The Question:

What are the limits for obtaining nursing home care (Institutional Care Program, "ICP")?

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Learn the Basics of Medicaid Issues

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Medicaid Basics

The Florida Medicaid Institutional Care Program (ICP nursing home benefits) imposes a three prong test in order to qualify for benefits. Each of these prongs have their own tests within their own right. The initial "test" is to determine whether or not the individual seeking Medicaid benefits requires the appropriate level of care in a skilled nursing facility. This test is referred to as a "CARES" Assessment. Assuming the person "passes" this test, the Agency will then look at the individual's income stream and asset levels.

Florida is an "Income Cap" state. This means that if a person's gross income is over $1,635 per month, then that person is ineligible for ICP Medicaid benefits. The Agency only looks at the Applicant's income, not the Applicant Spouse's income, if married.

Note that it is the GROSS income that is considered. Therefore, the Medicaid Agency will require that Medicare Part B premiums, insurance premiums, tax deductions and other deductions be added back in.

Example 1*:  Mary is a single person who needs placement in a skilled nursing facility.  Her income consists of her social security check of $700, and a small widow's pension of $300.  Her Medicare Part B Premium is $54 per month which must be added back in to determine her GROSS monthly income.  This amount is $1,054.00 per month, which is less than the income limit of $1,635 per month.  Mary passes the income test.

Example 2*:   Elizabeth is a married woman who needs placement in a skilled nursing facility.  Her income consists of her social security check of $700.  Roger, her husband, receives social security in the amount of $1,200, and a pension of $500 per month.  Together, their GROSS income equals $2,508.00 per month.  However, only Elizabeth 's GROSS income of $754.00 is considered.  Roger's income is ignored.

Example 3*:   Same as Example 2, except Elizabeth 's income consists of her social security check of $700 and a pension of $1,000.  Roger, her husband, receives social security in the amount of $1,200, and a pension of $500 per month.  Together, their GROSS income equals $3,508.00 per month.  Again, only Elizabeth 's GROSS income of $1,754.00 is considered and Roger's income is ignored.  However, here Elizabeth income exceeds the Income Cap of $1,635.00.

In the event the person exceeds this amount, then a Qualified Income Trust must be established.  In Example 3 above, Elizabeth will need to establish such a trust in order to become eligible for Medicaid benefits.

Many Medicaid Office s attempt to hand out a generic Qualified Income Trust form when a family wants to file a Medicaid Application.  Beware:  At the very least, that office or person is engaged in the unlawful practice of law (a trust is a legal document).  At its worse (which usually happens more often than not), the trust is deficient in its language, does not provide information as to how it should be maintained or how the trust bank accounts should be established and maintained, and runs the greater risk that at some point in the future, the Medicaid Agency will investigate and review the trust accounts and deny benefits retroactively.

Florida allows an individual to retain less than $2,000 in non-exempt assets, in addition to certain exempt assets. If the individual is married, than the Agency allows the well-spouse to retain a "Community Spouse Resource Allowance" (CSRA) of up to $89,280.

Proper Titling of the assets is crucial to a Medicaid Estate Plan. Unfortunately, all too often improper transferring of assets in the hope of beating the Medicaid system occurs. (see Transfer of Assets). However, with the proper tools, much or all of your hard-earned assets may be legally protected and preserved for you and your family's continued benefit.

For example, one important aspect of planning for ICP Medicaid benefits is: What happens to the exempt assets and/or the $89,280 if the Well-Spouse passes away first or themselves need to enter a nursing home. Surprisingly, many people believe that the spouse who is in the nursing home will pass away first or that the Well-Spouse will never need long-term care. This does not always happen. If the Well-Spouse passes first - or enters a nursing home themselves - then the CSRA and Exempt Assets may be completely lost without proper planning. Speak to an attorney about what options are available.

As stated elsewhere, the applicant may have only $2,000 and the exempt assets to be eligible for Medicaid. Since the well spouse may keep $89,280 plus the exempt property, if the couple is over this amount, they may consider transferring some of these assets. Transfer of assets refers to a situation in which the applicant or the well spouse transfer assets to someone other than the spouse without receiving a fair consideration for the transfer. The most common example is a gift. When the applicant or the well spouse transfer assets, the applicant will be ineligible for Medicaid for a period of time. 

The actual number of months that the applicant will be ineligible for Medicaid is calculated by taking the value of the asset transferred and dividing it by the average monthly cost for nursing home care, as determined by DCAF. As of January 1, 2001 , the average cost of nursing home care in the state of Florida is determined to be $3,300 per month. Therefore, if the applicant or the well spouse transfers assets worth $50,000, that amount is divided by $3,300/month, and results in a 15-month period of ineligibility. If the applicant or well spouse transfers $132,000 in assets, again this amount is divided by $3,300, resulting in a 40-month period of ineligibility.

