Medicaid Rules

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Medicaid is long term care for seniors. Medicaid pays for a nursing home, up to $1500 for an Assisted Living, or up to 20 hours per week of home health aide. The maximum allowance for countable assets is only $2000, and in order to qualify for Medicaid, a Medicaid Strategy needs to be implemented. Unfortunately, every strategy has a negative consequence, such as income tax implications, capital gains tax, or payback provisions to Florida Medicaid.  These are strategies utilized to avoid the five year look back period of Medicaid.  Fortunately, there is one strategy that does not have any of these negative consequences. There is not an income tax implication, there is not any capital gains, and most importantly there is not a payback provision to Florida Medicaid. 

 

There is a Medicaid rule that allows for investment property as long as it is rented with a fair market value. Florida also recognizes Lady Bird Deeds, so the payback provision to Florida Medicaid in Probate is avoided, and there is a step up basis on the property eliminating any capital gains tax. 

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For those individuals who have more assets than allowed by Medicaid, an Elder Law Attorney is essential for proper planning.  The Elder Law Attorney does NOT hide the assets from Medicaid. Instead, the Elder Law Attorney converts the countable assets in a manner allowable by Medicaid regulations to avoid having the spend down of the those prior to applying for Medicaid. 

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The Medicaid Rules can be found at 65A-1.712 SSI at paragraph f, which states that a second home is not a countable asset, as long it is rented out at Fair Market Value. Florida Department of Children and Families has maintained that a 3% annual return is Fair Market Value. 

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