RALPH S. ROBBINS, CFP©

A CERTIFIED FINANCIAL PLANNING PRACTITIONER

specializing in

elder care financial planning

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THE ASSET TEST

All assets of the applicant and, if married, the spouse, whether held jointly or not, are considered for Medicaid eligibility purposes.  A discussion of asset types follows the requirements below (as of July 1, 2014):

  1. Asset requirements for the applicant:  Cannot own countable assets in excess of $2,000.00 ($5,000 if income is under $844 per month) in addition to certain exempt and non-countable assets.

  2. Asset requirements for the well spouse (known as the Community Spouse):  May retain up to $117,240.00 in individual/joint assets in addition to non-countable assets (exempt, non-available, and certain income producing assets).

    Definition of Assets

    In general, an applicant's assets are divided into two types:  Countable towards Medicaid eligibility limits and Non-Countable towards Medicaid limits.  Assets may also be deemed "exempt" or "unavailable".  The type of asset involved, how it is titled, and in some cases the ownership history of an asset, will determine its category.   

  Below is a list of assets that most applying for Medicaid must contend with when considering the asset test.  It is by no means complete and every individual’s circumstances must be evaluated to be sure no “surprises” occur during the application process.

  The Home – If the spouse of the applicant or certain dependent relatives continue to reside in the home, the home is not counted as an asset.  If single, the home is excluded if the applicant “intends to and can be reasonably expected to return to the home”.  In virtually all cases in Florida, the primary residence (homestead) is not counted.  Once the applicant is deceased, however, the home may be subject to Medicaid Estate Recovery.  Proper planning may avoid this outcome.

  Vehicles – One vehicle of any age, and a second vehicle if over 7 years old (unless it is a luxury, antique, or custom vehicle) is/are not countable.

  Personal/Household Goods – Personal items in the home such as furnishings are not countable.  Other items such jewelry or art may be considered countable if deemed collectible 

  Retirement Accounts – IRA’s, 401-k’s, 403-b’s, are not counted as long as they are properly structured and the owner (applicant or spouse) is taking regular and periodic income distributions from the account (IMPORTANT:  the minimum distribution requirements for Medicaid are different than those for the IRS!).

  Burial Funds and Prepaid Funeral Contracts – If irrevocable, the full value of a burial contract is not counted regardless of the amount or value.  If the plan or funds are revocable, Medicaid allows up to $2,500 to not be counted.

  Ongoing Business Concerns – Whereas they generate income for the applicant who ultimately contributes to the cost of care in the form of Patient Responsibility, such concerns are generally not countable.  Likewise, the value of other real property that is rented or listed for sale can also be excluded as countable.  The gross proceeds from any rental income is counted towards gross monthly income when applying the Income Test.  Deductions are provided for allowable rental expenses.

   Life Insurance – All term life insurance policies are excluded since they have no cash value.  Whole Life or other forms of cash value life insurance polices with a current cash value may be counted as assets.  If the total face value (in other words death benefit) of all policies owned is less than or equal to $2,500 then the cash value of the total of all policies is excluded.  If the total death benefit of all policies exceeds $2,500 then the cash value of all policies is included in determining the asset test.

   Annuities – The cash surrender value of single or flexible premium deferred annuities are fully countable (unless contained in a retirement plan, see Retirement Plans above).

   Properly Structured Immediate Annuities – Assets placed into a properly structured immediate annuity may not be countable provided the contract meets strict Medicaid guidelines.

  It is easy to see that for many the Asset Test is the test that will present the most confusion and the largest stumbling block for Medicaid eligibility.

  Interestingly, however, it is because the rules are so complex and the types of assets an applicant may own may be so varied, that we find it is in this area that the greatest opportunity exists for eligibility planning.

  For further information on Medicaid eligibility planning, click here:

 

      Eligibility Planning

 

 

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