The Look-Back Period

The "look-back" period is the maximum amount of time DCAF is allowed to look-back at transfers of assets. Currently it is 36 months. Therefore, in the above example, if the individual transferring the $132,000, does not apply for Medicaid until after 36 months from the date of the transfer, then there will be no additional time of disqualification.  If however, the applicant were to apply any time during the 36 month disqualification period, then the DCAF case worker will take the value of the transfer, i.e., $132,000, and divide it by $3,300 and that will result in a 40 month period of ineligibility from the date of the transfer. In that situation, the look-back period is still 36 months, but the disqualification period will continue until the time limit is exhausted, because the applicant applied before the 36 month time had run. This is a very serious trap for the unwary.

The look-back period for living trusts has been extended to 60 months. Therefore, it is imperative, if the situation involves a living trust, that it be scrutinized very closely. 

Despite the strictness of the transfer rules, many techniques can be utilized that are legitimate and proper transfers and can reduce the size of a Medicaid Estate and to protect the family inheritance. Some of these strategies involve establishing certain trusts and legitimate gifting programs.

The following assets are some of the exempt assets from Medicaid qualifications:

1. Homestead :

- so long as the well spouse continues to reside there. 

- if there is an "intent-to-return" by the applicant.

- if a dependent SSI-disabled child lives there.

2. Certain Retirement Accounts.

3. Trade or Business Property.

4. Irrevocable burial contracts.

5. $2,500 designated for burial expenses

6. Irrevocable burial contracts, bank accounts designated for burial by notation in the title, or life insurance policies.

7. One burial plot per family member.

8. Other property if rented or listed for sale at fair market value.

9. One Vehicle

10. Additional vehicle(s) - if seven or more years old, except if is a luxury model, an antique or customized.

11. Life insurance - with zero cash value - or if - with cash value - the total face value of all life insurance policies is less than $2,500.

12. Life estate interest in real property.

13. Certain annuities.

14. One wedding ring.

The Community Spouse Resource Allowance (CSRA) is the amount of nonexempt assets that the community (or well) spouse is entitled to keep without affecting the ill-spouse's Medicaid eligibility.  The CSRA is currently $89,280 for Year 2002.  This amount is adjusted every January.

A Qualified Income Trust (or "QIT") is a mechanism to qualify for benefits when one's income exceeds the income limit (currently $ 1,635 per month in FL). This instrument is designed for those over the income limit, but who do not receive enough monthly income to pay for their nursing care facility costs.

For example, Mary receives $ 2,400 per month in social security and pension income. Her nursing home costs $ 3,500 per month. She will not qualify for because she has too much income. But, at the same time she cannot pay the $ 3,500 nursing home bill because she has too little income. She is in what is commonly known as the "gap." Too much and too little. Mary is perfect candidate for a QIT.

The QIT is often established and administered improperly.  This often means that eligibility may be lost - even retroactively. There are numerous Fair Hearing Rulings that have denied Medicaid benefits because of faulty trust language and/or Trust Administration. Oftentimes, these rulings have denied benefits retroactively. In other words, somebody had to reimburse the State.

The Medicaid Agency often audits the QIT every 3 or 6 months. Therefore, proper maintenance is crucial to establishing and preserving the Qualified Income Trust.

Many Medicaid Offices attempt to hand out a generic Qualified Income Trust form when a family wants to file a Medicaid Application.  Beware:  At the very least, that office or person is engaged in the unlawful practice of law (a trust is a legal document).  At its worse (which usually happens more often than not), the trust is deficient in its language, does not provide information as to how it should be maintained or how the trust bank accounts should be established and maintained, and runs the greater risk that at some point in the future, the Medicaid Agency will investigate and review the trust accounts and deny benefits retroactively.

1. Citizen of United States or a permanent resident alien

2. Resident of Florida

3. 65 years of age or disabled

4. CARES Assessment to determine if it is medically necessary for applicant to be placed in a Nursing Care Facility. This assessment is conducted by the Department of Children & Families (DCAF), formerly HRS

5. Assets of less than $2,000 during at least one day of each month. (If gross income is less than $633 per month, the individual is allowed to have up to $5,000 in assets). There are two classes of assets: Exempt and Non-Exempt. Only Non-Exempt Assets are used in the determination of Qualification. * Many Medicaid Attorneys use proven techniques to preserve substantial amounts of your assets over this $2,000 amount. see pre-planning or crisis planning.

6. Monthly gross available income no greater than $1,590 (as of January 2001)

Assets that are not counted in the $2,000 asset limit:

1.Homestead (if there is an "intent to return" to the homestead or if a disabled child resides there)

2. Certain retirement accounts

3. Trade or Business Property

4. Irrevocable burial contracts

5. One burial plot per family member

6. Properly titled Burial Fund up to $2,500

7. Other property if rented or listed for sale at
fair market value

8. One Vehicle

9. Additional Vehicle - if seven or more years old, except if is a luxury model, an antique or customized

10. Life insurance - with zero cash value - or if - with cash value - the total face value of all life insurance policies is less than $2,500

11. Assets properly placed in a properly drafted and funded Irrevocable Medicaid Trust

12. Immediate Annuities

13. Certain Special Needs Trust

Assets that are counted in the $2,000 asset limit:

1. Bank Accounts (including Joint Accounts)

2. Checking and Savings accounts

3. Time Deposits

4. Certificates of deposit

5. U.S. savings bonds

6. Real Estate

7. Interest in limited partnerships

8. Cash value of life insurance policies if total face
value of all policies is greater than $2,500

9. Loan Agreements

10. Certain Annuities

Included Income (If your income is over $ 1,635 per month, you will not qualify for ICP. However, you may be eligible for the Qualified Income Trust in order to meet income requirements).
 

