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The elder law practice of Sean W. Scott encompasses all aspects of planning, counseling, educating, and advocating for the senior client concerning illness, incapacity and death. Rather than being defined by technical legal distinctions, our elder law practice is defined by the client being served. In other words, while our lawyers handle a range of issues, we have a very specific client, seniors.

A senior’s legal problems are a unique function of the aging process. Those problems can be complex and include estate planning, incapacity and many times, the cost of long-term care.

At the Law Offices of Sean W. Scott, we focus on the legal needs of the elderly, working with a variety of legal tools and techniques to meet the goals and objectives of the older client. Under this holistic approach, we assist the client in planning for long-term care needs, including nursing home and assisted living care placement and most often assisting with asset preservation and Medicaid qualification. We also help with problems ranging from general estate planning issues, planning for incapacity and probate and trust administration.

Locating the appropriate type of care, coordinating private and public resources to finance the cost of care, and working to ensure the client's right to quality care are all part of the elder law practice.

As elder law attorneys we are concerned with problems unique to the elderly. We work as their advocate. We are dedicated to ensure delivery of quality legal services for the elderly and to advocate for their rights.

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The Medicaid Handbook

SOLD OUT! WATCH FOR THE NEW MEDICAID HANDBOOK COMING SOON.

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THE TOP TEN MEDICAID ELIGIBILITY MISTAKES

AND FREQUENTLY ASKED QUESTIONS

By Sean W. Scott, Esq. Elder Law Attorney

May 1, 2009

Over the last nineteen years of practicing elder law I have come to realize that most people have the same basic misconceptions and misunderstandings of Medicaid benefits, qualification and planning. I have produced a list below that highlights the most common mistakes people make. I hope this will help you avoid these all too frequent problems associated with obtaining Medicaid benefits to pay for the long-term care.

1. Medicaid Misinformation.  Medicaid provides identical care at the same facilities at a much lower cost to the resident. The majority of nursing home patients receive financial protection from Medicaid.  You do not need to be impoverished to receive benefits. A proper plan and implementation can preserve and protect almost any family’s nest egg.

2. Medicaid is state specific.  There are major differences among the state laws regarding Medicaid planning rules. Florida law provides unique opportunities not available elsewhere. Also, rules change over time so it is important to have the most recent information.

3. Assuming it is too early or too late.  Some basic advance planning can provide vital protection later, so you really can’t be too early. However, it is not too late to act even if a person is already in the nursing home.

4. Going it alone.  Maximizing Medicaid planning opportunities is not something easily learned.  No two situations are identical and strategies not implemented properly can cause benefit denial.  Seek qualified, professional guidance.

5. Gifting. Changing title to the home, transferring cash or assets of any type without knowing or understanding the consequences of such transfers. Most people mistakenly feel they can make limited transfers without consequence.  These uninformed financial decisions may result in extended periods of ineligibility.

6. Unused options. Not taking advantage of all spend down, conversion, transfer and exemption funding opportunities.  How can funds be properly transferred? Is there a mortgage that can be paid off?  Are there home repairs that can be made?  Are there items that can be pre-paid?  Has an irrevocable funeral arraignment been created and funded?

7. Not considering the consequences of financial transactions.  The movement of money often creates issues with penalties, taxes and estate planning. These issues must be considered and coordinated with your Medicaid plan.

8. Failing to take advantage of protections for the spouse.  The law provides protections so the spouse of a Medicaid recipient still living in the community does not have to be impoverished. Strategies are available to maximize this benefit.

9. Assuming Medicaid caseworkers will help with planning.  Except for some limited help with completion of the application, Medicaid employees are specifically instructed not to advise clients on asset protection strategies.

10. Stopping planning after approval. Not understanding post-Medicaid consequences. What will happen when the Medicaid recipient passes away?  What happens when the community spouse passes away either after or before the recipient?  What about the home? Most people feel Medicaid frequently takes your assets and although Medicaid is now more aggressively seeking repayment of benefits from beneficiary estates, proper planning protects most estates from this recovery.

