Five year rule for Medicaid is often misunderstood

Palm Beach Post (FL)

Q: My husband has been housebound for several years. My own health is poor now, and I can no longer properly care for him at home. I am looking at long-term care nursing facilities for him. At one facility, a staff member said that because we gave my daughter $20,000 three years ago to help her through her divorce, my husband won't be eligible for Medicaid benefits for five years following his admission. I am in a panic. I can't afford five years of care. Are there alternatives?

A: There is no reason to panic. The "five" refers to the length of the look-back period. The look-back is designed to discourage people from giving away assets just to become Medicaid eligible. The way it was explained to you is not accurate.

When your husband applies for benefits, Medicaid will examine all transfers for less than fair market value that you and/or your husband made in the five years preceding application. The sum is then divided by a "penalty divisor," (basically an estimate of the monthly cost of nursing home care). Florida's current penalty divisor is $9,171.

Assuming you have made no other gifts during the look- back period, Medicaid will divide $20,000 by $9,171. The resulting number – 3, because Medicaid rounds up - is the number of months your husband will have to wait until he gets benefits (provided of course he is qualified in all other respects). That's a far cry from five years, right? And here's another reason not to panic: there are numerous steps that can be taken, with full disclosure to Medicaid, that may eliminate even that three-month penalty. A Florida Bar Certified Elder Law Attorney will be able to guide you.

It would be wise for you to begin gathering together all the documentation needed for your husband's application, to prevent greater delays. Our website has a list of what is needed to apply for Florida Medicaid.

Joseph Karp and Jonathan Karp are Florida Elder Law and Estate Planning Attorneys. The Karp Law Firm is located in Palm Beach and St. Lucie counties. It assists clients with wills, trusts, Medicaid and VA benefits planning, special needs planning, asset preservation, probate/ trust administration, estate litigation, and probate and elder law mediation.