Jan 19, 2014

Florida Medicaid: the difference between look-back period and penalty period


Florida Medicaid law is a tangle of interrelated rules that change frequently. Here I explain one of many confusing aspects of Florida Medicaid law: the look-back period and the penalty period, and the difference between the two.

Look-Back Period: 
When a person applies for Medicaid benefits for long-term care in Florida, the Medicaid office "looks back" at all transfers made since January 1, 2010. There will be ultimately a 5-year period for all look-backs for all Medicaid applications filed from January 1, 2015 and thereafter. The function of the look-back period is to determine if the applicant or the applicant's spouse has made any non-exempt transfers (transfers for less than fair market value). For example, if you apply for benefits on March 1, 2014, Medicaid will look back at all transfers starting from January 1, 2010. If you apply for benefits on March 1, 2015, Medicaid will look back at all transfers starting March 1, 2010. (Note: Transfers made from spouse to spouse are considered exempt - in other words, are not considered gifts.)

Penalty period:  
This is the amount of time the applicant is ineligible for benefits. The penalty period is determined by dividing the total value of non-exempt transfers made during the look-back period, by a "penalty divisor." Currently in Florida, the divisor is $7,638. During the penalty period, the applicant may not receive benefits and the nursing home will have to be paid out-of-pocket.

Example: Mrs. Jones, 75, had a stroke and has been cared for at home by her husband. However, her needs have become so great that Mr. Jones, whose own health is declining, can no longer care for her. Mrs. Jones enters a long-term care nursing facility on November 15, 2013.

Mrs. Jones applies for Medicaid on November 15, 2014. The look-back period therefore spans from January 1, 2010 through November 15, 2014. Mrs. Jones made two non-exempt transfers during this period: She gave her daughter $20,000 in 2010, and she gave her son $30,000 in 2012, for a total of $50,000.

To determine the penalty period, Medicaid divides the total of non-exempt transfers by the penalty divisor:
$50,000 divided by $7638 = 6.55. 

Unless steps are taken even at that late date to rectify the situation, Mrs. Jones will have to wait 7 months (6.55 rounded up to 7) until her benefits start (assuming she has met all the other Medicaid eligibility criteria). For this 7 month period, she will have to pay out of pocket for her nursing care.  The average cost for a private room in a Florida nursing home is now $91,250 (Genworth Financial Survey of Nursing Home Costs), or $7,604 per month. Thus, Mrs. Jones will need to pay 7 months x $7,604, or $53,228, before Medicaid benefits even begin.

Fortunately, in many cases, even under these circumstances in which someone has already transferred the funds and is in the nursing home, steps can be taken to facilitate Florida Medicaid eligibility, to eliminate or reduce the penalty period, using legitimate legal methods which would be disclosed to Medicaid. When a family member needs long-term nursing care, Medicaid benefits may be the only thing that can prevent a family from being wiped out financially. Fortunately, there are perfectly legal strategies that may can allow an applicant to obtain Medicaid benefits without having to spend down, even if the person is already in a nursing facility. 

It is always advisable for families to consult a Florida Bar Certified Elder Law Attorney prior to a loved one applying for Medicaid long-term care benefits. The family should also consult with a Florida Bar Certified Elder Law Attorney even if they believe that a Medicaid application is inappropriate because the applicant is ineligible for Medicaid benefits because the applicant has significant assets or has made prior gifts. Medicaid office staff are well-meaning and knowledgeable, but should not and cannot be relied upon to provide you with the detailed advice and explanations needed to optimize your chances of securing benefits. That is not their job. A Florida Bar Certified Elder Law Attorney has the knowledge to keep up with ever-changing regulations, and will have only one goal in mind: protecting you and your interests. For advice and assistance, contact the Florida Bar Certified Elder Law Attorneys of The Karp Law Firm.

2 comments:

Norman Mcgill said...

Suppose Mrs. Jones has a cheaper room rate than $7604 and only has to pay $3000 a month. If the kids pay for that for the penalty time do they keep the remaining money? I'm going through this right now with my mother and I am trying to find a legal way to keep at least some of her money without having to go flat broke to get Medicaid. Would very much appreciate an answer from somebody.

Joseph S. Karp, Certified Elder Law Attorney said...

First, the period does not begin to run until the person has applied for Medicaid and has been denied solely because of the transfer. Otherwise there is a full five year look-back in Florida. If the person has applied and been denied, then the monthly exemption exists based on the "Medicaid divisor" in effect at the time of denial, as well as any monies returned for the benefit of the applicant. Sounds like you need a consultation with a board-certified elder law attorney.

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