I also frequently see the same questions being asked by people interested in using Medicaid to pay for the cost of long-term care. Below are some of those questions and answers:

Q. If you have too many assets to qualify, but need Medicaid now, can you still protect any assets?

A. Yes, you can still protect the assets. While you may have lost the opportunity to use some strategies, it is never too late to protect most if not all of the remaining assets.

Q. If you give assets away do you have to wait 36 months to qualify for Medicaid?

A. No. New rules effective in 2008 severely penalize you for making uncompensated transfers of assets. These rules will extend the look-back period to 60 months.

Q. Is the home counted as an asset?

A. No. The first $500,000 in home value is a not counted as an asset so long as the owner has an intent to return.

Q. When you die does the state take the house?

A. No. But if the house does not qualify as the “homestead” as defined by Florida’s constitution it could be taken by the state to recover money spent on your care in the nursing home after you die.

Q. What about the money in the safety deposit box, do you have tell anyone about it when applying for benefits?

A. Yes. You must disclose to Medicaid all of your assets. Failure to do so is fraud. Always tell us about all the assets.

Q. Can your son take money out of your joint account without affecting eligibility?

A. No. Any transfer of assets from a joint account, regardless of who makes the transfer, will be considered a transfer.

Q. Can you still give $10,000.00 a year away?

A. No, not without it being considered a disqualifying transfer. Many people mistakenly believe that because you can give away $10,000.00 per person, per year, tax free, that this is the same case with Medicaid. Unfortunately, it is not and the gift may adversely affect your eligibility.

Q. Do you get to keep your income if you are on Medicaid?

A. No. You are required to pay to the nursing home your total monthly income, minus $35.00 for personal needs. But, if there is a spouse he or she keeps all of their income and may be entitled to some or all of the applicant’s income.

Q. Should you wait until you need Medicaid benefits before seeing an elder law attorney?

A. No. Many of the options available to protect your assets are dependent on time. Therefore, the sooner you begin planning before the need arises the more options you have to preserve the assets.

Q. Once you are in a nursing home are there still planning options available?

A. Yes. There are multiple options available to preserve and protect assets.

Q. Do you need to have an elder law attorney help you qualify for Medicaid benefits?

A. Only an elder law attorney can bring together the necessary Medicaid planning, estate planning and incapacity planning skills to comprehensively solve the issues presented by a prolonged stay in a nursing home.

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Congress substantially changed the Medicaid eligibility rules effective November 1, 2007!

Read our analysis "Is Medicaid Dead?" here.

View the video here.

Below are more links to the new Florida and Federal laws affecting Medicaid:

Massive Medicaid Course Correction Leaves Questions in its Wake.
By Sean W. Scott, Esq. September 20, 2003


The state of Florida Department of Children and Families (DCF) has recently made critical policy changes regarding continuing eligibility of Nursing Home Medicaid (ICP) recipients. The Problem: When one spouse is on Medicaid in a nursing home, and the spouse who is still at home dies, the spouse in the nursing home will now lose his eligibility for Medicaid. For example, Susan and Sam are a married couple. Sam has been in a nursing home for the last year. Early in his placement he applied for and was approved for Medicaid. At the time of application the wife took steps to change her will so all her assets, totaling $90,000.00, go to her children instead of her husband. His wife died yesterday. What effect if any does her death have on his continuing eligibility for benefits? Answer, until recently, no effect. The husband’s assets were not increased since the wife’s money went to the children. Now, however, the Husband will be disqualified from Medicaid. But wait, he did not receive anything from the wife’s estate, why is he disqualified from Medicaid? Because DCF is now implementing long dormant policy stating the Medicaid recipient must apply for all benefits they are entitled to, which includes taking 30 percent of his deceased wife’s estate also known as the Elective Share.

If a spouse is disinherited he is entitled under Florida’s elective share law to “elect” or take 30 percent of his wife’s estate. All of her estate by the way, including amounts in a living trust, amounts in joint accounts, and amounts in life insurance are considered when calculating the 30 percent share. If the Medicaid applicant does not make the election, then he is deemed to have failed to apply for benefits he was otherwise entitled to. That failure to apply disqualifies him from Medicaid.

