By Andrew C. Grant
Any caricature of Florida inevitably shows a sizable senior population, which makes it no less true. With an aging population come certain needs, including increased needs for health care and day-to-day living assistance. Lawyers who work in Elder Law seek to assist clients with those needs in an economically efficient manner, whether by qualifying for Medicaid for long-term care costs, or structuring asset ownership so that long-term care costs don’t gobble up all the client’s assets.
Planning for long-term care costs may require significant changes to the client’s estate plan, as well. For example, qualifying for Medicaid may require giving assets away now instead of waiting until death. That makes it important to consider both aspects of planning when trying to meet the client’s needs.
Generally, there are three categories of persons when it comes to long-term care planning: there are those with sufficient wealth to self-pay, or who have procured long-term care insurance that will cover them; there are those with very few assets who do not have a problem qualifying for Medicaid; and there are those in-between with too much wealth for Medicaid and too little to self-pay.
Most Elder Law planning involves clients in the last category who need specialized strategies to meet their long-term care needs. The goal with such clients, generally, is to get them qualified for Medicaid by reducing their assets or income to a qualifying level. In Florida, married couples’ total assets must be under approximately $120,000, while an individual applicant can have around $2,000. Importantly, those asset limits do not include a Florida homestead which is exempt from Medicaid limits and should never be sold or given away without consulting a professional first.
Getting total assets down to the maximum level means either giving them away or giving away some aspect of control over them. It may include creating an asset protection trust where the clients retain the right to income from their assets, but they give up the right to access them directly. Either way, gifting triggers a 5-year lookback period which may mean delaying Medicaid benefits.
Even if total assets aren’t a problem some clients have too much income coming in, whether from retirement, pensions, or social security, to qualify for Medicaid. Those clients may need a separate qualifying income trust set up to direct the income stream to where it needs to go to qualify. Again, married couples have slightly different rules for qualifying than individuals, and special care is needed to make sure the well spouse is not impoverished.
When extraordinary means are necessary to qualify a person for Medicaid there is a direct impact on that person’s ability to plan for their estate because their resources must be reallocated to make sure end of life care is provided for. In those cases, it is critical to consult with professional advisors to make sure the person’s needs are met as well as that person’s wishes. It is usually possible to accommodate both, but only through careful planning.