Florida elder law and Medicaid - Sean W. Scott, Esq.

Virtual Medicaid Seminar - Click to listen Monday, May 12, 2008 for our New Medicaid Rules Seminar.

The New York Times health section has recently posted some great new articles on Alzheimer's Disease.

The deadline for changing Medicare coverage plans is March 31, 2008! If you are thinking of changing to a different Medicare plan you have to hurry. For more information on how to change and why to do it, listen to an excellent National Public Radio story by clicking here.

Our new Pinellas County Star Rated Nursing Home Map is up and running. Check back as we update this new tool. Our new article on how to pick a nursing home is located here.

Also...the St. Petersburg Times quoted Sean regarding the roll out of the new Medicaid law. Read the article.

• The NEW Medicaid Handbook 2008 is here! You can still download the 2006 version by clicking here. This handbook was written to help you better understand Florida Medicaid, eligibility requirements, benefits and qualification strategies. You can also visit our new Elder Law Bookstore where you can complete your research into all things related to aging and the law.

• If you want to see where we will be speaking please call us. The seminar and events calendar is being updated as you read this and is NOT current. Until then... just give us a call at 727-539-0181.

• Our NEW What to do checklist for people dealing with the death of a family member has been added to the site.

We have also added new resources for seniors including a special section on Alzheimer's Disease, a section on long term care insurance and a section devoted specially for caregivers. Make a difference in the lives of Alzheimer's victims, support the efforts of the Alzheimer's Association. Donate now.

Click on one of the subjects to the left to get more information on Medicaid eligibility and benefits, estate planning, and other areas of elder law, or call our offices at 727-539-0181 for a no cost initial consultation, or email us your question.

To get an idea of exactly what we do for our clients please view the news story below. (Click the small triangle in the lower left corner to start the video.)

If you are applying for Medicaid benefits to pay the nursing home prepare to be denied. Just when you thought it was safe to grow old, our senior friendly congress cuts the legs out from under middle class seniors. On February 1, 2006 Congress voted 216 to 214 in favor of sweeping “reforms” to restrict senior’s access to benefits used to pay for long term nursing care. This new legislation is a fundamental and sweeping change of the Medicaid program. In short, it effectively disqualifies nearly every applicant for Medicaid nursing home benefits. If your brain just paused and went huh, let me repeat: Upon the enactment of this new legislation, nearly every nursing home resident who applies for Medicaid benefits will be disqualified.

From time to time Congress changes the eligibility rules for Medicaid coverage of nursing expenses. Since 1993 the law has been relatively stable. It was as if the pendulum of change had stuck. Now this pendulum has broken free and ushered in new rules regarding eligibility and imposed perhaps the most draconian rules yet seen.

At the heart of all the changes is a change to how and when a person is disqualified for benefits if they made any gifts prior to going into the nursing home. To understand the scope and affect of this new law a short review of how it was will help us understand how it is now. Prior to the new law if a person gave any assets away, whether or not they thought they might be going to a nursing home they were disqualified for benefits. How long they would be disqualified depended on how much money was given away, for example, if $33,000 was given away then the person was disqualified for 10 months, if the amount was $66,000 they were disqualified for 20 months. The key here, however, is not necessarily how long of a penalty period but when did the disqualification period start.

Under the old law the period of disqualification started immediately after the giving of the gift. The import of this is that small gifts never disqualified an applicant and more substantial gifts and the resulting penalty were likely to expire before the person went to the nursing home. Now, however, under the new law being signed by the president on February 8, 2006, each and every gift a person makes for the five years prior to their entry into the nursing home will be added together as a “super transfer.” The person will be disqualified not from the date the transfer was made, but from the date they apply for Medicaid after entering the nursing home. In other words, the penalty for giving something away is imposed when the person most needs benefits, when they enter the nursing home. An example may help. Mr. Sith over the last five years gave each of his three children a $500 gift for Christmas, makes a weekly tithe to his church of $20, gave a one time gift of $1,000 to the Red Cross for hurricane relief, and $1,000 to re-elect president Bush When Mr. Sith goes into the nursing home he still has $25,000 in the bank. Under the new rules Mr. Sith will first have to spend the $25,000 on his nursing home care (about 5 months) until he reaches $2,000, then he can apply for Medicaid benefits. But because of the transfers/gifts that he made (totaling $14,700) he will be disqualified for Medicaid for the next 4 months and 12 days. It is not clear where he will come up with the money to pay the nursing home for this period. The law is rather silent on this particular issue.