The repercussions of his disqualification are wide and far reaching. First the nursing home no longer has a payment source. How are they going to get paid for their services? Medicaid is not paying, the spouse is dead, where are the children? To compound the situation, the nursing home may not find out about the disqualification until many months after the death of the spouse when the husband’s case comes up for annual review at DCF. It is not clear whether the facility may have to pay back monies erroneously received. The husband’s status is also in jeopardy. How is he going to pay the facility? Where is he going to go if he is discharged for failure to pay? Again, to make matters worse, what happens if he is not able to make the election because he is incapacitated, infirmed or without the financial resources to go forward with the election?

For the unprepared, a world of uncertainty awaits. Thankfully there is a solution that can remove the ambiguity for those who take corrective measures in advance, the qualified special needs trust. In the most recent modification of Florida’s elective share rules, provision was made for the utilization of an elective share qualified special needs trust. In the simplest terms, a will is created which contains a testamentary trust dedicated to providing for the special needs of the surviving spouse. At least 30 percent of the decedent spouse’s estate must go into the trust. In this circumstance, the eligibility of the Medicaid recipient is assured, and avoids all those unpleasant unanswerable questions. In part two of this article we will discuss the solutions to use when no advanced planning has been done. In other words, what to do if you suddenly lose Medicaid eligibility due to the death of the well spouse…

What is an elder law attorney anyway?

By Sean W. Scott, Esq.

The Elder Law practice encompasses all aspects of planning, counseling, educating, and advocating for the senior client concerning illness, incapacity and death. Rather than being defined by technical legal distinctions, elder law is defined by the client to be served. In other words, the lawyer who practices elder law may handle a range of issues but has a specific type of client, seniors.

A senior’s legal problems are a unique function of the aging process. They can be complex and include estate planning problems, the problems of incapacity and the cost of quality care.

Elder law attorneys focus on the legal needs of the elderly, and work with a variety of legal tools and techniques to meet the goals and objectives of the older client. Under this holistic approach, the elder law practitioner handles general estate planning issues and counsels clients about planning for incapacity with alternative decision making documents. The attorney also assists the client in planning for possible long-term care needs, including nursing home care and Medicaid.

Locating the appropriate type of care, coordinating private and public resources to finance the cost of care, and working to ensure the client's right to quality care are all part of the elder law practice.

Elder law attorneys are concerned with problems unique to the elderly. The elder law attorney works as their advocate. Elder attorneys are dedicated to ensure delivery of quality legal services for the elderly and to advocate for their rights. There are three major categories that make up elder law:

 

1.Estate planning and administration, including tax questions;

2.Medicaid, disability and other long-term care issues; and

3.Guardianship, conservatorship and commitment matters, including fiduciary administration.

 

Other areas include retirement benefits, Medicare, disability benefits, litigation in the areas of elder abuse and elder fraud.

The needs of elder clients extend beyond their legal problems. The clients may be frail or ill and require home health care or replacement in an institutional facility. The clients may be well but fearful that future illness may deplete financial resources, and thus may need to consider a long-term care insurance policy. If a client is a caretaker and is overwhelmed with the demands of caring for a person who is suffering from some form of dementia, the client may need other support services offered by various religious organizations of nonprofit organizations, such as the Alzheimer's Association. Meeting the needs of the client(s) depends on moving beyond conventional legal work to offering practical assistance. Quite often the attorney is the right person to provide information about home care, nursing homes, special geriatric health programs, adult day care and respite care; handling even a few elder-law cases quickly leads to an accumulation of such information and contacts with the right people.

The following is an exhaustive list of the areas in which an elder law attorney will practice:

1. Health and Personal Care Planning (including advance medical directives and living wills);

2. Pre-Mortem Legal Planning (wills and trusts);

3. Fiduciary Representation (including guardianship, trustees and personal representatives);

4. Legal Capacity Counseling (advising how capacity is determined and the level of capacity required for various legal activities);

5. Individual Representation (of those who care or who may be the subject of guardianship or conservatorship procedures);

6. Public Benefits Advice (including Medicaid, Medicare, social security and veteran's benefits);

7. Advice on Insurance (including health, life, long-term disability and burial/funeral policies);

8. Resident Rights Advocacy (including advising patients of their rights and remedies in matters such as admissions, transfer, discharge policies and quality of care);

