Florida’s laws about Medicaid planning

We have all heard stories of elder couples who lose everything they have worked for when one of the spouses enters a nursing home. With the annual cost of a shared room in Florida now averaging more than $86,000, it is easy to see why a couple of average income and savings and no long-term care insurance will quickly drain their assets.

More and more, families are beginning to understand the importance of Medicaid planning as one part of their complete estate planning strategy. Medicaid planning strategies will not work for family, in every situation. If you are considering ways to protect your financial legacy from nursing home costs, here are some things you need to know.

The rules for people entering a nursing home (applicant)

To qualify for nursing home care paid by the federal Medicaid program through the State of Florida, the applicant’s income cannot exceed $2,199 gross per month. Fortunately, there is no limit placed on the (non-applicant) spouse’s income. In fact, Florida law even allows for some of the applicant’s income to be diverted if the spouse’s income is below $1,991.

In addition to the limit on monthly income, the applicant may not control “countable” assets valued at more than $2,000. Countable assets are generally considered to be any asset that is immediately available as cash or conversion to cash by the applicant and spouse. Examples might be stocks, bonds and mutual funds and partnership shares in a business. There are variables that will be taken into consideration, so make sure you have the guidance of a qualified estate planning professional when filing the application paperwork. The government frequently charges people of Medicaid fraud.

The five-year lookback period

Is Medicaid planning in Florida really as simple as diverting all of your income to a family trust and giving away all of your disposable assets just before applying for benefits? Not hardly.

The State of Florida will review the nature of your gifts and the terms of trust accounts you may have established. If the applicant continues to control access to the assets, the money or property may not be considered exempt from consideration.

Most importantly, the state will also review how long ago the assets were forfeited and the income diverted. As of January 1st, 2015, the current “lookback” period is five years. That means that to avoid a significant penalty, all transfers must be made at least five years prior to the date Medicaid benefits begin.

Get help with your estate planning

Medicaid planning should be thought of as only one component of a successful estate planning. For many families, the five-year lookback period is the factor that becomes the stumbling block. A stroke, sudden onset of Alzheimers or a heart attack at an unexpectedly early age often means the spouse cannot wait out the five year period.

It is sometimes too late to start Medicaid planning, but it is never too early or late to start meeting your estate planning goals. Talk to an experienced wills and trusts lawyer soon.