The Income Test
Florida as well as many other states place limitations on a person’s eligibility to receive Medicaid’s long-term support. For instance, Florida limits the gross income that a person can make. In order to be eligible, a person’s gross monthly income cannot exceed $2,205 a month; however, the income of a spouse is not counted. If a person’s gross income is in excess of $2,205 the estate planning attorneys here can prepare a Qualified Income Trust, also known as a Miller Trust, so the individual can still qualify for Medicaid benefits.
Net Income vs. Gross Income
One of the hardest aspects to grasp about the income test is that the test determines eligibility by gross income. So what is the difference between gross income and net income? Gross income includes all of the pre tax income an individual receives from a variety of sources. A good example of how gross income compares to net income is when it comes to Medicare Part B. These premiums are taken out of Social Security Benefits and are considered net income. To determine the gross income, the premiums must be included as well, and thus the gross income is much more than the net income. Here are a few examples of what gross income includes:
- Business income
- Retirement plans
- Interest from checking, savings, CD’s, bonds, insurance annuities
- Rental income
The Asset Test
Once a Florida resident passes the income test he or she must then pass what is known as the asset test. This test states that a person cannot own countable assets in excess of $2,000.00, or $5,000.00 if their income is under $856 per month. At first this doesn’t seem like a lot, but the good news is that many assets do not count for the purpose of the Medicaid asset test.
So What Assets Are Exempt?
In Florida many assets are exempt from the test. For instance, a person’s home is exempt from the test if the applicant, or dependent relatives, continues to reside in the home. However, the equity of the home must be $552,000 or less. Many vehicles are also exempt. An applicant may exempt one vehicle of any age, and a second vehicle if the car is over 7 years old and not considered to be an antique or a luxury vehicle.
Other exempt assets include personal and household goods. Further, IRAs, 401Ks and 403b are also not counted as assets for The Asset Test, however, these assets are included under The Income Test. Further, all term life insurance policies are excluded because they have no cash value. Whole life insurance policies and other forms of cash value life insurance policies can be counted as assets if their total face value of the policies is greater than $2,500. The asset test overall is a very exhaustive list of assets that are and are not exempt. Also Medicare Part B premiums are not exempt from gross income calculations. For more information on if your assets pass The Asset Test we recommend you set up an appointment with our office today.
What Benefits Does Medicaid Provide?
Medicaid is a federal government program that provides healthcare coverage to residents with few assets and low income. The federal government oversees Medicaid, but each state actually administers its own form of the program. Florida sets the eligibility requirements for Medicaid, as well as the type, amount, and duration of services, and the rate of payment.
In turn, the federal government requires Florida must provide its residents a certain benefits. These services include: inpatient and outpatient hospital services, nursing facility services, rural health clinic services, home healthcare for persons eligible for skilled-nursing services, as well as x-rays and laboratory services.
Why is the Income Test Important?
The Income Test is important in Florida because this is a means test that allows eligible applicants to receive Medicaid. The importance of Medicaid can’t be stated enough. Healthcare costs are growing each year, and can easily eat into a person’s savings fast. The inheritance that many were hoping to leave for their loved ones may have to one day be used for nursing care, assisted living, or other forms of expensive care. This is why we recommend to all of our clients that they take advantage of every resource available, which includes receiving Medicaid benefits.
The problem is that not everyone can qualify for Medicaid benefits because they do not pass The Income Test or The Asset Test. This is why we often recommend clients use a Qualified Income Trust in order to take full advantage of their Medicaid benefits. Follow this link for more information on Qualified Income Trusts.
If you have questions about Medicaid or would like more information about Medicaid in Jacksonville or other areas of Florida, contact a Jacksonville Medicaid Eligibility Lawyers by email or call us at 904-685-1200 to discuss your situation today.