What is Elder Law?
Elder Law is an umbrella term used to describe the many kinds of legal issues commonly faced by the elderly or disabled.
Of course, the term “elderly” is a slippery slope – not too many Baby Boomers would think of themselves as elderly, and many Seniors don’t consider themselves elderly, either!
But, whatever the age of the client, the term Elder Law includes things such as guardianship, estate planning, probate, personal injury litigation, financial planning, age discrimination, insurance litigation, special needs planning, and long-term care planning (possibly including Medicaid or VA benefits).
Not every Elder Lawyer focuses on every area of the law – many focus on just one or two areas and use their professional network to assist their clients with other areas.
At the Law Offices of Cynthia M. Clark, we primarily focus on estate planning, long-term care planning, which may involve Medicaid planning, surviving or divorced spouse planning and probate/trust administration
Long Term Care Planning
Long-term care doesn’t just happen to the old. Many young people also end up needing long-term care due to an accident, illness, or disability.
Long-term care includes medical care or personal assistance provided by a caretaker or facility for a period of time – weeks, months, or longer. The care may be given in your home, an assisted living facility, or in a nursing home.
And it’s expensive. Very expensive.
Here are some 2018 numbers* for Florida:
|Homemaker Services||Daily $125||Median Annual $45,646|
|Home Health Aide Services||Daily $129||Median Annual $46,904|
|Adult Day Health Care||Daily $68||Median Annual $17,550|
|Assisted Living Facility (1BR, single occ)||Monthly $3,500||Median Annual $42,000|
|Nursing Home (semi-private rm)||Monthly $8,152||Median Annual $97,820|
|Nursing Home (private rm)||Monthly $9,064||Median Annual $108,770|
People tend to assume their spouse or children will take care of them if long-term care becomes necessary. But spouses divorce or die, and children move away.
Some proactive folks buy long-term care insurance while they’re relatively young and it’s still affordable. But the cost of healthcare and long-term care continues to skyrocket, and even though a good long-term care insurance policy will certainly help, it likely won’t cover all your potential expenses.
So, you have to make up the difference.
Your Elder Lawyer, working with your financial advisor, can help you plan for the worst while hoping for the best.
Medicaid is a government-provided health care benefit available to the poor. The idea behind Medicaid is that first you spend your own assets on your long-term care expenses, then, when you’re nearly broke, they’ll help pay so you won’t be tossed out on the street.
Every state has its own rules, and Florida’s Medicaid eligibility rules for long-term care are complex and they change frequently. In fact, some of the rules are different from county to county. Keep this in mind as you review the very basic information below…
Do I qualify for long-term care benefits under Florida’s Medicaid criteria?
To qualify for long-term care benefits under Florida’s Medicaid program, you must meet certain program, income, and asset requirements:
- Basically, you must:
- be a U.S. citizen or resident alien; AND
- have medical needs requiring placement in a nursing home OR have a physical or cognitive impairment that limits the performance of the activities of daily living to such a point that nursing home care is needed; AND
- be age 65, disabled, or blind; AND
- have very limited income and assets .
What are the asset and income requirements for long-term care eligibility under Florida Medicaid?
For nursing home care, you must qualify under both the income (the applicant’s earned and unearned income) and the asset (what the applicant owns) tests.
Income means gross income (before all tax, Medicare premiums, and other deductions) from virtually any and all sources – pensions, investments, social security, rents, IRA/401(k)/403(b) distributions, non-taxable income, disability income, etc.
If there’s a spouse who is not applying for benefits (known as the “Community Spouse”), her income isn’t counted, but her income needs are part of the calculation.
As of January 2019, the monthly gross income limit for the applicant is $2,313.00. In Florida, if you make just $1 above the income limit, you will not meet the eligibility requirements. However, there may be solutions – such as special trusts – available to avoid this situation.
Florida expects virtually all of the applicant’s income to be applied to the cost of his care. Medicaid pays the difference.
The Community Spouse’s income isn’t counted when determining the applicant’s Medicaid eligibility. Additionally, if the Community Spouse doesn’t have a certain minimum income, some of the applicant’s income can be diverted to her and Medicaid will pay a larger percentage of the cost of the applicant’s care.
