Medicaid Eligibility in Florida

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, we work with a lot of younger clients as well qualify under the disability provision.

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 2020 may keep up to a total $128,640 in countable assets. ($128,640 for the community spouse added to $2,000 in assets allowed for the applicant spouse.) Single persons can only have $2,000 in countable assets. (The $2,000 limit increases to $5,000 if the income of the applicant is under $891 per month.) It is important to update these eligibility requirements on an annual basis as they change every year.

In Florida, the 2020 income limit is set at a maximum of $2,349 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 we 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 are 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 $2,349 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 the income below the cap. See the income trust diagram for a visual of how this works as well as read the income trust chapter in our Medicaid Handbook for a 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 generally no safe amount of gift or any excluded person or entity although there are some exceptions. If a disqualifying gift has been made though, it can be “undone” by giving the gift back. One thing that needs to be clear: If you have not planned five years in advance you can still fix this problem. The five-year issue is a common misconception. You will have to disclose a gift but you can fix the problem and still become eligible for Medicaid benefits.