There is a phrase that describes this dilemma, it is “the law of unintended consequences.” It has been suggested that the new law be called the Nursing Home Bankruptcy Law of 2005 because of the affect it will have on nursing homes and their ability to receive compensation for the care they provide. In the example above, Mr. Sith, in most circumstances, cannot be discharged from the nursing home if he does not pay his bill. For those 4 months and 12 days the nursing home will be forced to care for the person without payment. The result on the nursing home is clear, they cannot stay in business. So what does the nursing home do, they stop taking patients that may go onto Medicaid. Where does the person go, the hospital emergency room? The hospital cannot discharge the person to a nursing home if the nursing home refuses to take them. They can’t discharge to the street corner. Thus the hospital fills up and the cascade effect continues. Clearly there is a uncertain and rocky road ahead.

Other changes to the Medicaid rules include the increase in the look-back period for gift/transfers from three years to five years. Now all transfers, whether to individuals or trusts, will be subject to a five year look-back period.

Annuities, a common asset previously not counted in many cases will now be counted unless the state is made the beneficiary of the annuity after the Medicaid recipient dies. The exact language states that the state “be named the remainder beneficiary in the first position for at least the total amount of medical assistance paid on behalf of the annuitant.” This appears to mean that the state could demand the entire annuity even though the Medicaid beneficiary pays for only a month of care. There is also some question that current Medicaid recipients may have to change their existing annuities to make the state the beneficiary upon their annual recertification review.

Lastly the sanctity of the home has been attacked. There is now a cap on the maximum value of the home of the applicant. If the home is worth more than $500,000 the person is not eligible for Medicaid benefits. There is a provision that may allow the value cap to be raised to $750,000, but this is on a state-by-state basis.

This summary does not go into every detail of the new law but is intended to highlight some of the more interesting features. It is very clear though that things now will be very different in the world of Medicaid and nursing home care. The new law has drastically changed the landscape of Medicaid but perhaps the most ironic point though is that there still remains many solutions to solve these seemingly unsolvable problems. Despite the change in the law, through proper planning and guidance Medicaid will still remain a viable method to pay the expense of nursing home care. Stay tuned for future updates at www.virtuallawoffice.com.

Staying out of the Nursing Home
A New Option Called The Nursing Home Diversion Program

What would you say if you were told that there now exists a solution that will provide a person suffering from Alzheimer's, medication, home care, respite, medical care management and even assisted living care at little or no cost to the family? Probably something like it's too good to be true. But in this case it is true.

For many caregivers coping with the demands of Alzheimer's the specter of the nursing home looms ever large on the horizon. Taking care of a person suffering from Alzheimer's can become a demanding and daunting task as the disease process progresses. A task that often can only be met with the provision of outside help usually from a nursing home or assisted living facility. While there has been financial assistance available from Medicaid to pay for nursing home care, there was little or no financial assistance for assisted living or home care.

Now, however, a new option has come on-line to help delay placement in a nursing home. The Nursing Home Long-Term Care Diversion Program has recently come on the scene in Pinellas and Pasco counties to help stave off nursing home placement. To many caregivers searching for help this just may be the life ring they have been looking for.

The Nursing Home Long-Term Care Diversion Program is a Medicaid Program designed for seniors who need help to remain at home or to live in an assisted living facility. This new program, rolled out in October 2003, provides a wide range of services to make it easier for seniors to get the care needed to live in the community and stay out of the nursing home. As part of the Medicaid program it has similar qualification requirements.

In order to be eligible:

You must be 65 years of age or older.

You must have Medicare Part A & B.

