Will My Spouse Be Able To Keep My Retirement If I Enter A Nursing Home Without Medicaid Planning?

Many spouses are concerned about how their spouse will be taken care of financially in the event that they have to enter a nursing home. This is particularly true when there is a large disparity between the incomes of the spouses, which most commonly occurs when the husband works during the marriage and the wife stays home to raise the children. Disparities between incomes can also occur in second marriages if the wife has not had continued employment throughout her work history, and therefore ends up with a smaller retirement income (i.e. retirement pension or IRA) compared to her spouse.

In Florida, income that goes through a retirement pension needs to be spent on the cost of nursing home care. Depending on the disparity between incomes, a higher-earning spouse who needs nursing home care could pay a portion of his or her income to the spouse that does not need nursing home care. If the spouse living at home does not have enough income to live on, then a court spousal support order could be used to lower the sick spouse’s nursing home bill and increase the well spouse’s monthly take-home amount.

The next issue with retirement is the qualified retirement or IRA account. When companies offer 401(k) plans instead of pensions, most employees began rolling these assets over into IRAs upon retirement. Under Florida Medicaid law, IRAs are exempt from being counted towards the asset limit of $2,000 as long as the retirement is in distribution or payout status. The issue in terms of Medicaid law is that the income from these retirement plans would go towards nursing home bills and therefore not be protected income. However, the asset portion would be protected if there is an IRA account.

Issues that involve spouses and IRAs are complex and should be discussed on a case-by-case basis during a consultation with a qualified attorney. The attorney will be able to explain all the rules that apply to the particular set of circumstances at hand and provide clarity in the process. It would also be well-advised for the spouse who does not need nursing home care to create a budget of expenses and income as it relates to their household; this would help determine whether additional requests for support (i.e. reduction in nursing home bills) should be made.

Can My Parent Transfer Any Medicaid-Exempt Assets Other Than A Home To Family Members?

Under Florida Medicaid rules, there is a denial and delay of Medicaid benefits for families who transfer assets with the intent of qualifying for Medicaid without any return benefit or compensation to the person gifting, giving, or transferring the assets. Within five years of the Medicaid application, which is typically referred to as the five-year lookback period, assets cannot be transferred. Of course, a policy reason for this is that you can’t give away your money today and expect the taxpayers to pay for your nursing home care tomorrow. However, there are plenty of exceptions to this rule, which are covered in the articles on this website.

The most common misconception regarding the transfer of assets stems from the fact that Medicaid rules are different than IRS rules. As of 2020, individuals are able to gift $15,000 to each person without having to file a gift tax return. This is true only for IRS purposes; if it is done under Medicaid law, then you will create a problem regarding Medicaid benefits. If you’re trying to reduce your estate to qualify for nursing home eligibility and avoiding having to pay $8,000 to $10,000 per month on nursing home care, consult with an elder law attorney who has experience filing Medicaid applications. The attorney will be able to explain what you need to do in order to qualify for Medicaid without any delay or additional financial consequences.

Can I Transfer Assets To My Spouse Or Disabled Child If I Have To Enter A Nursing Home With No Prior Planning?

You are able to transfer assets to a disabled child on the eve of entering a nursing home. In doing so, the main consideration is whether or not you will disrupt that disabled child’s eligibility for public benefits. In order to ensure that this doesn’t happen, you should have a discussion with an attorney to determine what public benefits that child is receiving. If the child is receiving means-tested benefits, then you would need to consider creating a special needs trust for the child. Such a trust would eliminate the possibility of the child losing public benefits, as well as protect the assets from the child’s parents. The next consideration to make when transferring assets to a disabled child immediately prior to nursing home admission is whether or not that disabled child is capable of managing those assets.

Transferring excess assets to a spouse is permitted under Florida Medicaid law. However, depending on the amount of assets the healthy spouse has, the asset limit could be exceeded, which would disqualify both spouses from Medicaid eligibility. If you plan to transfer assets to a spouse or disabled child, consult with a Florida elder law attorney who has experience filing Medicaid applications. The attorney will be able to assess whether or not a transfer to a disabled child or spouse is prudent, and if so, under what circumstances the transfer should occur in order to leave public benefits untouched.

For more information on Nursing Home Without Medicaid Planning, an initial consultation is your next best step. Get the information and legal answers you’re seeking by calling (904) 398-6100 today.

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