Long-term care is help with the ordinary acts of living, bathing, dressing, eating, and moving about, over months or years, at home, in assisted living, or in a nursing home. Most people who reach 65 will need some of it, and most families have not decided how to pay for it. The planning is financial and legal, and best done while the person who will need the care can still sign. Spiro Verras has practiced law since 1993; what follows is what he tells families in the first hour.
The cost is high, and Medicare does not pay it
A nursing home in Florida costs more each year than most retirees receive in income, assisted living somewhat less, and full-time home care as much or more. Medicare covers a limited period of skilled care after a hospital stay and nothing for custodial care, which is what most long-term care is; health insurance and Medicare supplements do not cover it either.
There are three ways to pay
The first is your own money, which works for a short stay or a large estate and consumes a modest one. The second is long-term care insurance, bought while you are healthy enough to qualify; fewer carriers sell it than a decade ago, and it often comes now as a hybrid life or annuity policy with a care rider. Spiro Verras does not sell insurance, but a policy you hold changes the rest of the plan. The third is Medicaid, which pays for nursing home care, and in Florida some care at home and in assisted living, for people who meet a medical test and strict income and asset limits. The Medicaid planning page covers the limits; what follows is how a family gets within them.
The look-back, and the protections for a spouse at home
Medicaid examines every transfer for less than fair value in the five years before the application, and penalizes gifts with a period of ineligibility proportionate to what was given away. Planning done five years ahead is therefore different in kind from planning at the nursing home door. A married couple has protections the law builds in: The spouse at home keeps the house, a vehicle, and a community spouse resource allowance of countable assets up to a figure set each year, and may receive enough of the other spouse’s income to reach a minimum monthly allowance. Transfers between spouses carry no penalty. For many couples those protections, properly used, are the whole plan.
The home is exempt, with conditions
Your home is not a countable asset while you or your spouse live in it, or while you intend to return to it, up to an equity limit set by federal law. That protects it during life. At death the state may recover what it paid from your probate estate; a home that passes under an Enhanced Life Estate “Lady Bird” Deed or a trust avoids probate and so avoids the claim. Florida does not treat a Lady Bird Deed as a transfer for Medicaid purposes, so it remains useful late in the process.
Two tools work inside the five years, and one needs them
A personal services contract pays a family member, in a lump sum at fair market value, for the care they will provide for the rest of your life. Done correctly it converts countable assets into a paid-for service rather than a gift, and it can be signed when care is already needed. The caregiver pays income tax on it, the services have to be real, and the contract has to meet the state’s standards. A Medicaid-compliant annuity converts a spouse’s excess assets into income for the spouse at home. An irrevocable income-only trust protects assets completely, but only after five years; it is described on the Medicaid trusts page.
When planning is late, there is still spend-down
If care is needed now and nothing was done, the family can still spend countable assets on exempt things rather than on the facility: pay off the mortgage, repair the house, buy the car the spouse needs, prepay the funeral under an irrevocable contract, buy the hearing aids. A qualified income trust solves income over the cap. The result is a smaller estate than earlier planning would have left, but a larger one than doing nothing. What cannot be done then is to give money to the children and expect it not to count.
The documents come first, and the CPA and the Medicaid planner are part of it
Every step above is a transaction, and a person who cannot sign cannot make one. A durable power of attorney that expressly authorizes gifts, trusts, and Medicaid planning lets a spouse or child act when the time comes; a standard form often does not. The health care advance directives decide who arranges the care itself. A plan that depends on a signature from someone who has lost capacity is a guardianship, and Verras Law does not take new guardianship cases.
Every step also has an income tax consequence on which Verras Law does not advise; the family’s CPA sees the plan before it is signed. The application itself, with its five years of bank statements, is prepared by a Medicaid planner Spiro Verras works with. Spiro Verras drafts the instruments, the deeds, and the contracts, and keeps them consistent with the estate plan behind them. When it is done, the family will know what is protected, what is not, and who signs for whom.
The next step is the questionnaire, followed by an hour with Spiro Verras in Palm Harbor, or by appointment in Tampa or St. Petersburg.