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Medicaid Qualification: 7 Common Mistakes and Misconceptions

By Phil Rarick & Jacqueline Bowden Gold, Weston Elder Law Attorneys*

Today, many elder persons fail to apply for Medicaid benefits because they think they have too much cash, real estate or are within the 5 year look back period. Your big take away from this report should be this: With the counsel of an experienced Elder Attorney there are almost always legal planning options for an elder loved one to get Medicaid qualification.

Let’s examine three common mistakes and four common misconceptions about Medicaid qualification.

Mistake #1

Failure To Apply Because of 5 Year Look Back Period. While Medicaid does have a stringent 5 year look back period that will penalize transfers made within 5 years of the application, there are numerous types of trusts and other legal strategies to transfer property out of the parent’s name. However, the Medicaid rules for Florida (and each county) need to be carefully considered prior to making any transfer and prior to the Medicaid application.

Mistake #2

Failure to apply because you think Medicaid is only for the poor or nearly destitute. Yes, Medicaid does have strict limits: in 2019, an applicant cannot have more than $2,313 per month of income or $2,000 in assets. However, these limits should not deter you from considering Medicaid planning. For example, in Florida, your elder parent can have an equity interest in the home up to $585,000 and substantial sum in cash and receive Medicaid qualification – with proper planning.

Mistake #3

Failure To Plan For Medicaid Because You Think Your Medicare Will Cover Long Term Care. Medicare has a 100 day limit: the patient will only be covered by Medicare for a maximum of 100 days during any benefit period. And, even if Medicare does qualify the patient for Medicare for nursing home treatment, there is a co-pay of $167.50 per day after the 21st day (in 2018).

Misconception #1

Concluding A person on Medicaid will be less well-treated than a person who has a private source of payment. While not every nursing home accepts Medicaid patients, 58% of all nursing home patients receive Medicaid. Strong federal laws prohibit any form of discrimination between patients on Medicaid and those with private pay: these laws require identical treatment for all residents, and generally staff has no idea how the resident is paying for the services.

Note: This is not to say nursing homes treatment should not be carefully monitored: we all know that some nursing homes fail to provide a consistent high level of care.

Misconception #2

Thinking Medicaid Does Not Cover Home Care. Many persons wrongly believe that Medicaid will only pay for nursing home care. This is wrong: Florida has several Medicaid Waiver Programs or HCBS (Home and Community Based Services) that will pay for numerous personal care services in the home. This is an incredibly popular program: in 2012 – 2013 there were approximately 22,000 individuals on the waiting list for waivers. However, there are ways to secure home care without going on the waiting list.

Misconception #3

Not Understanding Medicaid Will Pay For Certain Assisted Living Facilities (ALF). As noted above, Medicaid is not restricted to nursing homes. In addition to home care, it will pay for care in an ALF. The facility must be “Medicaid Certified,” so this is an important question to ask when searching for a facility. Note: the facility’s basic room and board will not be paid for by Medicaid – as it would if the person resided in a nursing home.

Misconception #4

Thinking You or A Facility Social Worker Can Prepare An Effective Medicaid Plan. Do not underestimate the complexity of Medicaid laws and regulations: not only are they complex they are a moving target. Congress and the state are constantly changing the rules for Medicaid qualification.

Note: Effective planning is often a three-step process: Step 1: Prepare a carefully analyzed Medicaid Asset Protection Plan tailored to your loved one’s unique circumstances and needs. Step 2: Implement the Plan. Step 3: Application for Medicaid. Note: this application must be consistent with your Asset Protection Plan.

Conclusion

We can help. Rarick & Beskin has concentrated in estate and asset protection planning for over 20 years. We collaborate with other experienced Florida Elder Law attorneys on certain Medicaid planning issues. Call attorney Jacqueline Bowden Gold for an initial consultation at (305) 556-5209. We look forward to working with you and your loved ones.

* For an excellent, timely explanation of Medicaid see, Unveiling the Medicaid Mystery: Qualifying for Veteran’s Benefits and Medicaid in Florida, by Jodi E. Murphy, Attorney, Michelle A. Berglund-Harper, Attorney, and K. Gabriel Heiser, Attorney at Medicaid Secrets.

Today, one in seven persons is 65 or older and most will face financial crisis if they need long term care – which can run $8,000 per month or more than $500,000 over a person’s life.

The big, black hole in Medicare is that, except for short duration, it does not cover nursing home care. While some persons have long term care insurance to cover assisted living care or in home care many do not. This means that if you do not have long term care insurance, the only viable option to pay for such care in the United States today is Medicaid which can pay for both ALF, nursing home, or in home care.

Unfortunately, Medicaid is designed for low income persons and a 5 year look-back window. Medicaid has strict requirements and limits: for example, in 2019, an applicant cannot have more than $2,313 per month of income or $2,000 in assets. However, the good news is that many persons can qualify for Medicaid with careful Medicaid planning. Here are the Bare Essentials:

  1. Despite the 5 year look back period, there are almost always viable legal strategies to qualify of Medicaid. These strategies may include use of an Elder Protection Trust to hold excess income and assets, use of a family caregiver contract, promissory notes and many other techniques.

    Caution: without proper counseling, many techniques can backfire: For example, giving your house to your children can cause you to lose your Florida homestead exemption and may make you ineligible for Medicaid for a period of time.
  2. The big hole in Medicare is that it does not pay for Long Term Care. However, Medicaid does pay for both nursing home care and care in the home. Medicaid has strict requirements and limits: for example, in 2019, an applicant cannot have more than $2,313 per month of income or $2,000 in assets. Assets transferred to an EPT Trust five years prior to application can help the elder person qualify for Medicaid.
Take-Away Points

Do Not Wait - Timing Is Critical. The longer you wait, the legal options are fewer and more expensive.

Learn More

Trust Attorneys at Rarick & Beskin have over 60 years of combined experience in designing legal plans to protect your family and business. To see if an Elder Protection Trust is a good legal option for your family, call Jacqueline Bowden Gold at (305) 556-5209 or email her at jbowden@raricklaw.com.