9. Housing Counseling (reviewing options and financing of options such as mortgage alternatives, life care contracts and home equity conversion);

10. Employment and Retirement Advice (pension, retiree health benefits and unemployment benefits);

11. Income, Estate and Gift Tax Advice;

12. Counseling about Tort Claims against Nursing Homes;

13. Age and/or Disability Discrimination Counseling (including employment and housing and Americans with Disabilities Act); and

14. Litigation and Administrative Advocacy (including will contest, contested capacity issues and elder abuse).

 

Eligibility Criteria For Nursing Home Medicaid

By Elder Law Attorney Sean W. Scott, Esq.

Original publish date September 9, 1999. Updated for 2003. See the current numbers by clicking here.

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In this section:

How to determine eligibility.

Breaking down the two financial criteria, assets and income.

The different situations of married couples versus single applicants.

Details the use of an income trust.

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The Threshold Eligibility Tests

There is an initial three part test to determine eligibility for nursing home Medicaid: Basic "medical" need; age or disability; and financial resources. Each one of these tests must be passed before you can get Medicaid to pay for care. If any one is missing you will not be eligible for the program and will have to pay for care privately; that is, out of your own pocket.

First Test - "Medical" Need

I put the word medical in quotations because this is not as strict a test as there is with Medicare. The care provided to the individual need not be strictly medically necessary, but may be custodial in nature. The person must have some form of impairment that limits the activities of daily living to a point where a nursing home is needed. This test is usually not a problem and is designed to keep healthy individuals out of the system. The standards to determine if the need is present are:

1. The need must require twenty-four hour nursing care in a "skilled care facility." A skilled care facility is one where professional nursing services are available and include, physicians, respiratory care, audiologists, physical and occupational therapists.

2. The individual’s needs are so medically complex that they require supervision, assessment or planning by a Registered Nurse.

3. The individual must need the care on a daily basis.

4. The individual needs ongoing involvement of a Registered Nurse or other professional in the evaluation of the individual and the implementation of a treatment plan.

5. The individual needs continuous observation in order to monitor for complications or change in the status of his condition.

6. Lastly, the care the individual needs should not be of a degree which would normally be provided by a hospital.

Second Test - Aged or Disabled.

In order to be eligible for benefits you also need to be either suffering from some form of disability or you need to be over 65. A 60 year-old with Alzheimer’s would meet this test as the Alzheimer’s disease qualifies as a disability. A 70 year-old, on the other hand, need not have a disability. So long as he needs nursing home care he will pass this phase of the inquiry. (See first test.)

 

Third Test - Financial

Here is where things get sticky. The third test presents perhaps the most confusing requirements of the three tests due to the number of variables that must be considered.

The specific dollar amounts change depending on the specific characteristics of the applicant. State laws also differ in this regard.

The states are divided into two camps, one where the income of the applicant is used to deny eligibility if it is over a certain number, called the income cap, and those where it is merely used to determine the amount of benefits. For the sake of discussion in this book all numbers and eligibility requirements will use the laws that are applied in the state of Florida. Florida for example is an "income cap" state. (Caution is advised if using this material for other states. You should consult with an elder law attorney in your state to update and localize the laws to that particular jurisdiction.)

 

The Asset Test

MARRIED VS. SINGLE

In determining the exact amount of assets that can be retained, we first have to know whether the applicant is married or single. The Medicaid laws were originally targeted at increasing the amount of seniors that could qualify for the Medicaid program. Congress was especially concerned with making sure that the spouse who was not in the nursing home was not impoverished to the point where she became a nonproductive member of society. The eligibility numbers are quite different depending on whether you are married or single. A married couple may keep up to $92,660 in countable assets. ($90,660.00 for the spouse and $2,000.00 for the applicant spouse.) A single person, including widows, may only have $2,000.00 in countable assets. (This number increases to $5,000.00 in cases where the income of the individual is under $679.00.) Below is a summary of the eligibility numbers:

 

Assets (income greater than $679.00 per month)	Applicant	Community Spouse	Income (Florida)
Single	$2,000.00	n/a	$1,656.00
Married	$2,000.00	90,660.00	$1,656.00 per month for applicant, unlimited for community spouse
Assets (income less than $679.00) per month	Applicant	Community Spouse	Income (Florida)
Single	$5,000.00	n/a	$1,656.00 per month
Married	$5,000.00	$90,660.00	$1,656.00 per month for applicant, unlimited for community spouse

 

What’s an Asset?

