Although it may seem unlikely to you right now, there is a very good chance you will need to qualify for Medicaid during your retirement years. If that does indeed come to pass, you may find that the combined value of your non-exempt assets is a potential bar to eligibility. Looking ahead, it helps to know what assets are considered countable resources and which assets are not considered countable resources for the purpose of determining eligibility for Medicaid in Florida.
Why Would I Need Medicaid?
The first question you may ask is “Why would I need Medicaid?” If you have never before relied on Medicaid, you are undoubtedly wondering why you would need to plan for the need to qualify for Medicaid in the future. The need for Medicaid may arise from the need for long-term care (LTC) at some point during your later years. With the average cost of LTC running over $80,000 a year nationwide, and an even higher average of almost $110,000 per year in Florida, the average person cannot afford to cover that cost out of pocket. Although Medicare will likely cover most of your healthcare costs as a senior, it will not pay for LTC nor will most basic health insurance plans unless you purchased a separate LTC plan. Because Medicaid does cover LTC expenses, over half of all seniors needing LTC turn to Medicaid for help with the cost of that care.
How Is Eligibility for Medicaid Determined?
The good news is that Medicaid will help cover long-term care expenses if you qualify for Medicaid. Because Medicaid is a needs-based program, an applicant must demonstrate financial need to be approved. To do that, you must have income and “countable resources” below the current threshold. The “countable resources” limit is very low in most states, including Florida. An individual applicant cannot have countable resources worth more than $2,000. If you do have excess assets at the time you apply, your application will be denied and you will have to “spend-down” your assets before applying again. Fortunately, some assets are exempt, meaning they do not count toward your “countable resources,” including:
- Your home, up to an equity limit of $572,000 if you are planning to return or you have a spouse, a child under 21, or a disabled person residing in it.
- Your automobile with no equity limit.
- An irrevocable burial trust with no limit
- Household furnishings, furniture, clothing, jewelry, and other personal effects are not counted.
Why Is Medicaid Planning So Important?
At one time, an applicant was allowed to transfer assets to an adult child or other loved one in anticipation of the need to qualify for Medicaid. Transfers such as those, however, are no longer allowed. Medicaid now uses a five-year “look-back” period that prevents transfers of assets for less than fair market value for the 60 month period prior to an application for Medicaid. A review of your finances will be conducted when you apply for Medicaid and if any such transfers are uncovered, Medicaid will likely impose a waiting period. The length of the waiting period will depend on the value of the assets transferred and the average cost of LTC in your area. For example, if you transferred an asset valued at $100,000 with an average monthly cost of LTC in Florida of $9,000, you would incur a waiting period of 11 months ($100,000/$9,000). During that waiting period, you will be forced to cover the cost of LTC on your own. By incorporating Medicaid planning into your comprehensive estate plan ahead of time, however, you can avoid the possibility of incurring a waiting period if you find that you need to qualify for Medicaid down the road.
Contact Florida Medicaid Planning Attorneys
To learn more, please download our FREE solid estate plan checklist. If you have additional questions or concerns about countable assets, or Medicaid eligibility in general, please contact the experienced Florida Medicaid planning attorneys at Kulas & Crawford by calling (772) 398-0720 to schedule an appointment.
