Florida Medicaid planning is a complex undertaking. If you read our previous post about Medicaid planning in Florida, you know that it is crucial to have a plan for funding skilled nursing care, such as care in a nursing home. We create Medicaid plans for people trying to qualify for Medicaid benefits in the current month as well as those looking a little further down the road. Regardless of your planning stage, the Department of Children and Families (DCF) will evaluate your medical needs, your assets, and your income to determine eligibility.
The limit on assets is possibly the most restrictive Medicaid eligibility component. In Florida you may have no more than $2000 in countable assets.
What is an Asset?
Assets are the most tricky part of the Medicaid puzzle, and one of the most important. “Asset” is a term everyone uses, but everyone doesn’t understand the nuance of the word. For Medicaid purposes, they look at anything that is “cash or other liquid assets or any real or personal property that an individual (or spouse, if any) owns and could convert to cash to be used for his or her support and maintenance.”
This is a very broad definition. Practically speaking, this means that if something has value and can be sold it is an asset. To illustrate this, here are examples of some assets: Land, buildings, gold bars, motor vehicles, savings account, stocks, Individual Retirement Account (IRA), certain life insurance policies, collectible Honus Wagner T206 baseball card.
How Much Can a Person Own and Qualify for Medicaid in Florida?
A person who otherwise qualifies for Medicaid can have no more than $2000 in countable assets. I often suggest keeping that number much lower than $2000 (the last thing you want is an accumulation of Personal Needs Allowance funds to cause ineligibility). This limit is not as simple as it seems at first glance.
For Medicaid purposes assets are divided into the categories that mean either they are either included when determining whether someone qualifies for medicaid or disregarded for that purpose. For this post I will only describe assets as countable or non-countable. The nuance of countable, non-countable, and excluded won’t add to our discussion much. Some assets may fall into one category or the other depending on how it is titled, who is using it, total value of the asset, the age of the asset, and many other variables.
What Assets Count Against Medicaid Eligibility?
As a general rule, all assets owned by a Medicaid Applicant count. Some assets will almost always count, like cash, bank accounts, investment accounts, stocks, and almost any other financial assets. Sometimes life insurance policies have cash value. In that case, it will likely be counted as well. Once we apply the general rule of “all assets count” we get an idea of what assets are in the name of the Applicant. Then we can go through in more detail to determine if there is something about the assets that can keep it from being counted.
What Assets Do Not count Against Medicaid Eligibility in Florida?
Even though we start with the general rule of counting all assets, there is an abundance of reasons not to count certain assets. I will touch on some of the highlights in the following categories that usually represent most people’s primary assets: Real property, motor vehicles, and Individual Retirement Accounts.
Real Property
Most people own one home. That home is usually the one they live in. If the Applicant owns the home in which they reside immediately prior to entering a skilled nursing facility that home will be considered homestead, and will not be counted as an available asset in Florida. As long as the resident intends to return to that residence should they be discharged, it will not be counted. There is a maximum value to non-counted homestead property. In 2019 the maximum homestead equity value is $585,000.00.
Unlike some other states, Florida does not check in later to see if it is reasonable for a Medicaid recipient to expect to return to their homestead.
What about property that an Applicant does not live in? This is a little more tricky. If you have a renters paying the market rate or more for rent, then the property is not counted as an asset. However, the net rent received is included in the Applicant’s income.
Property that is placed up for sale is also not counted. Once it is sold the Applicant will have assets available to pay for care. Sometimes we keep the property for sale so the asset ends up not being counted for the remainder of the Applicant’s life. Don’t turn down any bona fide offers for the market price and the asset won’t count.
If an Applicant owns property with another individual and the property cannot be sold without the other individual’s consent, the property will not count. The rights of each owner varies widely depending on how the property is titled.
Motor Vehicles
Currently, the Florida Medicaid policy is to exclude one car of any value or use. After the first vehicle of any value, any vehicle more than 7 years old is not counted. This will result in eliminating the value of most vehicles over 7 years old. However, the older vehicles may be included if the vehicle is 1. A Luxury car ( jaguar, Mercedes Benz, Cadillac, Lincoln, Corvette); 2. If the vehicle is 25 years or older (potential value as classic or antique); or 3. Customized or specially modified vehicles (except modifications for use by handicap person).
It is important to note that any of the criteria mentioned above that could cause an older car to be counted may lead to further discovery- not immediate disqualification. We usually include the value of the car with any modifications in our Medicaid plans so the caseworker doesn’t need to look any further to develop an understanding of the value of the particular vehicle.
If an Applicant owns more than one car, the Medicaid caseworker will apply this policy in the most favorable way to the Applicant.
Individual Retirement Accounts.
Individual retirement accounts have a sort of on/off switch for Medicaid purposes. When the switch is on, the full value of the IRA is included as an available asset. The Applicant could withdraw the funds, deduct any taxes, and pay for care. If the Applicant is eligible to receive required minimum distributions (RMD), then the “off” switch is available. If the Applicant is receiving the RMD in a regular systematic way (like monthly payments) the IRA is not counted as an asset. However, the payments received will be included in the Applicant’s income. This means the Applicant may have to pay the RMD payments to the nursing home.
Sometimes it makes sense to remove the IRA funds from the equation by using them (after paying taxes and any penalties) to purchase non-countable assets, pay for personal services, or some other available planning strategy to avoid disqualification.
A short note on bank accounts.
It is possible to exclude a bank account of no more than $2500 by designating the funds to burial. This is done using a form provided by DCF. Once this is done, no money can come or go from the account until the death of the Applicant.
Funds in bank accounts can be gifted to spouses (within certain limits), be used to purchase non-countable assets, or as payment for personal services. We can usually help reclassify the funds in the accounts so the Applicant will qualify, but when they are just sitting in an account in the Applicant’s name they are included as an available asset.
Hopefully this information will help you better understand assets and Florida Medicaid. Spending down assets, attempting to gift assets, or otherwise trying to qualify for Medicaid is task fraught with pitfalls and traps. An attorney who knows the ins and outs of the asset rules, and has the creativity to craft a plan that fits your particular facts is a must.
Conclusion
Assets can disqualify a person from Medicaid eligibility in Florida. There are a lot of options to allow the Applicant to either preserve assets for their spouse, transfer assets to their family or friends. An intimate knowledge of Medicaid eligibility in Florida is required to avoid any transfers from disqualifying the Applicant. A skilled attorney can help make sure you don’t run afoul of the Medicaid rules in Florida.
Call us today to set up your free consultation to find out how we can help you or your loved one qualify for Medicaid in Florida. [h3]
Remember, this post is just for your information. This post doesn’t create an attorney-client relationship. No reasonable person would use this post to try to DIY a Medicaid application strategy, and you’re a reasonable person right? Contact us today to schedule a free Medicaid long term care planning consultation with one of our attorneys. During our consultation, one of our attorneys will answer any questions you may have about the Medicaid planning process and provide you with idea of what options are available to you in your situation. We are confident that our firm will be able to provide you with a plan that will allow for you or your loved one to qualify for Medicaid long term care benefits in Florida.
This blog post is for informational purposes only. Nothing in this blog post should be used to formulate your own Medicaid plan. You should not rely on this information in spending down your or anyone else’s assets in an effort to qualify for Medicaid.