Notice that I said countable asset above. This is a critical distinction because many of us own a primary residence that we think would automatically put us over the asset limit. Remember the Medicaid program was designed to help seniors from becoming impoverished due to the high costs of nursing home care. The home of the applicant in nearly every situation is not counted as an asset of the applicant. It is so discouraging for me to hear a client tell that they have sold the home in a last ditch effort to generate cash to continue to pay for nursing care. Why did they do this? Because they did not know any better. Such ignorance of the law can cost your family dearly. I must stress that the primary residence is not counted as an asset when applying the asset level test. Subtract it from your total assets when calculating eligibility. There are other types of non-countable assets, such as the car and a burial account, but none are potentially as large as the home.

The reader should be careful when looking to which assets to count. Often clients erroneously believe that a joint bank account is only treated as half an asset: Not so, 100 percent of the asset is counted! And do not think that the other person on the account, your son for example, can withdraw the bulk of the account and put it into his name. The law specifically forbids this. Also, remember that little insurance policy you have been paying on for years? Well, it probably has built up quite a nice cash value that will be counted as an asset. The asset test is not as easy as it would seem. Similarly the income test poses its own set of unique problems.

Income Test

In addition to looking at the amount of assets you have, some states, including Florida, impose an additional factor to consider when determining eligibility, the income of the applicant. In Florida, for example, the income amount is capped at $1,656 per month. In "income cap" states if the applicant is over the cap, even by a dollar, he is not eligible for benefits, despite the fact that he passes every other test.

This often imposes the harsh and arbitrary result of ineligibility for the applicant over the income cap even though he has no other assets and no other means to generate additional cash flow. Furthermore, while he may have a relatively high income he may not even be close to the amount required for care averaging $4,500.00 per month. The applicant has fallen into what we call the Medicaid Gap. Too much income to qualify for benefits, too little to pay for care. What do you do in this situation?

Prior to 1993 there were few if any options for the person in this situation. Sometimes the nursing home would provide services at a reduced rate; sometimes they would not. The person is considered INELIGIBLE for Medicaid benefits if he make greater than $1,656 per month. In 1993 Congress again modified the laws regarding the Medicaid program, and while they took away with one hand; again further restricting the criteria for determining eligibility, they gave with the other; giving people who were over the cap a work-around to avoid the Medicaid Gap. This work-around is called the income trust See the section on strategies for obtaining eligibility for a complete discussion of the income trust.

Income Trusts

While an income trust is not specifically related to protecting assets, it is an absolute necessity if your income is greater than the $1,656 per month income cap. If you are in an income cap state, are over the income cap and want to have benefits paid in an income cap state you must have an Income Trust drafted, executed and properly funded, prior to application for benefits.

Income Trusts are fairly simple in their concept. A trust is set up in order to divert income of the applicant to the trust in an amount great enough to reduce the income of the applicant below the cap. So, for example, if you have $1,666 in monthly income, you will need to put $10.00 into the trust each month to bring the income at or below the cap amount.

Now for the peculiar part; the total income of the applicant, with a few deductions for personal needs, is used to calculate what is known as the patient’s responsibility. This patient’s responsibility requires the applicant who has been granted benefits to pay his total income; $1,666.00, to the nursing home as his contribution to the cost of his care. There is an obvious shortfall of $10.00 that was sent to the income trust. The solution is that the trust then pays the $10.00 to the nursing home, making up the balance.

When the applicant is over the income cap, eligibility can not be established without the use of an income trust; therefore, the income trust must be set up before the application process is begun. Additionally, it must be properly funded with the applicant's excess (over the cap) income. For example: $10.00 would go into the trust as diagramed below. If you do not transfer the excess income to the trust prior to, and during the application process, eligibility will probably be denied for those months that the trust did not receive the excess income.

