, and thus can be employed as last-minute solutions to qualify for Medicaid. These include assets transferred to:
- Your spouse (or another person if it is for your spouse’s benefit)
- A child who is blind or disabled
- A trust for the benefit of a child who is blind or disabled
- A trust for the sole benefit of someone who is disabled and under age 65
If the asset you are transferring is your home, there are a few added exemptions in addition to those mentioned above, including transfers to:
- A child who is under age 21
- A sibling who has equity in the home and has lived in it at least a year prior to the applicant entering a nursing facility
- A child who lived in the home at least two years prior to the applicant entering a nursing facility, and who provided care that helped keep the applicant living at home
If any of these situations apply to you, it may be possible to transfer your assets and qualify for Medicaid without penalty.
Qualified Income Trusts
Also known as a Florida Medicaid trust, Miller trust, or d4B trust, a qualified income trust is an irrevocable living trust that is set up to divert excess income and allow the creator to qualify for Medicaid. While the Medicaid recipient is alive, assets in the trust can be accumulated, invested, or spent.
Upon death, any remaining assets in the trust must be paid back to the state up to the total amount the state paid the recipient for long-term care (minus applicable taxes and trust administration fees). While this is a less than ideal scenario, a qualified income trust can help you qualify for Medicaid while giving you control of your assets while you are alive.
Other strategies that can be taken last-minute to help qualify for Medicaid include:
- “Spend downs” of excess countable assets into exempt assets such as home improvements and automobiles
- Medicaid pooled trusts in which excess funds are put into a group trust with leftover funds remaining in the trust after you die and being used to help others in the pool
- Medicaid-compliant annuities that irrevocably convert countable assets into an income stream
There are several other strategies that may be available depending on your situation. A qualified Elder Law Attorney can fully review your needs to determine the best solutions for your specific circumstance.
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