Medicaid and Nursing Home Planning

Financial planning for nursing homes

By Stuart R. Morris, Esq., CPA, CELA, Elder Law Associates, P.A.

Nursing home care is expensive, and most people haven't thought through how they'd pay for it. These are questions worth asking yourself now: Do I want to plan for nursing home care? What does it cost in my area? How much have I saved for it?

Many older Americans face a real problem. We're living longer than previous generations, but we're not always able to care for ourselves. Meanwhile, adult children are less likely to live near their aging parents or provide care at home.

More older Americans now spend their final years in nursing homes. The cost is substantial. In South Florida, nursing homes average around $5,000 per month—and that's on the lower end.

Long-term care insurance helps if you qualify and can afford it while you're still healthy. But what if you can't? The main option is Medicaid, which covers nursing home care if you meet three tests: medical need, income limits, and asset limits.

To qualify for Medicaid's Institutional Care Program in Florida, you must meet three criteria: medical need, income limits, and asset limits.

You meet the medical criteria if the Department of Health and Rehabilitative Services determines you're medically needy or unable to perform most daily living activities, and you live in a Medicaid-approved nursing home.

Your income must be less than $1,635 per month. This includes Social Security, pensions, disability payments, and investment income. If you're married and your spouse is still living at home, their income doesn't count. If your spouse is also in the nursing home, they're also limited to $1,635 per month.

If your income exceeds $1,635 per month, you may still qualify using a Qualified Income Trust. This trust receives your income and pays the nursing home directly, keeping you under the income cap.

A single person in a nursing home can retain $2,000 in assets. A married couple can retain $3,000.

If one spouse is in a nursing home and the other is living at home, the nursing home resident can have $2,000 in assets while the community spouse can have up to $89,280.

Either way, you can keep your home, one car, personal belongings, and prepaid burial arrangements without counting them as assets.

If you transfer assets to your spouse, there's no penalty. But if you transfer assets to anyone else, Medicaid looks back 36 months. Any transfer above the limits can create a period where you're ineligible for Medicaid.

If assets are transferred through a trust or to a trust for a non-spouse, the look-back period extends to 60 months.

To calculate how long you'll be ineligible, divide the amount transferred by $3,300. The result is the number of months Medicaid will deny coverage. Transferring exempt assets (like your home) to a non-spouse can also trigger ineligibility.

There are ways to help nursing home residents protect assets under Medicaid rules.

You can spend down assets to qualify, but other strategies exist that let you preserve savings for your spouse or children while still qualifying for Medicaid within a few months.

These are Florida's general rules. Before you take action, talk to an elder law attorney. They can explain your options and help you keep more of what you've built.

Stuart R. Morris is an attorney and certified public accountant specializing in elder law, nursing home planning, wills and trusts, and asset protection. He is AV rated and board certified by The Florida Bar in Elder Law and Wills, Trusts and Estates, and holds certification as a Certified Elder Law Attorney. He lectures regularly to attorneys, CPAs, and the public on elder law and nursing home planning. His offices are located in Aventura, Boca Raton, Fort Lauderdale, Weston, and West Palm Beach. Reach him at 1-800-ELDER LAW (1-800-353-3752).

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