Seniors Turn to Medicaid to Pay Nursing Home Bills

By Sean W. Scott, Esq.

August 9, 1999

A man's chance of entering a nursing home in his life is one in three…for women, it is one in two. Inevitably every senior in our community ponders the question "will I ever end up in a nursing home?" The next question then becomes "How will I pay for this care?" Many seniors are surprised to learn that their health insurance, including Medicare, does not pay for an extended stay in a nursing home. A stay in a nursing home, where the average monthly bill is from $3,500 to $4,500, can rapidly wipe out a families savings. In Florida where one out of every five residents is over 65 and where 400,000 Floridians have Alzheimer's disease…one of the leading health problems that lead to the need for long term care, it is clear that this problem is one of pressing concern. Long term care insurance is one very good solution to finance the costs of long term care. However, it is one that is not often available due to the propensity of most seniors to put off the purchase of such insurance until it is too late. Long term care insurance is impossible to buy once you have been diagnosed with Alzheimer's or some other debilitating disease. The older you are also affects whether or not you can purchase long term care insurance. Many seniors and their families are turning to Medicaid in order to pay the nursing home bill, and as part of that process, seniors are turning to elder law attorneys to assist them in understanding the complexities of Medicaid's laws.

Nearly 70% of the residents presently in long term care nursing homes receive Medicaid benefits to pay their monthly nursing home bills. Why would a senior want to qualify for what many believe is a welfare program to pay for this care? One way of looking at it is to take for example, a married couple with $100,000 in assets. One of them has a stroke and requires long term care. The couple could decide to spend their money for the care. With nursing home care averaging $4000 per month they would have spent enough money to become eligible for benefits in four months. The couple might instead decide to apply for Medicaid right away and use the $16,000, the amount that they are over assets, to fix the home, put some money away for the healthy spouse or even transfer the money to a child. With some exceptions the Medicaid laws allows them to do this.

Medicaid, originally created as a welfare program to provide basic health care to those without financial means, was substantially changed in 1988. It was then that the U.S. Congress changed the rules regarding eligibility opening the program to seniors whom most would not call poor or in need of welfare. Along with the changes in the eligibility rules in 1988 came an increase in the facilities that would accept Medicaid payment in exchange for providing care. More facilities signed on to accept Medicaid as payment for the resident's care. Today, it is now possible to receive care at superior rated facilities in our community regardless of whether or not the resident pays privately or by Medicaid. Gone are the days when being on Medicaid meant receiving substandard care.

In order to be eligible for Medicaid benefits the State of Florida requires that certain asset and income tests be met. Each year these numerical tests change. For 1999 the Medicaid tests require that the applicant for benefits be at or below $2,000 in countable assets, while the applicant's spouse is allowed to keep $84,120. The applicant's home and car are not counted as assets. The second test requires that the applicant's gross income be less than $1,536 per month. The state does not count the income of the spouse when determining eligibility. If the applicant is either over income or over assets then the applicant does not qualify for benefits.

Many seniors who are over the asset or income limits are now seeking advice from elder law attorneys to help them become eligible for benefits. These attorneys in essences make the person eligible for Medicaid by assisting the client in preserving their assets within Medicaid's rules. There are two widely differing opinions as to whether or not someone should use the Medicaid laws to their personal advantage or instead pay privately for the care until their funds are depleted. A segment of the insurance community is pressing for reform of the Medicaid laws so as to encourage more seniors to purchase long term care insurance. Insurance requires advanced planning so that it can be purchased ahead of the need for care. If you require care or have a disease that will eventually require long term care, insurance is no longer an option. The question of how to pay the nursing home bill will continue to be an ever increasing problem facing more and more people. For more information on Medicaid and long term care questions, contact us at (800) 823-5571.

The information in this site has a general applicability to all viewers, however, since our attorneys are licensed to practice law only in Florida and Colorado, it has an emphasis on those state's laws and may be most helpful to Florida and Colorado residents. Please see our disclaimer for further cautionary words regarding the information contained within this site.