Some older adults in Florida eventually require significant help with daily life. They might have a nurse come visit them at home or may move into a nursing home. Both arrangements can provide someone with the care they need but can also strain their finances. Most people do not have enough money set aside for retirement to pay with their own resources for skilled nursing support or a room in a nursing home. They also cannot count on Medicare to cover those expenses, so they may end up applying for Medicaid.
It is typically best for those seeking Medicaid benefits to plan well in advance. Failing to do so might put them at risk of a significant penalty. What type of penalty could older adults face when they seek Medicaid benefits for long-term care?
Transfers and gifts can lead to penalties
When someone requires Medicaid benefits to pay for long-term care needs in Florida, their recent financial history is subject to scrutiny by the state. Not only does the state look at their current income and resources, but professionals may also evaluate five years of someone’s prior financial transactions.
Any inappropriate or excessive transfers and gifts during those five years could lead to the state imposing a penalty. First, the state determines the total value of the gifts and inappropriate transfers. Then, the state converts that to a set number of months of care based on current costs. The applicant must then pay for their own medical needs for that number of months before they become eligible for Medicaid coverage.
Obviously, those who have already gifted and transferred their resources are not in a position to pay out of pocket for in-home help or a room in a nursing home. They face those penalties at a time when they may struggle to find alternative means of paying for their coverage. Therefore, it is usually a smart move for people to consider the possibility that they might need Medicaid before their health begins to decline.
Someone who plans in advance can potentially make transfers and even gifts to loved ones years before they apply for Medicaid. Therefore, those transactions won’t lead to more scrutiny or any financial penalties. Changing the ownership of assets, possibly by using them to fund a trust, is one way to protect resources while simultaneously helping ensure that someone can receive financial aid when they are vulnerable later in life.