Your income and assets must meet the levels required to be in a nursing home under Medicaid. (Steps can be taken to meet the requirements with the help of an elder law attorney.)

You must be medically/clinically eligible in that you:

Require some help or supervision with 5 activities of daily living (ADL) such as bathing, dressing, walking, toileting, eating, transferring, OR;

Require some help with 4 ADL plus require supervision of medications, OR;

Require some help with 3 ADL and have a diagnosis of Alzheimer's Disease, OR;

Require total help with 2 ADL, OR;

Have a diagnosis of a degenerative or chronic condition requiring daily nursing services.

You must be determined by the Florida Department of Elder Affairs to be a person who can be safely taken care of at home or in an assisted living facility, in lieu of nursing home placement. (The program is NOT designed to provide 24-hour care in the home however.)

“The Nursing Home Diversion Program is fantastic benefit for seniors in our community,” says caregiver consultant Gilda O'Brien, “It gives seniors who can be taken care of at home or in an ALF an option they did not have before. It keeps them out of the nursing home.”

The Diversion Program acts much like a managed health care plan or HMO. The goal is to provide a one stop shopping experience where all the needs of the client can be met. The key component of the program is the care management companies known as qualified providers. These providers sit in a position to direct the services and care being provided. They deal with each client on a case-by-case basis and truly manage the care of the client/patient.

Jackie Garvey from American Eldercare, one of the qualified providers, stated “We do whatever it takes to keep that person from going to the nursing home. If there is a problem we figure out a solution to keep that client at home or in the ALF.” Other qualified providers include Citrus Health Care, Amerigroup, Evercare and Neighborly Care Network.

The range and scope of services provided by the Nursing Home Diversion Program are impressive and can include:

Short term respite care

Payment of Medicare deductible and co-insurance.

One of the first diversion clients that the Law Offices of Sean W. Scott helped qualify for the program is a classic example of what can be done. In that case the wife was taking care of her husband who suffered from dementia and who had had a massive stroke. The wife was doing all she could to keep him home but his needs were rapidly outstripping her abilities. After slightly adjusting the couple's finances the law office brought American Eldercare in to provide care management and home health care services. Because of the Diversion Program and American Eldercare's involvement the husband remains in the home today.

RESOURCES

For more information on the program contact:

The Department of Elder Affairs CARES Unit.
Pinellas County
11351 Ulmerton Road, Suite 100
Largo, FL 33778
(727) 588-6882 (Pinellas)
(727) 943-4958 (Pasco)

American Eldercare
866-383-6663

Citrus Healthcare
866-769-1158

AmeriGroup
800-950-7679

Area Agency on Aging
(727) 570-9696
www.agingcarefl.org

For more information on Medicaid Qualification:

The Law Offices of Sean W. Scott
727-539-0181
www.virtuallawoffice.com

April 28, 2004.

There's a new support group in town, one that is easy to access and requires no driving to get to. As many readers know, the Alzheimer’s Association hosts a number of support groups for caregivers in our community. The support group concept is one of the most effective ways to provide help directly to the caregiver. It puts people together who share a common experience and provides an environment where information on the disease process and its many effects on the patient and the caregiver are readily available. A major problem, however, and one of the ironic dilemmas with a support group, is that the caregiver providing the care for the loved one often cannot get away from providing that care to attend a real face-to-face support group. They feel that they just can't get away. Now that has changed. The Alzheimer’s Association, in conjunction with elder law attorney Sean W. Scott, has created an online support group that uses the power of the internet to connect caregivers.

Local elder law attorney Sean W. Scott has come up with a solution to connect isolated caregivers bound by the demands of care giving. “We saw a need and a big gap in the support group framework and wanted to reach out to those who may be house bound and unable to personally attend a support group,” stated Mr. Scott, the facilitator and host of AlzSupport.com. “Now people can sit in their bath robes and still get the fantastic benefits that a support group provides.”

