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Florida Medicaid is a state and federal partnership that provides health coverage, including long-term care, for selected categories of people with low incomes. Medicaid can literally be a lifesaver for people who cannot afford health insurance or health care coverage without assistance. Unfortunately, Medicaid can be difficult to qualify for due to its extremely harsh income requirements. For instance, for someone in a two-person household to qualify for Medicaid, the annual household income (before taxes) must be less than $24,353 in 2022.
For couples who planned and saved enough money to afford a comfortable retirement, being forced to either spend down their assets to qualify for Medicaid or forgo medical care is an agonizing choice. Thankfully, it’s not a choice every couple has to make. With proper planning through the help of an experienced Medicaid planning attorney, one can qualify for Medicaid without going bankrupt or having to spend down their life savings. One important planning tool available in Florida involves what is known as the “spousal refusal of support.” Read on to learn what this term is and what it means for Medicaid eligibility, and contact an experienced Medicaid planning attorney at Shalloway & Shalloway, P.A. for expert assistance in West Palm Beach.
Medicaid is available to pay health care costs for someone who is blind, pregnant, 65 years old or older, has a disability or a household family member with a disability, or is responsible for a child who is 18 years old or younger. In addition to one of those qualifying conditions, the applicant must also be considered “low income” or “very low income.” On top of severe income limits, the applicant is also limited to only $2,000 in non-exempt assets. Exempt assets can include the family home, one vehicle, and certain other assets such as some jewelry and household items, a burial plot, and certain retirement accounts. Exempt assets are “non-countable” and don’t apply to the strict $2,000 asset limit.
For a married couple where only one spouse is applying for Medicaid, while the applicant is limited to only $2,000 in assets, the non-applicant spouse can have $137,400 (for 2022) in assets without affecting the applicant’s eligibility. A common Medicaid planning tool, therefore, involves transferring non-exempt assets from the applicant to the non-applicant within the asset limits described above.
Spousal transfers of assets can be effective, but only to the $137,400 limit. In most states, couples have to get creative on how to deal with asset transfers that would put the non-applicant spouse over the cap, such as putting additional funds toward improving exempt assets, like making home repairs or renovations, paying off debts, buying a car, or providing for the ill spouse’s needs that aren’t covered by Medicaid. Even after accomplishing objectives like these, the couple may still have an overage of non-exempt assets they can’t transfer.
Typically, part of being married is that each spouse is legally required to support the other financially. Two states, however, New York and Florida, expressly allow the non-applicant spouse to refuse to pay for the applicant spouse’s medical care. In this situation, the non-applicant spouse would not be subject to an asset limit in order for the applicant to qualify for Medicaid, because none of their assets are being made available to the Medicaid recipient. Nearly all of the applicant’s non-exempt assets could be transferred to the other spouse without affecting the applicant’s Medicaid eligibility, regardless of the total amount transferred.
To be effective, the asset transfer must occur before the applicant applies for Medicaid. After applying, the other spouse will file a notice of spousal refusal with the Florida Medicaid agency (AHCA) refusing to pay the cost of care. The Medicaid applicant would then complete a spousal refusal form as part of the application process, which is essentially an assignment of rights to the state to collect reimbursement from the other spouse. The process is tricky; the transfer must come before the refusal, and everything has to be done within certain timelines, filing the right documents in the right order. Mistakes could result in the denial of Medicaid services based on the spouses exceeding allowable asset limits.
There are pros and cons to utilizing the spousal refusal option to qualify for Medicaid, and it must be done carefully with the help of an experienced Medicaid planning attorney who can advise you of your options and make sure you take the correct steps.
An experienced West Palm Beach Medicaid planning attorney can help you qualify for Medicaid without overburdening your estate or causing undue hardship on your spouse. If you are in need of a dedicated, thorough Florida Medicaid and estate planning attorney, contact the diligent West Palm Beach elder law attorneys of Shalloway & Shalloway at 561-686-6200.