The applicant’s assets – and those of his spouse, if married – are considered when determining Medicaid eligibility. However, some of the assets are “countable” and some are “non-countable.” Some assets are also considered “exempt” or “unavailable.” An asset’s classification may be determined by the way it’s titled or how it was owned over time.
- Applicant – countable assets in his name can’t exceed $2000 ($3000 if both spouses are applying for Medicaid) plus certain non-countable and exempt assets.
- Community Spouse – can keep up to $126,420 in individual/joint countable assets plus non-countable assets (exempt, unavailable, and certain income-producing assets)
Of course, you can’t just give away all of your money and property to your kids and then expect your neighbors to pay for your long-term care expenses. That’s bad public policy.
So there’s a 5-year look-back period.
- The look-back period
Medicaid looks into your financial records for the past five years to see if anything funky was going on. And then they add up all the gifts and transfers you made during that period.
The total amount of the gifts and transfers (which includes adding someone’s name to your bank account or investment property) is then divided by the average monthly cost of a nursing home in your area (not the monthly cost of your potential nursing home). As of January 2019, the divisor used in Florida is $9,171.00. The resulting figure determines how long you’ll be paying the nursing home out-of-pocket before you become eligible for Medicaid assistance.
So, for example, if you gave away or transferred $45,855 during that 5-year period, and the Florida divisor was $9,171.00, then your “penalty period” would be five months. You wouldn’t be eligible for Medicaid payments until after you paid for five months of nursing home care out of your own pocket.
Generally, it’s best if the planning is done long before this scenario happens, but even then an Elder Lawyer may be able to help reduce the penalty period.
Here are some assets you may need to consider when applying for Medicaid:
- Your Florida homestead
Florida has some of the most protective homestead laws in the country. We don’t want spouses and dependents to be homeless.
Generally, as long as your spouse or a dependent is still living in the home (if you’re married) or you “intend to return home” (if you’re single), up to $585,000 of the net equity (fair market value minus any mortgages or liens) in your Florida homestead is not counted for Medicaid purposes.
And Medicaid can’t have your homestead sold out from under your Community Spouse. But, in some rare cases, after an applicant dies his home may be subject to Medicaid Estate Recovery. Proper planning may prevent this.
- Your retirement accounts
Your IRAs, 401(k)s, 403(b)s, etc. could be countable unless they’re properly set up and you’re taking regular distributions (which may count as income). Interestingly, some counties in Florida may treat your IRA as an asset while another counts it as income. These assets – which may be a large part of your retirement savings – can be tricky and usually require special planning.
- Life insurance
Term life insurance is not a countable asset. If your life insurance policy builds cash value (whole life, variable life, variable universal life), the cash value may be countable.
One vehicle of any age is not countable. A second vehicle over 7 years old is generally not countable unless it’s an antique, custom, or luxury vehicle.
- Personal/Household Goods
Generally, your household goods and furnishings aren’t countable. However, anything that could be considered valuable or collectible (art, jewelry, antiques, guns, stamps, etc) would be countable.
Firearms and NFA/Title II weapons – an old, beat up hunting rifle probably isn’t a big deal. But if you have a large collection, antique or collectible weapons, or an expensive NFA/Title II weapon such as a machine gun, you’d likely be over the asset limits. And you can’t just give away certain regulated firearms without going through all the legal formalities. Things are a little easier if you have a Gun Trust, but please talk to us whether you have one or not – we can explain all your options.
The cash value of deferred annuities is generally countable (for annuities in retirement plans, see retirement accounts above). Immediate annuities might not be countable if they are structured properly and meet strict Medicaid guidelines.
Surviving or Divorced Spouse Planning
As a surviving or divorced spouse, you have special planning needs.
Your life has drastically changed. The plans you made before your spouse’s death or before your divorce may no longer appropriate.
Give us a call and we’ll sit down together and review your estate plan and, if necessary, update your estate planning documents. We’ll also work with your financial advisor and insurance agent to make sure your financial planning and insurance policies are still appropriate.
Perhaps you’ve been widowed or divorced for a while, and now you’re considering living with someone or getting married. But you want to make sure your assets will be there for you and your children in the event of death, divorce, or splitting up.