With the advent of computers and a greater acceptance of their use by all segments of the population, both young and old are using the computer and the internet to reach out and touch someone. By simply tapping into the online world caregivers can connect with other caregivers to exchange ideas, stories, strategies and tips on dealing with the disease and its effects. “I kind of stumbled on the group (AlzSupport.com) and posted some of the problems I was having dealing with my mother,” said one member who goes by the online name of Gregory M, “and the responses I got back gave me some hope that I could deal, now and later on. I check back on the group on a regular basis just to see what new insight I can get.”

The new virtual support group cannot completely replace the dynamics of a face-to-face group, but it does add a new option for the caregiver. “I am going to encourage my support group members to log in and participate,” commented Karen Karle a support group facilitator in Pinellas County. “I think that this will augment the experience, allow my caregivers to connect with others, and to extend the support group experience when they can’t make it in person.”

“It’s something that we have talked about doing for a while, and now we have,” said Cheri Rudgers, Director of Programs and Services for the Florida Gulfcoast Chapter of the Alzheimer’s Association. “It is another way we can reach out to the community that nicely complements our other efforts.”

The online support group is set up like a message board where members can post questions, experiences, tips and otherwise connect with other caregivers. The support group is comprised primarily of caregivers but also has members from the legal, medical and other professions familiar with the disease process who actively participate and respond to the group’s discussions and questions. The newest feature is a support chat room where “live” meetings are held every Wednesday from 12:00 pm to 1:00 pm.

To join the group or to just take a look around, use your web browser, internet explorer, AOL, etc. and enter AlzSupport.com/supportgroup as the address for the site. Hope to see you there!

Massive Medicaid Course Correction Leaves Questions in its Wake.
By Sean W. Scott, Esq. September 20, 2003

The state of Florida Department of Children and Families (DCF) has recently made critical policy changes regarding continuing eligibility of Nursing Home Medicaid (ICP) recipients. The Problem: When one spouse is on Medicaid in a nursing home, and the spouse who is still at home dies, the spouse in the nursing home will now lose his eligibility for Medicaid. For example, Susan and Sam are a married couple. Sam has been in a nursing home for the last year. Early in his placement he applied for and was approved for Medicaid. At the time of application the wife took steps to change her will so all her assets, totaling $90,000.00, go to her children instead of her husband. His wife died yesterday. What effect if any does her death have on his continuing eligibility for benefits? Answer, until recently, no effect. The husband’s assets were not increased since the wife’s money went to the children. Now, however, the Husband will be disqualified from Medicaid. But wait, he did not receive anything from the wife’s estate, why is he disqualified from Medicaid? Because DCF is now implementing long dormant policy stating the Medicaid recipient must apply for all benefits they are entitled to, which includes taking 30 percent of his deceased wife’s estate also known as the Elective Share.

If a spouse is disinherited he is entitled under Florida’s elective share law to “elect” or take 30 percent of his wife’s estate. All of her estate by the way, including amounts in a living trust, amounts in joint accounts, and amounts in life insurance are considered when calculating the 30 percent share. If the Medicaid applicant does not make the election, then he is deemed to have failed to apply for benefits he was otherwise entitled to. That failure to apply disqualifies him from Medicaid.

The repercussions of his disqualification are wide and far reaching. First the nursing home no longer has a payment source. How are they going to get paid for their services? Medicaid is not paying, the spouse is dead, where are the children? To compound the situation, the nursing home may not find out about the disqualification until many months after the death of the spouse when the husband’s case comes up for annual review at DCF. It is not clear whether the facility may have to pay back monies erroneously received. The husband’s status is also in jeopardy. How is he going to pay the facility? Where is he going to go if he is discharged for failure to pay? Again, to make matters worse, what happens if he is not able to make the election because he is incapacitated, infirmed or without the financial resources to go forward with the election?

For the unprepared, a world of uncertainty awaits. Thankfully there is a solution that can remove the ambiguity for those who take corrective measures in advance, the qualified special needs trust. In the most recent modification of Florida’s elective share rules, provision was made for the utilization of an elective share qualified special needs trust. In the simplest terms, a will is created which contains a testamentary trust dedicated to providing for the special needs of the surviving spouse. At least 30 percent of the decedent spouse’s estate must go into the trust. In this circumstance, the eligibility of the Medicaid recipient is assured, and avoids all those unpleasant unanswerable questions. In part two of this article we will discuss the solutions to use when no advanced planning has been done. In other words, what to do if you suddenly lose Medicaid eligibility due to the death of the well spouse…

What is an elder law attorney anyway?

