According to AARP, the average cost of nursing home care in Florida is $88,300 per year. The average cost of in-home care for seniors is $17 per hour. If an individual needs to go into an assisted living care facility, it could cost an average of $32,000 per year. These figures do not include prescriptions, therapy, clothing or other living expenses. It is also expected that these costs will continue to rise.
Medicaid, which covers the cost of nursing home care for qualifying individuals, is a federally funded program administered by the individual states and, as such, is very state-specific. In order to qualify for Medicaid, the applicant has to meet a two-prong test.
First, if the applicant is a single person, he or she cannot have more than $2,000 in assets. If the applicant is married, a married couple is allowed $3,000 in assets. If one spouse is in a nursing home (the institutionalized spouse) and the other is at home (community spouse), there is a community spouse resource allowance of $109,560. That is, after discounting $109,560 from both spouses’ combined resources, the institutional spouse’s remaining resources must not exceed $2,000.
Second, a single individual applicant will not qualify if he or she has income of more than $2,022 per month, unless the excess income is deposited into a “qualified income trust” so that the income outside the trust is less than $2,022. To qualify, the trust must be irrevocable, be composed of income only and must establish that the state will receive any funds remaining in the trust upon the death of the Medicaid recipient, up to the amount of Medicaid payments paid on behalf of the individual. There are a few exceptions to countable resources, such as a principal residence, as long as the applicant or a dependant lives there at the time of application or if there is an intention of returning home.
“You may think that transferring assets to other family members will allow you to get below the asset requirements and qualify for Medicaid,” says Ana M. Veliz, an attorney with Katz Barron Squitero Faust. “But, the government created rules making such transfers ineffective to qualify for Medicaid unless such transfers are properly planned and executed.”
Smart Business spoke with Veliz about Medicaid and how to properly plan for incapacity.
How do you know if a transfer or gift will affect Medicaid eligibility?
Transfers could subject the applicant to a penalty period during which he or she would not qualify for Medicaid. This is known as the ‘look-back period.’ If there is an uncompensated transfer within the look-back period, there will be a penalty period associated with any such transfer during which the individual is ineligible for Medicaid. This often results in seniors being unfairly penalized for giving gifts to loved ones. It is essential to seek advice from a qualified adviser prior to making any transfers or gifts.