Florida Medicaid looks at three things to determine if you are eligible nursing home Medicaid benefits: Medical need, age, and finances, and ONE thing to see if you are disqualified. Check out the video page for additional information.
First Requirement – Medical Need
This is the “Are you sick enough?” requirement. Medicaid requires that the applicant be unable to care for himself or herself without substantial assistance. What degree of care or level of care is substantial enough? The person must have an impairment or illness severe enough to limit his or her activities of daily living to a point where a nursing home is the only appropriate placement.
Second Requirement – Aged, Disabled or Blind
In order to be eligible for benefits the applicant must be either over 65, be characterized as disabled, or blind. Disabled is defined as the inability to perform gainful activity for a period of time that is expected to exceed one year. The general rule here is that the person needs to be 65 years old or older, however the exception to this rule allowing disabled individuals under 65 to qualify makes this a particularly easy requirement to meet.
Third Requirement – Financial Need
The third requirement is the one most people focus on. It can also be the most confusing requirement due to the number of variables that must be considered, and the special rules concerning moving assets and income. The financial requirement in Florida is divided into two distinct sub-tests: Florida looks at the assets of the applicant and spouse, as well as the applicant’s income. In other words what you got (assets) and what you get (income) are used to determine Medicaid eligibility.
The amount of assets allowed for eligibility is quite different depending on whether we are talking about an applicant who is married or one who is single. A Florida married couple in 2017 may keep up to $121,220 in countable assets. ($119,220 for the community spouse added to $2,000 in assets allowed for the applicant spouse.) Single person can only have $2,000 in countable assets. (The $2,000 limit increases to $5,000 if the income of the applicant is under $871 per month.) It is important to update these eligibility requirements on an annual basis as they change every year.
In Florida, the 2017 income limit is set at a maximum of $2,199 per month. This cap amount is based on the applicant’s gross income, not his or her net income. This means that deductions such as the Medicare premium and any withholding tax must be added back to determine the applicant’s gross income. In Florida, an applicant who is over the cap, even by a dollar, is not eligible for benefits, but can fix this problem by using an income trust.
When I explain to clients that the income cap and its negative effect on Medicaid eligibility is easily resolved by the implementation of an income trust they shake their head. Why, they ask, does Florida have one law that disqualifies you for Medicaid benefits based on income, only to be gotten around, and basically nullified, by using an income trust? The essence of an income trust is to think of it as an EXCESS income trust. The excess income that the applicant has above the $2,199 limit merely has to be deposited into the trust's bank account each month. The amount deposited is magically subtracted from the income of the applicant, reducing them below the cap. See the income trust diagram for a visual of how this works as well as read the chapter in the Medicaid Handbook for a more complete discussion on income trusts.
The most common cause for denial of Medicaid benefits is a transfer or gift of assets. Generally transfers of assets prior to application for Medicaid benefits is a bad thing that will result in disqualification. Medicaid will look back five years from the date of application to see if ANY assets were given away. There is no safe amount of gift or any excluded person or entity (with a few exceptions.) If a gift has been made though, it can be "undone" by giving the gift back. One thing that needs to be clear: You do not have to have made asset movements five years in advance. This is a common misconception. You will have to disclose the gift and fix the problem before you can become eligible.
Now or later?
The idea of planning for something that you don't even want to think about it sometimes almost incomprehensible. No one lists nursing home planning as a priority. Unfortunately this is where life can take a decided turn toward reality. Sometimes we have advanced warning of the pending need, and other times it just surprises us. There are typically three different types of clients that we see in our office, the planner client, the uh-oh client and then the one that we call the writing on the wall client.
Everyone knows of this type of person, you may even be that person, the person that knows what they're going to have for breakfast next month. The planner has a plan for everything. A plan for this person is a little bit of freedom, one less thing to worry about. Unfortunately, this is not the sweet spot of the human condition. Most of us procrastinate and put off till tomorrow what we could have done today. Still, for the planner, having a plan for life eventualities represents peace of mind and one less thing to worry about. The cornerstone of that plan is a good, complete, durable power of attorney.
Durable Power of Attorney
When it comes to planning ahead, the most thing is having in place a good durable power of attorney. When I say good here I mean a document that has all of the required powers that will be necessary for your backup person to be able to step in your shoes and do those things that are required in order to obtain Medicaid benefits. Many power of attorney documents, especially those produce by non-lawyers, do not contain the language that will be required to qualify for Medicaid benefits.
The BIG Five Powers
Five powers that need to be in every power of attorney but are most commonly missing:
1. The power to create a trust, including both revocable and irrevocable trusts.
2. The power to fully manage individual retirement accounts (IRAs).
3. The power to make gifts, especially to the named power of attorney.
4. The power to convey the home and all the principle's interest.
5. The provision specifying the backup to the named power of attorney.
The Uh-Oh client
On the other end of this planning spectrum, is what I refer to as the uh-oh client. This is typically the client who has not done any prior planning or has been surprised by some sort of sudden need for placement in a nursing home or assisted living facility. The term comes from the situation where the person receives the nursing home bill, sees the amount that is being charged on a per month basis and then says to himself uh-oh. While this may be the most common client that I see, some planning opportunities can be lost by waiting to the lase minute. This brings up to the third type of client...
The writing on the wall client
There is a bible story from the book of Daniel that talks about writing on the wall, literally a warning from God, and that is a good idea to head that warning. Many of my clients may have a similar heads-up regarding future care needs and the need for Medicaid. When such advanced warnings exist, it is a VERY good idea to begin the process of establishing eligibility and taking action to address the many issues that are present. Failure to take action usually results in a less than optimal outcome.
Failure to plan is a plan to fail
One of the most common reasons for lack of planning in the world of public benefits and specifically Medicaid is the commonly held misconception that if you have not taken any action at least 5 years in advance then you are out of luck and cannot do anything but pay privately for the nursing home care. This is just wrong. The 5 year rule only relates to the making of gifts/transfers of assets prior to application of benefits. It is never too late to solve the problem, to take control of the situation and put into place a plan of action to obtain benefits to help pay the cost of long term care. It is only too late if you do not take action.
Income Cap Limit 2017
gross income per month
Asset Limit (single applicant)
Asset Limit - married couple 2017
(yes it is a big difference)
You can divert income to applicant spouse to raise community spouse's income.
Minimum spousal monthly income
Maximum amount to healthy spouse can be increased by diverting applicant spouse's income in the event of high housing costs.
Maximum income allowed to be diverted
transfer ÷ 8,662
number of months disqualified
Transfer Look Back Period
from date of application
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