Florida’s Medicaid rules are numerous and often confusing. We explain why planning for Medicaid is so important here. One theme that is consistent in Florida, is that the state would rather pay public benefits for one person if it will keep two or three of their loved ones from needing benefits as well. We see this in the ability to transfer property to blind or disabled children, giving property to a caretaker child, and ignoring transfers to spouses, most of the time.
This post will discuss transfers between spouses and how that relates to a Medicaid application. Keep in mind that an applicant for Medicaid Institutional Care Program in Florida can have no more than $2,000.00 in countable assets. The community spouse, that is the spouse who will not be receiving Medicaid Benefits, also has a limit to their countable assets it is called the Community Spouse Resource Allowance. The limit is set much higher at $130,380.00.
This standard is calculated generally using the same standards for countable and non-countable assets. The primary residence is not counted, as long as the equity does not exceed $603,000.00. One vehicle of any value, and any number of vehicles 7 years or older. This rule may not apply to a collector car and not a car used routinely for driving. Rental properties and IRAs making routine required minimum distributions are also ignored.
Sometimes it makes sense to do some planning with personal services contracts or shuffling assets around to qualify. Other times it makes sense to transfer all the assets owned by both spouses to the community spouse only.
What if the Community Spouse Has Too Many Assets?
This is where the Florida Medicaid rules shine. We often get asked whether or not Medicaid planning is ethical. It’s really just shuffling papers until the assets match what Medicaid requires without a material effect on the wealth of the couple as a whole. As an example that Florida purposefully retains certain rules to allow for this planning- the state has created a form that assigns rights to spousal support. They expect people to use the strategy I am about to describe.
The “Just Say No” Strategy
Spousal refusal is sometimes colloquially referred to as the ” Just Say No” strategy. “Just say no” is a common strategy that has been employed since the early days of Medicaid. The ultra-short summary of this strategy is three steps:
- Title all assets owned by the Applicant or Jointly with the Applicant solely in the name of the community spouse.
- Community Spouse executes a statement refusing to make their resources available to support the Applicant.
- Execute the DCF Assignment of Rights to Support.
That is deceptively simple. Timing is extremely important. After the refusal to make resources available to the applicant, transfers are now subject to the penalty divisor. If an account wasn’t depleted or an asset was not retitled in the community spouse’s name prior to executing that document, you may have a significant challenge in addressing those assets. You will have lost the extreme flexibility that comes with ignoring transfers between spouses.
Can Florida Actually Compel Me to Support my Spouse?
Technically, yes. Practically, no. The state has not pursued support from a spouse since this technique became available. At this point, the court may not actually allow the state to compel a spouse to pay support. They may be, as we lawyers say, “estopped” from pursuing this claim. This does not mean it can’t happen. At this point it’s unlikely, but not impossible.
This is a deceptively simple looking strategy. Having an attorney represent you in preparing for and making your Medicaid application can be the difference between qualifying on the first try and paying $9,703 per month until the penalty period expires.
Do not try using this strategy on your own. If you or your spouse may need to begin living in a skilled nursing facility and you think you may have too many assets, contact us for a consultation to discuss your situation. We also work with financial professionals to prepare their clients for making application as well, so feel free to reach out for a consultation.
All the numbers in this post were as of 3/23/2021