When it comes to elder law, it sometimes can seem as though seniors and their families have an infinite amount of unique questions. That is only natural, given that every person has his or her own unique circumstances. There is one issue, however, that seems to be a consistent concern for everyone involved: how do Florida Medicaid eligibility rules impact the fate of the senior’s house? That single question can often deter seniors and their families from pursuing the Medicaid benefits they need to provide necessary nursing home care, so it is important to understand the rules.
Of course, it is equally important to recognize that any overview of the various rules involved in determining what happens to a Medicaid recipient’s house must be viewed as general advice. Individual circumstances can impact your particular case, so you should always consult with an experienced attorney to find out how these rules apply to your home.
Medicaid Recovery and the Sale of Your Home
Many people wonder whether their home will be sold when they start receiving Medicaid benefits for nursing home care. As a general rule, this will not occur as long as the home can be considered the senior’s homestead property, and he or she intends to return to the home at some point. Medicaid typically operates under the presumption that applicants do plan to return home – even when it is all but certain that there is no realistic possibility that the benefit recipient will ever be able to do so. That view prevails unless and until the Medicaid applicant affirmatively acts to eliminate the possibility of return.
In addition to the homestead requirement, the home must also have an equity value that does not exceed the limit established by state law, or the current occupants must include the senior’s spouse, underage child, or child under the age of 21.
Medicaid Leans on the Home
This is a major concern for all who understand that federal law currently requires state-level Medicaid agencies to take affirmative steps to recover benefit costs from the estates of those who have benefited from the program. Florida’s homestead laws prevent Medicaid from pursuing that recovery against homestead properties, however, provided that certain conditions are met. The property must have qualified as a homestead at the time of the owner’s death, and the will or trust must contain provisions that transfer the home to an allowable heir – defined as “constitutional heirs at law.”
Selling or Transferring the Property
This can be a trickier issue for many people, but typically focuses on whether the applicant has a well spouse. If a well spouse exists, then the property can be transferred to that spouse and sold prior to the filing of the Medicaid application. That then allows the house to be sold without consequence for the applicant’s Medicaid eligibility. Spousal refusal options may need to be used if that sale results in the well spouse having assets in excess of the limits set by law.
Those techniques can also apply for spouses living in the home when Medicaid approval occurs, provided that the spousal refusal option was never used. In instances where it was, your attorney will have to pursue other options to ensure that Medicaid benefits are not disrupted. Finally, there are a whole host of other techniques and options that can be used for instances in which no well spouse exists. Your attorney can discuss those possibilities with you to identify your best choices.
In additional to those spousal transfers, some people might be tempted to simply gift the home to children or other family members to maintain Medicaid eligibility. If that transfer occurs during the 5-year look-back period, though, it will be considered a gift that invokes the Medicaid penalty period. That penalty involves denial of benefits for a period of time that is based on the value of the applicant’s gifted home.
If, on the other hand, the homeowner made such a transfer while already in a nursing home, the program would evaluate the home equity and determine it to be what it calls an “uncompensated transfer.” That transfer could very well result in the benefit recipients losing access to program benefits. The exception would be if the transfer was made to someone like an adult child who suffered from a disability. In those instances, no penalty would be assessed.
Renting the Home During Any Nursing Home Stay
Sometimes, nursing home residents would like to simply rent their homes during their stay. Often times, families want to use rental income to help pay for the home’s annual taxes, make mortgage payments, or maintain the property’s insurance coverage. The problem is that any long-term rental agreements can be construed as an affirmative acknowledgment that the benefit recipient has no intention of returning home – which can result in an end to Medicaid benefits.
To avoid that, rental income must be managed in a way that does not cause the senior’s income to rise above the allowable program limit. That may require the creation of a qualified income trust. Additionally, the senior will need to ensure that the conversion of the homestead into rental property does not cause Medicaid to pursue the home as a recoverable asset during probate. Steps will need to be taken to keep the property out of probate – steps that typically involve the use of a ladybird deed that enables automatic transfer to a beneficiary when the senior dies.
The simple truth of the matter is that Medicaid eligibility and your home ownership are both complicated issues that are difficult to determine without a thorough review of your unique individual circumstances. At the same time, they are issues that must be evaluated, particularly in light of the high costs associated with long-term nursing home care. At Robert Kulas Attorneys at Law, our elder law and estate planning attorneys can help you to make sense of all of these concerns and properly plan for your Florida Medicaid eligibility needs. Give us a call at (772) 398-0720 or contact us online today to learn more.
