This and other asset related questions with Florida ICP Medicaid qualification
Over the years I have been asked hundreds of questions concerning the qualification of nursing home Medicaid, but the most commonly asked questions pertain to assets. Naturally the biggest one is “Can I keep my house?” In this article I will address this and many other questions concerning assets.
Assets are broken down into three different categories. These headings are Countable assets, Non-countable assets and Exempt assets. Assets are also analyzed in terms of whether they are assets of a single person or a married couple. They are then also divided up between the confined spouse and the healthy or “community” spouse. We are going to look at all of these types of assets. Additionally, we explain what assets you are able to keep and what will hinder you from qualification for ICP Medicaid.
Medicaid is a federally funded, state run program. Each state has specific laws pertaining to nursing home Medicaid and estate planning. The rules and regulations I will be discussing in this article pertain to Florida nursing home Medicaid. Please refer to your own states’ policy and do not presume that other states’ follow the same guidelines as Florida.
I would like to state that the information I provide in these articles must not be interpreted as legal advice. Moreover, it is important to note that each case has unique characteristics that must be thoroughly analyzed by a nursing home Medicaid specialist. My company has helped hundreds of individuals and families through the nursing home Medicaid qualification process. We are proud to announce that we enjoy an A+ accredited rating from the Better Business Bureau. Additionally, we have a 100% close rating regarding nursing home Medicaid application filings.
I will first discuss assets for single individuals and then transition to a view of married couples. We will also include an analysis of the different types of assets that are considered in the nursing home Medicaid filing process.
Assets for the single person
First, a single person can only have a maximum of $2,000 in countable assets. This single, confined individual (individual in nursing home care) is allowed to own one house as their homestead. This homestead may have up to $525,000 in equity. If the house is worth less than $525,000, or if there is a mortgage on the home that brings the equity below $525,000, the house is exempt. Therefore, it is not considered as a countable asset of the confined individual. If the home has more than $525,000 in equity; the state of Florida will place a lien on the premises for the amount they paid out in Medicaid benefits for the confined individual. The confined individual is also allowed to own one vehicle of unlimited value. This vehicle can be an old beat up clunker or a brand new, expensive luxury vehicle. A confined individual can own a wedding and engagement ring, household furnishings, and clothes. A confined individual may own pre-paid funeral arrangements as long as they have been made irrevocable. Additionally, they may own up to $2,500 in original face amount of life insurance without any of the cash value counting toward their countable assets.
Assets for the community spouse
The community spouse may have up to $113,640 in countable assets. This means that the community spouse and the confined spouse may have up to $115,640 in combined countable assets. The community spouse and the confined spouse together may own one car and one house; they don’t each get to own one. Both the confined spouse and the community spouse may also have household furnishings and contents normally found in ones’ home. The community spouse may also have pre-paid funeral arrangements as long as said arrangements are deemed irrevocable. The community spouse may also own up to $2,500 in life insurance without any of the cash value counting toward their countable assets.
Types of assets
There are three different types of assets which must be taken into account with regards to the nursing home Medicaid process and estate planning: Countable assets, non-countable assets, and exempt assets. Each of these assets are looked at differently in the nursing home Medicaid qualification process. Understanding where each of these assets must be allocated will help you understand how an individual can successfully qualify for nursing home Medicaid.
➫ Countable Assets
Countable assets include, but are not limited to: checking accounts, savings accounts, CDs, money markets, stocks, bonds, mutual funds, savings bonds, most annuities, cash, second homes, additional properties, boats, planes, additional automobiles and motorcycles, investment accounts and any other asset that can be titled. Countable assets are just that – countable toward nursing home Medicaid qualification and subject to the limits of $2,000 for an individual and $113,640 for a community spouse.
