Prior to October, 1993, if a nursing home resident or someone in need of nursing home care earned income in excess of 300% of the federal poverty level (at that time $1,226), that applicant would never be able to qualify for Medicaid benefits in Florida. Elder law practitioners like myself were forced to tell the families of these residents the State of Florida would not help them. This created a great amount of anxiety and financial crisis for these families.

In October, 1993, the federal government published new regulations relating to the Medicaid program which, if accepted by the individual states, would avoid this horrible tragedy. In June 1994, the state of Florida began accepting the proposed Federal regulations.

The Federal government suggested the use of a Qualified Income Trust to overcome the income cap barrier. The trust functions as a pass through of the income of the Medicaid applicant and allows the applicant, no matter what their income, to qualify for Medicaid, assuming the other criteria is met.

In addition to the income requirement, an individual must be determined to be medically needy by the Department of Health and Rehabilitative Services (“HRS”) and must be residing in a Medicaid qualifying nursing home to qualify for Medicaid. In addition to the medical and the income qualifications, there are asset limitations. For the year 2004, a single individual living in a nursing home is only permitted to have $2,000 in assets. A married couple living in a nursing home is only permitted to have $3,000 in assets. If an individual is living in a nursing home and has a spouse living in the community (not living in a nursing home), the nursing home individual is allowed to own $2,000 in assets and the spouse living in the community is permitted to have $92,760.00 in assets. In addition to these asset limits, an individual may retain exempt assets such as a residence, one automobile, personal property and household furnishings and pre-need burial arrangements and burial plots. If an individual exceeds the asset limit as stated above, and subsequently transfers his or her assets to his or her spouse, there is no penalty. However, if the spouses’ combined assets exceeds the asset limit stated above and one spouse transfers assets to a non-spouse, there is a thirty-six (36) month look-back period and period of ineligibility that may be incurred. If these transfers come from a trust to a non-spouse or if the transfers are to a trust, the look-back period is extended to sixty (60) months. However, the look-back period and ineligibility period may be shorter, depending on the amount of assets that have been transferred. The calculation to determine the period of ineligibility is the amount transferred to a non-spouse divided by $3,300. The solution to this equation equals the number of months of ineligibility for the Medicaid applicant. In addition, a transfer of an exempt asset to a non-spouse may also incur an ineligibility period.

The rules stated above are the general rules for qualification for Medicaid in Florida. There are many alternatives and other planning opportunities to qualify for Medicaid. Before any action is taken, you should consult a qualified Elder law Attorney who can explain the Medicaid program and alternatives for preserving your assets.