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October 12, 2020

Top 10 Florida Medicaid Application Mistakes

When applying for Florida Medicaid to help pay for assisted living costs, submitting an accurate and truthful application is critical in determining eligibility. Below are the top ten mistakes that often lead to a denial of such benefits.

#1 Out-dated or Inadequate Durable Powers of Attorney Documentation

One of the top mistakes that many make when applying for Medicaid to assist in costs for assisted living care is not specifying what authority you have for giving family members gifts. Another issue that can arise is entering into a personal contract with your chosen power of attorney. These two scenarios are frequently the root cause for the Department of Children and Families (DCF) to deny your Medicaid application.

When your documentation is out of date and doesn’t meet Florida Medicaid statutory requirements, a guardianship proceeding could also occur.

#2 Not Sharing All of Your Income or Assets with DCF

You are required to sign a release that shares your financial income sources and assets when applying for Florida Medicaid. This document also allows your previous tax returns to be reviewed, as well as permitting inquiries to any financial institutions you do business. Purposely hiding these resources is a criminal offense, and Medicaid applicants are also required to report any changes to these accounts within ten days to DCF.

#3 Failing to Plan for the Death of Your Caregiving Spouse

Statistics have shown that the stressful nature of caregiving often results in the caregiver dying before their institutionalized partner does. Cases that involve caregiving spouses that precede their Medicaid enrolled husband or wife in death can potentially jeopardize the disposition of the estate left to the institutionalized spouse. It’s not unusual in estate planning for a husband or wife not receiving Medicaid to bequeath all assets to their surviving partner in a will or assume probate will do so if they die intestate. Unfortunately, in the state of Florida, this can cost their spouse their Medicaid benefits, and potentially their home.

#4 Attempting to Reduce Countable Assets Through Gifting

Just like mistake number two, attempting to game the application process by not being upfront about your income sources and assets, can come at a steep price. In this case, purposely donating away money or giving away these assets as gifts during the five-year Medicaid lookback period will trigger DCF to pursue a deferment of your benefits. The length of this imposed ineligibility gets determined by the valuation of the assets you gave away.

#5 You Don’t Create a Qualified Income Trust (QIT)

With an income over the eligibility limit for Medicaid long-term care qualification standards, Floridians can use a Qualified Income Trust to put away these monies every month for Medicaid. Failing to do so, as well as not funding it the same month you apply, could result in an ineligibility finding.

#6 Failing to Take Your Minimum Distributions from Qualified Retirement Accounts

Under Medicaid rules, if you can take a regular distribution from a qualified retirement account (IRA, SEP, 401k), it is required to do so for the asset to be considered exempt. At the same time, these withdrawals are also deemed income, so you will also need a QIT available for a deposit. Further, every single qualified account that you have falls under the distribution requirement to meet Medicaid eligibility rules.

It is important to note that the Internal Revenue Service (IRS) does have exceptions for these accounts and these accounts have creditor protections. Still, you must ensure these avoid being counted against your Medicaid application for Florida long-term care.

#7 Not Using an Irrevocable Funeral Contracts Before Submitting a Medicaid Application

If you have a refundable funeral contract, Medicaid considers it a countable asset. This could potentially cause you to exceed the countable asset limitations, forcing DCF to deny your Medicaid application. To avoid this situation, make sure your funeral contract has an irrevocability rider since these have no value limit and cannot be refunded.

#8 No Plan in Place for Non-Homestead Real Estate

Typically, Medicaid will not pursue estate recovery to Florida homesteads, but this doesn’t mean it won’t attempt to do so against other properties you or your loved one qualified for ALF benefits, pass away. These property assets could include:

  • Rental property
  • Secondary homes
  • Vacation property

There are several ways to work around this from happening, including the use of a Florida Lady Bird deed. Also known as enhanced life estate deed, these deed types make it possible to avoid Florida probate by passing property automatically to designated beneficiaries after the owner has died.

#9 Failing to Liquidate Life Insurance Policies with Certain Cash Surrender Values

When a death benefit from life insurance exceeds $2,500, the cash value is viewed as a countable asset by Florida DCF. You must liquidate these or borrow against them before applying for Medicaid. Annuities that carry cash values may also be subjected to this standard, though most regular annuities could be cashed out or converted.

#10 Not Applying for Additional Benefit Options

When applying for Medicaid, understand that it is intended as a last resort after all other assistance options have been exhausted. If there are other benefits available to help you or your loved one with long-term care costs, you are required to apply for those first.

These additional benefits options that might apply to your situation could include:

  • VA Assistance
  • Social Security Disability
  • Pensions
  • Long-Term Care Insurance
  • Life Insurance Settlement
  • Reverse Mortgaging
  • Bridge Loans
  • Annuity Income

For many families, knowing what they may or may not qualify for is frustrating. Working with an experienced Medicaid planning attorney can help make navigating this process easier. It also provides security in knowing that your ALF costs are covered.

Don’t Delay and Speak With Experienced Medicaid Planning Attorneys

At The Legacy Law Firm, we work with you to protect the best interests of you and your loved one’s assets and beneficiaries with our Medicaid planning services. We help you avoid common mistakes that can cause denials of benefits and maximize the benefit of your assets for long-term care needs. Call us today at (954) 999-9683 or contact us online to discuss your unique situation, learn more, and get started.


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