2. 2
What is Medicaid AssetWhat is Medicaid Asset
Protection Planning?Protection Planning?
• Following the Medicaid RulesFollowing the Medicaid Rules
• To distribute your Assets to your familyTo distribute your Assets to your family
• While still qualifying for MedicaidWhile still qualifying for Medicaid
• Limiting amount of estate shrinkageLimiting amount of estate shrinkage
3. 3
FLORIDA MEDICAIDFLORIDA MEDICAID
REQUIREMENTSREQUIREMENTS
65 Years of Age or Blind or Disabled65 Years of Age or Blind or Disabled
U. S. Citizen or a Qualified AlienU. S. Citizen or a Qualified Alien
Florida ResidentFlorida Resident
Satisfy Asset TestSatisfy Asset Test
Satisfy Monthly Income TestSatisfy Monthly Income Test
Appropriate PlacementAppropriate Placement
4. 4
ASSET TESTASSET TEST
• Single Individual may have only $2,000.00 ofSingle Individual may have only $2,000.00 of
“Countable Assets”“Countable Assets”
• If that individual’s monthly income is less thanIf that individual’s monthly income is less than
$845, then they can have $5,000.00 of$845, then they can have $5,000.00 of
“Countable Assets”“Countable Assets”
• If married, the “community spouse” may haveIf married, the “community spouse” may have
only $117,240.00 of “Countable Assets”only $117,240.00 of “Countable Assets”
6. 6
EXEMPT ASSETSEXEMPT ASSETS
HomesteadHomestead
VehicleVehicle
Life InsuranceLife Insurance
Burial FundsBurial Funds
Prepaid Funeral Contracts or Funeral TrustPrepaid Funeral Contracts or Funeral Trust
Personal/Household GoodsPersonal/Household Goods
Retirement Accounts (paying out monthlyRetirement Accounts (paying out monthly
income)income)
Immediate AnnuitiesImmediate Annuities
Ongoing Business ConcernsOngoing Business Concerns
7. 7
HOMESTEAD EXCLUSIONHOMESTEAD EXCLUSION
If the spouse or certain dependent relativesIf the spouse or certain dependent relatives
continue to reside in the home, then the home iscontinue to reside in the home, then the home is
excluded.excluded.
If the Applicant for Medicaid intends to return toIf the Applicant for Medicaid intends to return to
the home, then the home is excluded. (Floridathe home, then the home is excluded. (Florida
presumes that every Applicant intends to gopresumes that every Applicant intends to go
home)home)
Florida Statute 409.9101: No debt under thisFlorida Statute 409.9101: No debt under this
section shall be enforced against any propertysection shall be enforced against any property
that is determined to be exempt from the claimsthat is determined to be exempt from the claims
of creditors under the constitution or laws of thisof creditors under the constitution or laws of this
state.state.
8. 8
VEHICLEVEHICLE
One vehicle of anyOne vehicle of any
ageage
Second vehicle if it isSecond vehicle if it is
over seven years old,over seven years old,
unless it’s a luxuryunless it’s a luxury
modelmodel
9. 9
ONGOING BUSINESSONGOING BUSINESS
CONCERNSCONCERNS
Excluded because they generate incomeExcluded because they generate income
Rental Income (GrossRental Income (Gross notnot Net)Net)
Royalties Etc.Royalties Etc.
Mortgages Receivable, Etc.Mortgages Receivable, Etc.
10. 10
LIFE INSURANCELIFE INSURANCE
All term life insurance policies are excludedAll term life insurance policies are excluded
since they have no cash valuesince they have no cash value
Only whole life or other cash value types ofOnly whole life or other cash value types of
insurance count. (i.e., variable, universal)insurance count. (i.e., variable, universal)
If the total face value of all policies is equal to orIf the total face value of all policies is equal to or
less than $2,500.00, the cash value is excluded.less than $2,500.00, the cash value is excluded.
If the total face value of all policies exceedsIf the total face value of all policies exceeds
$2500, the total sum of the$2500, the total sum of the cash valuescash values of allof all
policies is counted as an asset.policies is counted as an asset.
11. 11
BURIAL FUNDS & PREPAIDBURIAL FUNDS & PREPAID
FUNERAL CONTRACTSFUNERAL CONTRACTS
The full value of anThe full value of an irrevocableirrevocable burial contract isburial contract is
excluded regardless of the amount. (Floridaexcluded regardless of the amount. (Florida
permits up to $15,000 in a funeral trust.)permits up to $15,000 in a funeral trust.)
In addition, Medicaid allows a $2500.00In addition, Medicaid allows a $2500.00
exclusion for funds that have been designatedexclusion for funds that have been designated
for burial expenses. Bank Account Titled “Johnfor burial expenses. Bank Account Titled “John
Doe Burial Account”Doe Burial Account”
One burial plot is allowed for each familyOne burial plot is allowed for each family
member.member.