By Sean W. Scott, Esq.

The Elder Law practice encompasses all aspects of planning, counseling, educating, and advocating for the senior client concerning illness, incapacity and death. Rather than being defined by technical legal distinctions, elder law is defined by the client to be served. In other words, the lawyer who practices elder law may handle a range of issues but has a specific type of client, seniors.

A senior’s legal problems are a unique function of the aging process. They can be complex and include estate planning problems, the problems of incapacity and the cost of quality care.

Elder law attorneys focus on the legal needs of the elderly, and work with a variety of legal tools and techniques to meet the goals and objectives of the older client. Under this holistic approach, the elder law practitioner handles general estate planning issues and counsels clients about planning for incapacity with alternative decision making documents. The attorney also assists the client in planning for possible long-term care needs, including nursing home care and Medicaid.

Locating the appropriate type of care, coordinating private and public resources to finance the cost of care, and working to ensure the client's right to quality care are all part of the elder law practice.

Elder law attorneys are concerned with problems unique to the elderly. The elder law attorney works as their advocate. Elder attorneys are dedicated to ensure delivery of quality legal services for the elderly and to advocate for their rights. There are three major categories that make up elder law:

1.Estate planning and administration, including tax questions;

2.Medicaid, disability and other long-term care issues; and

3.Guardianship, conservatorship and commitment matters, including fiduciary administration.

Other areas include retirement benefits, Medicare, disability benefits, litigation in the areas of elder abuse and elder fraud.

The needs of elder clients extend beyond their legal problems. The clients may be frail or ill and require home health care or replacement in an institutional facility. The clients may be well but fearful that future illness may deplete financial resources, and thus may need to consider a long-term care insurance policy. If a client is a caretaker and is overwhelmed with the demands of caring for a person who is suffering from some form of dementia, the client may need other support services offered by various religious organizations of nonprofit organizations, such as the Alzheimer's Association. Meeting the needs of the client(s) depends on moving beyond conventional legal work to offering practical assistance. Quite often the attorney is the right person to provide information about home care, nursing homes, special geriatric health programs, adult day care and respite care; handling even a few elder-law cases quickly leads to an accumulation of such information and contacts with the right people.

The following is an exhaustive list of the areas in which an elder law attorney will practice:

1. Health and Personal Care Planning (including advance medical directives and living wills);

2. Pre-Mortem Legal Planning (wills and trusts);

3. Fiduciary Representation (including guardianship, trustees and personal representatives);

4. Legal Capacity Counseling (advising how capacity is determined and the level of capacity required for various legal activities);

5. Individual Representation (of those who care or who may be the subject of guardianship or conservatorship procedures);

6. Public Benefits Advice (including Medicaid, Medicare, social security and veteran's benefits);

7. Advice on Insurance (including health, life, long-term disability and burial/funeral policies);

8. Resident Rights Advocacy (including advising patients of their rights and remedies in matters such as admissions, transfer, discharge policies and quality of care);

9. Housing Counseling (reviewing options and financing of options such as mortgage alternatives, life care contracts and home equity conversion);

10. Employment and Retirement Advice (pension, retiree health benefits and unemployment benefits);

11. Income, Estate and Gift Tax Advice;

12. Counseling about Tort Claims against Nursing Homes;

13. Age and/or Disability Discrimination Counseling (including employment and housing and Americans with Disabilities Act); and

14. Litigation and Administrative Advocacy (including will contest, contested capacity issues and elder abuse).

Eligibility Criteria For Nursing Home Medicaid

By Elder Law Attorney Sean W. Scott, Esq.

Original publish date September 9, 1999. Updated for 2003. See the current numbers by clicking here.

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In this section:

How to determine eligibility.

