What Assets Is Someone Able to Keep In Medicaid Planning?

The assets that someone is able to keep in Medicaid planning vary from state to state. In the state of Florida, you are allowed to keep your primary residence, cars and irrevocable funeral plans. Under certain circumstances, you are also allowed to keep IRAs or retirement accounts and rental property. The primary residence is protected under Florida Medicaid rules. However, Medicaid applicants need to consider the fact that if all of their assets are spent down, then they may not have enough income to maintain the house. Furthermore, if they keep the primary residence, then they will typically need to ensure that probate of that residence is avoided. So, that can be looked at in an asset protection plan.

When a person is in a nursing home and their primary residence is unused, Medicaid rules do not allow for the nursing home to sell or take that residence. However, if you were to sell the house and you receive proceeds from the sale of the house, then you’ve taken a protected asset and made it into a non-protected asset. If you are doing anything with the primary residence in a nursing home situation- whether you’re renting, selling, or holding it- it’s best to contact an elder law attorney for those purposes. That way, you can make sure that you don’t accidentally run afoul of any rules.

You are allowed to keep one automobile; under certain circumstances, you can keep two. If you sell the car, that becomes cash and it counts against your $2000 Medicaid asset limit. In addition, there is the complication of keeping that car in running condition and paying for liability insurance. You will not have the income to be able to pay for insurance, so the insurance will have to be paid elsewhere.

You are allowed to keep any rental property under the Florida Medicaid rules. However, if you fail to avoid probate of your rental property, then Medicaid can recover and put an estate lien on the rental property. Should you pass away, Medicaid can collect against the rental property in probate court. You can also keep your IRA as long as it’s set in distribution status. There is a certain way to do that, which requires the assistance of an elder law attorney.

Since a significant amount of time has usually passed between when someone creates one of these plans and when the plan actually comes into play, people often have the misconception that everything was paid for. However, there are usually certain things that were not paid for. So, if you are applying for Medicaid, you are out of assets and you didn’t pay for everything related to your funeral, burial or cremation, then you are not going to have assets to pay for those services after you pass away.

Can Medicaid Take My Annuities?

The Medicaid rules treat annuities in different ways. Medicaid may or may not recover from annuities; it all depends on the type of annuity. Annuities are very diverse and can have many different features, much like how a car can have many different features. The common annuity that I see in my practice that can be taken by Medicaid is the non-qualified tax deferred annuity that has cash value. When it’s non-qualified, that means the annuity contract is not owned by an IRA or a retirement account. So, the non-qualified accounts are going to be subject to the Medicaid countable asset rules. If the deferred annuity has cash value and you ask the insurance company to give you all of that money, then they’ll cut you a check for all of your money (less the account surrender fees). The money that they give back to you is considered a countable asset. Those types of annuities are problematic when it comes to Medicaid asset protection.

The annuities that are typically not counted towards the Medicaid limits are called single premium immediate annuities (SPIA). An SPIA is a type of annuity that has no cash value and that is in payout status, meaning the annuity company is giving you your money back in equal amounts or in a guaranteed income stream over a certain period of time. In certain circumstances, this type of annuity is protected, but in other circumstances it is not; it all depends on the situation. If you are looking into an annuity for long-term care or asset protection, then you should contact an elder law attorney before agreeing with the purchase of that annuity. This is because sometimes the annuity sales person is trying to sell a product that they don’t quite understand, or that doesn’t quite conform to the reality of the Medicaid rules.

For more information on Retaining Assets In Medicaid Planning, an initial consultation is your next best step. Get the information and legal answers you’re seeking by calling [number type=”1″] today.