12. 12
PERSONAL & HOUSEHOLDPERSONAL & HOUSEHOLD
GOODSGOODS
ClothingClothing
Home FurnishingsHome Furnishings
AppliancesAppliances
Medical EquipmentMedical Equipment
Wedding RingWedding Ring
13. 13
RETIREMENT ACCOUNTSRETIREMENT ACCOUNTS
IRAs, 401Ks, SEPs, 403b, TSAs, etc.IRAs, 401Ks, SEPs, 403b, TSAs, etc.
Not counted so long as they are properlyNot counted so long as they are properly
structured and the individual is taking regularstructured and the individual is taking regular
income distributions from the account.income distributions from the account.
If you are not taking income currently and youIf you are not taking income currently and you
are not eligible to start taking income, then itare not eligible to start taking income, then it
may become necessary to cash them out, paymay become necessary to cash them out, pay
all taxes and restructure the principal.all taxes and restructure the principal.
14. 14
IMMEDIATE ANNUITIESIMMEDIATE ANNUITIES
May be created by annuitizing an existingMay be created by annuitizing an existing
deferred annuity, ordeferred annuity, or
Using cash to purchase an single premiumUsing cash to purchase an single premium
immediate annuityimmediate annuity
Definition: a series of payments over a definedDefinition: a series of payments over a defined
period of timeperiod of time
Period may be lifetime of the annuitant, a setPeriod may be lifetime of the annuitant, a set
number of payments, or a combination.number of payments, or a combination.
15. 15
VALID TRANSFERSVALID TRANSFERS
Any transfer thatAny transfer that
results in theresults in the
payment of debtspayment of debts
Any transfers toAny transfers to
spousespouse
Any transfer for fairAny transfer for fair
market valuemarket value
Any transfer whichAny transfer which
resulted from anresulted from an
attempt to get fairattempt to get fair
market valuemarket value
Any transfer whereAny transfer where
the donor wasthe donor was
cheated out of thecheated out of the
assetasset
16. 16
INVALID TRANSFERSINVALID TRANSFERS
Any and allAny and all
transfers that dotransfers that do
not qualify as anot qualify as a
valid transfervalid transfer
are invalidare invalid
transferstransfers
17. 17
ASSET PRESERVATIONASSET PRESERVATION
TECHNIQUESTECHNIQUES
The “Half-a-Loaf” ApproachThe “Half-a-Loaf” Approach
Medicaid Friendly AnnuitiesMedicaid Friendly Annuities
Personal Services ContractPersonal Services Contract
Enhanced Life Estate Deed “Lady BirdEnhanced Life Estate Deed “Lady Bird
Deed”Deed”
18. 18
GIFTING ASSETSGIFTING ASSETS
If the gifts are made within the look back periodIf the gifts are made within the look back period
(now 60 months whether an outright gift or to or(now 60 months whether an outright gift or to or
from a revocable or irrevocable trust) prior tofrom a revocable or irrevocable trust) prior to
applying for Medicaid, then a penalty periodapplying for Medicaid, then a penalty period
applies.applies.
$76,380.00 gift ÷ $7,638 = 10 month penalty$76,380.00 gift ÷ $7,638 = 10 month penalty
periodperiod
Penalty period starts from date of MedicaidPenalty period starts from date of Medicaid
application back.application back.
Gifts made before the look back period do notGifts made before the look back period do not
count.count.
19. 19
THE HALF-A-LOAF STRATEGYTHE HALF-A-LOAF STRATEGY
Reduce total gift soReduce total gift so
that remaining assetsthat remaining assets
can cover penaltycan cover penalty
periodperiod
20. 20
MEDICAL FRIENDLY ANNUITIESMEDICAL FRIENDLY ANNUITIES
(The Immediate Annuity)(The Immediate Annuity)
Preserves virtually all of the principalPreserves virtually all of the principal
Not available in many statesNot available in many states
May be created by annuitizing an existingMay be created by annuitizing an existing
deferred annuity, ordeferred annuity, or
Using cash to purchase a single premiumUsing cash to purchase a single premium
immediate annuityimmediate annuity
Definition: a series of payments over a definedDefinition: a series of payments over a defined
period of timeperiod of time
Period may be lifetime of the annuitant, a setPeriod may be lifetime of the annuitant, a set
number of payments, or a combination.number of payments, or a combination.
21. 21
INCOME TESTINCOME TEST
Florida is an “Income Cap” stateFlorida is an “Income Cap” state
Medicaid Applicant allowed to receiveMedicaid Applicant allowed to receive nono
moremore than $2,163.00 per month inthan $2,163.00 per month in
countablecountable grossgross incomeincome
Community Spouse (i.e. well spouse) canCommunity Spouse (i.e. well spouse) can
receivereceive unlimitedunlimited income.income.
23. 23
BUT I RECEIVEBUT I RECEIVE MORE THANMORE THAN
$2,163.00 A MONTH IN INCOME$2,163.00 A MONTH IN INCOME
No problem throughNo problem through
the use of a “Millerthe use of a “Miller
Trust” or “QualifiedTrust” or “Qualified
Income Trust” we turnIncome Trust” we turn
the “excess availablethe “excess available
income” intoincome” into
“unavailable income”“unavailable income”