1. Dividends and Interests received through investments

2. Social Security

3. Pension

4. Income from Retirement Accounts

5. Alimony and Support payments

6. Real estate income

7. Life Insurance Proceeds

8. Personal Injury Settlements/ Awards

9. Wrongful Death Settlements/ Awards

Excluded Income

1. Burial Fund Dividends and Interest

2. Aid and Attendance from Veterans Administration

3. Medical Care and Services  

1. Citizen of United States or a permanent resident alien

2. Resident of Florida

3. 65 years of age or disabled

4. CARES Assessment to determine if it is medically necessary for applicant to be placed in a Nursing Care Facility. This assessment is conducted by the Department of Children & Families (DCAF), formerly HRS

5. Assets of less than $2,000 during at least one day of each month. (If gross income is less than $633 per month, the individual is allowed to have up to $5,000 in assets). There are two classes of assets: Exempt and Non-Exempt. Only Non-Exempt Assets are used in the determination of Qualification

6. Monthly gross available income no greater than $1,590 (as of January 2001)

7. Assets of the applicant's spouse no more $89,280.00, IF PROPERLY TITLED * Many Medicaid Attorneys use proven techniques to preserve substantial amounts of your assets well over this $89,280.00 amount. see our pre-planning or crisis planning page(s).

Assets that are not counted in the $2,000 asset limit:

1.Homestead (if the Well-Spouse continues to reside there, there is an "intent to return" to the homestead or if a disabled child resides there)

2. Certain retirement accounts

3. Trade or Business Property

4. Irrevocable burial contracts

5. One burial plot per family member

6. Properly titled Burial Fund up to $2,500

7. Other property if rented or listed for sale at
fair market value

8. One Vehicle

9. Additional Vehicle - if seven or more years old, except if is a luxury model, an antique or customized

10. Life insurance - with zero cash value - or if - with cash value - the total face value of all life insurance policies is less than $2,500

11. Assets properly placed in a properly drafted and funded Irrevocable Medicaid Trust

12. Immediate Annuities

13. Certain Special Needs Trust

Assets that are counted in the $2,000 asset limit:

1. Bank Accounts (including Joint Accounts)

2. Checking and Savings accounts

3. Time Deposits

4. Certificates of deposit

5. U.S. savings bonds

6. Real Estate

7. Interest in limited partnerships

8. Cash value of life insurance policies if total face
value of all policies is greater than $2,500

9. Loan Agreements

10. Certain Annuities

Included Income (If your income is over $ 1,635 per month, you will not qualify for ICP. However, you may be eligible for the Qualified Income Trust in order to meet income requirements).
 

1. Dividends and Interests received through investments

2. Social Security

3. Pension

4. Income from Retirement Accounts

5. Alimony and Support payments

6. Real estate income

7. Life Insurance Proceeds

8. Personal Injury Settlements/ Awards

9. Wrongful Death Settlements/ Awards

Excluded Income

1. Spouse's Income * This is often a key factor that  can often be leveraged to exclude more assets than the $89,280.00 Spousal Resource Allowance.

2. Burial Fund Dividends and Interest

3. Aid and Attendance from Veterans Administration

4. Medical Care and Services

The following are a few mistakes commonly made (in no particular order):

1. Transferring assets without taking into account the transfer rules and penalties.

2. Confusing the look-back period and the transfer penalty period.

3. Transferring the homestead to the children directly by way of a quitclaim deed - or other poor planning with the homestead - in an attempt to preserve the home from Medicaid claims or liens.

4. Failing to plan for the event BOTH spouses enter a skilled nursing facility.

5. Failing to plan for the event the Well-Spouse predeceases the Nursing-Home-Spouse.

6. Making transfers without the proper authority or documentation.

7. Relying on outdated or poorly drafted durable powers of attorney (or other estate planning documents).

8. Neglecting to disclose all known income, assets or gifts - and neglecting to inform Medicaid of any new or additional income, assets or gifts in the future.

9. Failing to include the gross income of an applicant when applying for benefits.

10. Improper establishment and/or maintenance of a
Qualified Income Trust (QIT).

11. Failing to determine whether or not a nursing home accepts Medicaid payments.

12. Believing that MEDICARE pays for long-term nursing home costs.

13. Making transfers into and out of the wrong type(s) of trusts.

14. Thinking the $10,000 gift tax exclusion is applicable
to Medicaid planning.

Kit to Prepare for Your Adviser

WARNINGS ABOUT THIS SITE'S CONTENT Bob Parrish CPA, P.C.