➫ Non-Countable assets
Non-countable assets are assets that would be considered countable but for some type of exception. Here is what I mean. IRA’s or Individual Retirement Accounts are considered a countable asset if no distributions are being taken on them annually. Once you reach 70.5 years of age you are required to take distribution on your IRAs; this is known as “required minimum distribution” or RMD. However you do not have to be 70.5, you can start taking distribution at any age. If you are not at least 59.5 years of age there is a penalty of 10% in addition to the taxes you have to pay on your distribution. Alternatively, taking a distribution causes the IRA to be considered non-countable as an asset for purposes of nursing home Medicaid. The income the IRA produces counts as income to the one receiving it. However, the asset itself is no longer considered countable. 401K’s and other pension related assets fall under the same rules as an IRA with regards to the nursing home Medicaid application process.
Another non-countable asset is an annuity IF the annuity is annuitized irrevocably for the life expectancy of the individual whose name it is in, based on the social security life expectancy tables, or shorter. This means that if you have a female age 85 and their life expectancy is 6 years, the annuity must pay out in that six year period of time or less. If the annuity income payment is for longer than the life expectancy of the individual, it is considered not to be “actuarially sound” and hence-forth considered a countable asset. The annuity must also be irrevocable, un-assignable, non-cancellable and must pay out interest and principal. If the annuity is on the confined person, it must pay out in equal payments. Also, as of November 1st 2007, the state must be listed as the first beneficiary so they may recover up to what they paid out in nursing home Medicaid benefits while the individual was in the nursing home.
Other non-countable assets include but are not limited to: jointly owned property if the property was jointly purchased and the other owners are unwilling to sell. You cannot just add another person or family member to a property unless they pay fair market value for their share of the property. Otherwise, it would be considered a gift for the nursing home Medicaid application process. Rental property, as long as it has been purchased at fair market value and rented at fair market value, is not considered a countable asset. A legitimate business is not considered a countable asset as long as it is producing income. If you have a second home or other property that would normally be considered a countable asset and place it up for sale with a real estate agent for fair market value, it then becomes considered a non-countable asset.
➫ Exempt Assets
Exempt assets are assets up to $2,000 for a confined person and up to $113,640 for a community spouse. Exempt assets also include, but are not limited to, one house as a homestead with equity up to $525,000. One automobile of unlimited value, wedding and engagement rings, household furniture and other contents of the home, up to $2,500 in original face amount of life insurance, burial plots and pre-paid funeral expenses as long as they are made irrevocable. If a confined individual makes less than $808 in monthly gross income, they are able to keep up to $5,000 instead of $2,000.
If there is $2,500 dollars in original face amount of insurance or less, none of the cash value is counted as a countable asset for purposes of nursing home Medicaid. However, if there is $2,501 or more in original face amount of life insurance then all the cash value is counted. This is the total amount of life insurance, not the amount of each policy. So if you have a $1,000 life insurance policy, a $500 life insurance policy and a $2,000 life insurance policy, this adds to $3,500. Therefore, all of the cash value counts toward the countable asset limit for nursing home Medicaid purposes. There are solutions for repositioning these assets. Furthermore, hypothetically, you could have a million dollars in term life insurance with no cash value and it will not prevent an individual from qualifying for nursing home Medicaid. However, if you have a single $3,000 policy with cash value, it and all of the cash value of that policy will be considered a countable asset. This applies to both the confined individual and the community spouse. They each are allowed to own up to $2,500 in original face amount of life insurance.
I cannot address all of the intricate nuances of nursing home Medicaid and estate planning in one article. I do hope this information assists you in your search to learn more about Florida nursing home Medicaid and the ICP Medicaid qualification process. Please do not hesitate to visit our website http://www.elderplanningall.com/ should you have any questions and/or concerns. You may contact the nursing home Medicaid Specialists at Elder Planning Alliance through this web site. If you currently have a loved one in a nursing home or are considering placing a loved one in a nursing home I strongly suggest you discuss your specific situation with the experts at Elder Planning Alliance. We will take you step-by-step through the nursing home Medicaid application process. Additionally, we will strategically plan for the preservation and protection of yours or your loved ones’ assets. The nursing home Medicaid specialists at Elder Planning Alliance offer families a free initial consultation. You will be given the peace of mind of knowing that you are acting in the best interest of yourself or your loved ones. For immediate help, please do not hesitate to the nursing home Medicaid professionals, toll free, at 1-866-372-2702.