Breaking down the two financial criteria, assets and income.

The different situations of married couples versus single applicants.

Details the use of an income trust.

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The Threshold Eligibility Tests

There is an initial three part test to determine eligibility for nursing home Medicaid: Basic "medical" need; age or disability; and financial resources. Each one of these tests must be passed before you can get Medicaid to pay for care. If any one is missing you will not be eligible for the program and will have to pay for care privately; that is, out of your own pocket.

First Test - "Medical" Need

I put the word medical in quotations because this is not as strict a test as there is with Medicare. The care provided to the individual need not be strictly medically necessary, but may be custodial in nature. The person must have some form of impairment that limits the activities of daily living to a point where a nursing home is needed. This test is usually not a problem and is designed to keep healthy individuals out of the system. The standards to determine if the need is present are:

1. The need must require twenty-four hour nursing care in a "skilled care facility." A skilled care facility is one where professional nursing services are available and include, physicians, respiratory care, audiologists, physical and occupational therapists.

2. The individual’s needs are so medically complex that they require supervision, assessment or planning by a Registered Nurse.

3. The individual must need the care on a daily basis.

4. The individual needs ongoing involvement of a Registered Nurse or other professional in the evaluation of the individual and the implementation of a treatment plan.

5. The individual needs continuous observation in order to monitor for complications or change in the status of his condition.

6. Lastly, the care the individual needs should not be of a degree which would normally be provided by a hospital.

Second Test - Aged or Disabled.

In order to be eligible for benefits you also need to be either suffering from some form of disability or you need to be over 65. A 60 year-old with Alzheimer’s would meet this test as the Alzheimer’s disease qualifies as a disability. A 70 year-old, on the other hand, need not have a disability. So long as he needs nursing home care he will pass this phase of the inquiry. (See first test.)

Third Test - Financial

Here is where things get sticky. The third test presents perhaps the most confusing requirements of the three tests due to the number of variables that must be considered.

The specific dollar amounts change depending on the specific characteristics of the applicant. State laws also differ in this regard.

The states are divided into two camps, one where the income of the applicant is used to deny eligibility if it is over a certain number, called the income cap, and those where it is merely used to determine the amount of benefits. For the sake of discussion in this book all numbers and eligibility requirements will use the laws that are applied in the state of Florida. Florida for example is an "income cap" state. (Caution is advised if using this material for other states. You should consult with an elder law attorney in your state to update and localize the laws to that particular jurisdiction.)

The Asset Test

MARRIED VS. SINGLE

In determining the exact amount of assets that can be retained, we first have to know whether the applicant is married or single. The Medicaid laws were originally targeted at increasing the amount of seniors that could qualify for the Medicaid program. Congress was especially concerned with making sure that the spouse who was not in the nursing home was not impoverished to the point where she became a nonproductive member of society. The eligibility numbers are quite different depending on whether you are married or single. A married couple may keep up to $92,660 in countable assets. ($90,660.00 for the spouse and $2,000.00 for the applicant spouse.) A single person, including widows, may only have $2,000.00 in countable assets. (This number increases to $5,000.00 in cases where the income of the individual is under $679.00.) Below is a summary of the eligibility numbers:

Assets (income greater than $679.00 per month)	Applicant	Community Spouse	Income (Florida)

Single	$2,000.00	n/a	$1,656.00
Married	$2,000.00	90,660.00	$1,656.00 per month for applicant, unlimited for community spouse

Assets (income less than $679.00) per month	Applicant	Community Spouse	Income (Florida)

Single	$5,000.00	n/a	$1,656.00 per month
Married	$5,000.00	$90,660.00	$1,656.00 per month for applicant, unlimited for community spouse

What’s an Asset?

