Medicaid Update Presented by: Randy C. Bryan, Esq. The Law Offices of Hoyt & Bryan, LLC Family Wealth and Legacy Counsellors 254 Plaza Drive Oviedo, Florida (407) – voice (407) fax © 2012 – Hoyt & Bryan, LLC
What are the Costs? Medicaid Update
How Are You Going to Pay for It? LTCLTCCCOOSSTTSSLTCLTCCCOOSSTTSSCOSTS LTCLTCCCOOSSTTSSLTCLTCCCOOSSTTSSCOSTS LTC INSURANCE? PERSONAL ASSETS? FAMILY? MEDICARE? MEDICARE SUPPLEMENT? VETERANS AFFAIRS? MEDICAID?
Medicare Coverage of Nursing Home Care For skilled care, Medicare will pay the full cost of stay in a nursing home facility for only 20 days. It will pay a part of the cost for the next 80 days, and absolutely nothing after 100 days. BENEFITMEDICARE PAYSYOU PAY First 20 Days100% of NOTHING Approved Amount Next 80 DaysAll But $144.50/Day $144.50/Day Beyond 100 DaysNOTHINGALL COSTS Medicaid Update
How Are You Going to Pay for It? LTCLTCCCOOSSTTSSLTCLTCCCOOSSTTSSCOSTS LTCLTCCCOOSSTTSSLTCLTCCCOOSSTTSSCOSTS LTC INSURANCE? PERSONAL ASSETS? FAMILY? MEDICARE? MEDICARE SUPPLEMENT? VETERANS AFFAIRS? MEDICAID?
Medicaid Law Development Medicaid Spend Down Spousal Impoverishment Rule (1988) Irrevocable Trust Planning OBRA (1993) “Granny Goes to Jail” Law - and her lawyer too! (1997) “Only Granny’s lawyer goes to jail” (1998) Nobody goes to jail anymore! (1999) Deficit Reduction Act of 2005 –Passed by U.S. Congress in (2006) –Implemented in Florida 11/1/2007 & 1/1/2010 Medicaid Update
Eligibility Criteria for Medicaid In a facility that accepts Medicaid or enrolled in a Medicaid Waiver Program At least 65 years of age or disabled Citizen or permanent resident alien Resident of Florida Medical need for nursing home care Income Cap (only person in nursing home) Asset Cap (person in nursing home & spouse) Not be under a penalty period b/c of prior uncompensated transfer Medicaid Update
Income of Medicaid Applicant $2,094/month GROSS income (2012) Add back in Premiums for Medigap insurance Premiums for health/hospital insurance Part B reduction- $99.90 Life Insurance premiums taxes garnishments guardianship fees Medicaid Update
Average cost of nursing home care in Florida $7,500/month GAP Medicaid Income Cap $2,094/month Medicaid Update
Qualified Income Trust (a/k/a “Miller” Trust) Required any time the institutionalized spouse’s income exceeds $2,094/month Applicant must meet all other eligibility requirements Trust must be prepared by attorney Medicaid Update
Who can establish a QIT? Medicaid Applicant (if competent) Applicant’s spouse (w/o DPOA) Attorney-in-fact (if authorized by DPOA) Court Medicaid Update
Assets of the Applicant cannot exceed $2,000 Assets of the Community Spouse cannot exceed $113,640 (2012) Medicaid Update
Exempt or Non-countable Assets Homestead Vehicle Life Insurance* Irrevocable prepaid burial contract Burial Account* One wedding/engagement ring Medicaid Update
Countable Assets Include Basically Everything Else General Rule - if you can access the principal, count it Bank accounts / CD’s / money market accounts Non-homestead real estate Stocks & bonds More than one vehicle Revocable burial contracts Assets in Revocable Living Trust Assets in a Guardianship Jointly held assets Medicaid Update
Hybrid Assets Retirement Funds Annuities Medicaid Update
Planning for the Asset Test Medicaid Update
Calculating the Spend Down: Penalty Divisor = $5,000/month – in process of changing to $6, Gifting: transfers Exempt vs. Non-Exempt IRS gifts vs. Medicaid gifts Medicaid Update
Effect of an Uncompensated Transfer Does not result in disqualification Can result in a period of ineligibility or “penalty period” based on the date and amount of the transfer Medicaid Update
How to Spend Down: Look back period 3 years – ( prior to January 1, 2010) 5 years – (on or after January 1, 2010) Penalty Period/ Waiting Period Medicaid Update
LAW : “Lookback” starts when applicant resides in Nursing Home and applies for Medicaid Benefits 5 years For gifts prior to 11/1/2007, “penalty” starts when gift/transfer is made For gifts after 11/1/2007, “penalty” starts on application for Medicaid benefits Runs at approximately $5,000/month The timing of the application is CRITICAL Medicaid Update
Disadvantages of Transferring Assets Loss of Control Divorce Judgment Creditors Misuse of Funds Loss of step-up in basis Loss of financial aid Gift taxes Early death of adult child Coordination with estate planning Medicaid Update
Coordination with Estate Planning Critical Planning Issues when spouse is in a nursing home or may require nursing home care in the future Effective October 1, 2001 cannot disinherit spouse Joint ownership/beneficiary designation pitfalls Must utilize “Special” Planning to protect assets from Medicaid spend down Medicaid Update
Issues on the Horizon Medicaid Reform Implementation Block Grants Continued Shrinkage of Medicaid Dollars Repeal of CLASS Act Increased importance of Preventative Planning Long-Term Care Insurance Irrevocable Trust Planning Medicaid Update