Long-term care costs are extremely expensive. According to the latest data from the Florida Health Care Association (FHCA), the median cost of a private room in a nursing home has now increased to six figures. As Medicare provides little long-term care coverage, it is imperative that Florida seniors utilize the right Medicaid planning strategy to protect their assets. The following are a few key factors to consider when determining one’s asset protection through proactive Medicaid planning.
Medicaid Covers Long-Term Care, Not Medicare (Why it Matters)
Knowing how expensive long-term care costs can be, each elder resident may have an important question: Can a senior citizen in Florida access public benefits to help cover long-term care costs? The answer is yes—but only when certain financial requirements are met. Here is the major issue:
- Medicaid, not Medicare, covers most long-term care expenses in the United States.
Understanding the distinction between Medicare and Medicaid is crucial for senior citizens who are trying to make viable financial plans for their future long-term care needs.
- Medicare, a federal health insurance program, primarily covers hospital stays, doctor visits, and short-term rehabilitation services. This program does not cover long-term care in nursing homes or assisted living facilities.
- Medicaid provides long-term care coverage. However, qualifying for Medicaid is not automatic. For many seniors in Florida, Medicaid eligibility is by no means straightforward. The Medicaid program has both strict income limits and strict asset limits.
Without proper planning, seniors in Florida may be exposed to the high costs of long-term care, which can quickly deplete their savings.
What You Need to Know About the Medicaid Spend Down Requirement
The Medicaid spend-down requirement is one of the most important concepts that senior citizens in Florida need to be aware of. If your income or assets exceed Medicaid’s eligibility limits, the senior will be required to “spend down” their excess assets to qualify for Medicaid benefits. However, Medicaid has strict guidelines on acceptable expenditures.
- The senior can spend down assets by paying off debts, making home improvements for medical needs, purchasing exempt assets, or prepaying funeral expenses.
- The senior cannot simply gift money to loved ones to meet Medicaid requirements. Any remaining assets above the limit will be used to pay for long-term care before Medicaid steps in. Further, income may be imputed to the senior on improperly made gifts, among others.
How Proactive Medicaid Planning Can Protect a Senior Citizen’s Assets
As stressful and confusing as it can be for seniors and their families to navigate long-term care, proactive planning can help protect assets. A top-tier Florida estate planning attorney who has experience in Medicaid planning can help determine the best course of action. It is recommended by many experienced attorneys to start Medicaid planning at least five years in advance. Strategies include:
- Home Equity Protection/Exemption: Medicaid allows a senior to protect or exempt up to $713,000 of home equity in 2024 & $730,000 in 2025. Paying off a mortgage or making qualifying home improvements can help.
- Early Gifting (Five-Year Lookback): Transferring assets to family members or a trust more than five years before applying for Medicaid can help protect wealth.
- Medicaid Trusts (Five-Year Lookback): An irrevocable trust shields assets from Medicaid eligibility calculations, but the same five-year lookback rule applies.
- Medicaid-Compliant Annuities: These convert liquid assets into an income stream, making them non-countable assets for Medicaid eligibility.
- Personal Care or Services Agreements: A formal agreement where a senior pays a family member for caregiving services can justify asset transfers under Medicaid rules.
Why Trust Florida Estate Planning and Elder Law Attorneys?
Medicaid planning is exceptionally complicated. If you have questions about your options or need guidance, an experienced estate planning and elder law attorney can help you navigate the process.
The foregoing is a very brief and very general overview of the topic and the need for specific and experienced legal and tax advice is emphasized.
If you have any additional questions regarding the foregoing or have any legal issue or concern, please contact the law firm of CASERTA & SPIRITI in Miami Lakes, Florida.