Notice that I said countable asset above. This is a critical distinction because many of us own a primary residence that we think would automatically put us over the asset limit. Remember the Medicaid program was designed to help seniors from becoming impoverished due to the high costs of nursing home care. The home of the applicant in nearly every situation is not counted as an asset of the applicant. It is so discouraging for me to hear a client tell that they have sold the home in a last ditch effort to generate cash to continue to pay for nursing care. Why did they do this? Because they did not know any better. Such ignorance of the law can cost your family dearly. I must stress that the primary residence is not counted as an asset when applying the asset level test. Subtract it from your total assets when calculating eligibility. There are other types of non-countable assets, such as the car and a burial account, but none are potentially as large as the home.

The reader should be careful when looking to which assets to count. Often clients erroneously believe that a joint bank account is only treated as half an asset: Not so, 100 percent of the asset is counted! And do not think that the other person on the account, your son for example, can withdraw the bulk of the account and put it into his name. The law specifically forbids this. Also, remember that little insurance policy you have been paying on for years? Well, it probably has built up quite a nice cash value that will be counted as an asset. The asset test is not as easy as it would seem. Similarly the income test poses its own set of unique problems.

Income Test

In addition to looking at the amount of assets you have, some states, including Florida, impose an additional factor to consider when determining eligibility, the income of the applicant. In Florida, for example, the income amount is capped at $1,656 per month. In "income cap" states if the applicant is over the cap, even by a dollar, he is not eligible for benefits, despite the fact that he passes every other test.

This often imposes the harsh and arbitrary result of ineligibility for the applicant over the income cap even though he has no other assets and no other means to generate additional cash flow. Furthermore, while he may have a relatively high income he may not even be close to the amount required for care averaging $4,500.00 per month. The applicant has fallen into what we call the Medicaid Gap. Too much income to qualify for benefits, too little to pay for care. What do you do in this situation?

Prior to 1993 there were few if any options for the person in this situation. Sometimes the nursing home would provide services at a reduced rate; sometimes they would not. The person is considered INELIGIBLE for Medicaid benefits if he make greater than $1,656 per month. In 1993 Congress again modified the laws regarding the Medicaid program, and while they took away with one hand; again further restricting the criteria for determining eligibility, they gave with the other; giving people who were over the cap a work-around to avoid the Medicaid Gap. This work-around is called the income trust See the section on strategies for obtaining eligibility for a complete discussion of the income trust.

Income Trusts

While an income trust is not specifically related to protecting assets, it is an absolute necessity if your income is greater than the $1,656 per month income cap. If you are in an income cap state, are over the income cap and want to have benefits paid in an income cap state you must have an Income Trust drafted, executed and properly funded, prior to application for benefits.

Income Trusts are fairly simple in their concept. A trust is set up in order to divert income of the applicant to the trust in an amount great enough to reduce the income of the applicant below the cap. So, for example, if you have $1,666 in monthly income, you will need to put $10.00 into the trust each month to bring the income at or below the cap amount.

Now for the peculiar part; the total income of the applicant, with a few deductions for personal needs, is used to calculate what is known as the patient’s responsibility. This patient’s responsibility requires the applicant who has been granted benefits to pay his total income; $1,666.00, to the nursing home as his contribution to the cost of his care. There is an obvious shortfall of $10.00 that was sent to the income trust. The solution is that the trust then pays the $10.00 to the nursing home, making up the balance.

When the applicant is over the income cap, eligibility can not be established without the use of an income trust; therefore, the income trust must be set up before the application process is begun. Additionally, it must be properly funded with the applicant's excess (over the cap) income. For example: $10.00 would go into the trust as diagramed below. If you do not transfer the excess income to the trust prior to, and during the application process, eligibility will probably be denied for those months that the trust did not receive the excess income.

Seniors Turn to Medicaid to Pay Nursing Home Bills

By Sean W. Scott, Esq.

August 9, 1999

A man's chance of entering a nursing home in his life is one in three…for women, it is one in two. Inevitably every senior in our community ponders the question "will I ever end up in a nursing home?" The next question then becomes "How will I pay for this care?" Many seniors are surprised to learn that their health insurance, including Medicare, does not pay for an extended stay in a nursing home. A stay in a nursing home, where the average monthly bill is from $3,500 to $4,500, can rapidly wipe out a families savings. In Florida where one out of every five residents is over 65 and where 400,000 Floridians have Alzheimer's disease…one of the leading health problems that lead to the need for long term care, it is clear that this problem is one of pressing concern. Long term care insurance is one very good solution to finance the costs of long term care. However, it is one that is not often available due to the propensity of most seniors to put off the purchase of such insurance until it is too late. Long term care insurance is impossible to buy once you have been diagnosed with Alzheimer's or some other debilitating disease. The older you are also affects whether or not you can purchase long term care insurance. Many seniors and their families are turning to Medicaid in order to pay the nursing home bill, and as part of that process, seniors are turning to elder law attorneys to assist them in understanding the complexities of Medicaid's laws.

Nearly 70% of the residents presently in long term care nursing homes receive Medicaid benefits to pay their monthly nursing home bills. Why would a senior want to qualify for what many believe is a welfare program to pay for this care? One way of looking at it is to take for example, a married couple with $100,000 in assets. One of them has a stroke and requires long term care. The couple could decide to spend their money for the care. With nursing home care averaging $4000 per month they would have spent enough money to become eligible for benefits in four months. The couple might instead decide to apply for Medicaid right away and use the $16,000, the amount that they are over assets, to fix the home, put some money away for the healthy spouse or even transfer the money to a child. With some exceptions the Medicaid laws allows them to do this.

Medicaid, originally created as a welfare program to provide basic health care to those without financial means, was substantially changed in 1988. It was then that the U.S. Congress changed the rules regarding eligibility opening the program to seniors whom most would not call poor or in need of welfare. Along with the changes in the eligibility rules in 1988 came an increase in the facilities that would accept Medicaid payment in exchange for providing care. More facilities signed on to accept Medicaid as payment for the resident's care. Today, it is now possible to receive care at superior rated facilities in our community regardless of whether or not the resident pays privately or by Medicaid. Gone are the days when being on Medicaid meant receiving substandard care.

In order to be eligible for Medicaid benefits the State of Florida requires that certain asset and income tests be met. Each year these numerical tests change. For 1999 the Medicaid tests require that the applicant for benefits be at or below $2,000 in countable assets, while the applicant's spouse is allowed to keep $84,120. The applicant's home and car are not counted as assets. The second test requires that the applicant's gross income be less than $1,536 per month. The state does not count the income of the spouse when determining eligibility. If the applicant is either over income or over assets then the applicant does not qualify for benefits.

Many seniors who are over the asset or income limits are now seeking advice from elder law attorneys to help them become eligible for benefits. These attorneys in essences make the person eligible for Medicaid by assisting the client in preserving their assets within Medicaid's rules. There are two widely differing opinions as to whether or not someone should use the Medicaid laws to their personal advantage or instead pay privately for the care until their funds are depleted. A segment of the insurance community is pressing for reform of the Medicaid laws so as to encourage more seniors to purchase long term care insurance. Insurance requires advanced planning so that it can be purchased ahead of the need for care. If you require care or have a disease that will eventually require long term care, insurance is no longer an option. The question of how to pay the nursing home bill will continue to be an ever increasing problem facing more and more people. For more information on Medicaid and long term care questions, contact us at (800) 823-5571.

The information in this site has a general applicability to all viewers, however, since our attorneys are licensed to practice law only in Florida and Colorado, it has an emphasis on those state's laws and may be most helpful to Florida and Colorado residents. Please see our disclaimer for further cautionary words regarding the information contained within this site.













Your host for this site is Sean W. Scott, Esq. , a Florida elder law attorney with main offices located in Pinellas county, serving Pinellas, Hillsborough, Charlotte, Lee, Hernando, Citrus, Pasco and Polk counties. This site is dedicated to providing the senior client, family, and legal practitioner a resource for current up to date legal information as it pertains to seniors and care givers. We hope that you will find this collection informative and helpful in your search for information about elder law. Recent published articles by attorney Sean W. Scott including the definition of an elder law attorney are below. To see the article on Florida Medicaid eligibility requirements click here, for the article on seniors and nursing homes click here. For information on senior living options on Florida's West Coast, please visit: