These assets are subject to an unlimited marital deduction for estate tax purposes but more importantly, if the surviving spouse is younger than the decedent, there will also be a substantial opportunity for deferral of income taxes. 222.21 and are not subject to probate unlessthe estate of the decedent is the beneficiary of the estate. Will versus Intent versus Beneficiary Designation and Estate Settlement: There are many cases, both in Florida and across the country, arising from conflicting testamentary provisions. Reg. 7 July/August 2004 Pg 54. coverage to low-income adults. which is publicly reported by CMS but uses a different summary statistic. When considering Florida Medicaid planning strategies for IRA and 401(k) accounts, it is important to remember Floridas five-year Medicaid look-back period intended to curb questionable transfers. Prior to applying for Medicaid, the IRA or 401k is converted into pay-out status, so that what would have been a countable asset is instead considered a source of income. For those who may have received a new job during the pandemic, and didn't sign up for their job's health insurance due to having Medicaid, speak with a supervisor or The Florida statutes concerning revocable trusts and wills in light of divorce11 do not govern any account whose disposition is determined by a beneficiary designation and therefore will not automatically cause the surviving former spouse to be treated as having predeceased the decedent. 24 See Paszamant v. Retirement Accounts, Inc., 776 So. Copyright 2023 All rights reserved. When a state did not report a measure or used non-Core Set specifications, the measure is not and (b)national counts and change statistics for the same period. 8 Fla. Stat. 12 See also Schultz v. Schultz, 591 N.W. Other eligibility criteria also apply, for example, with respect to citizenship, immigration status and residency. Awareness of the legal and business environment in which IRAs exist is essential to help our clients avoid costly mistakes and unexpected outcomes. Almost all income is counted IRA payments, pension payments, Social Security benefits, property income, alimony, wages, salary, stock dividends, etc. It reads, in part, [T]he separate account rules under A-2 of 1.401(a) (9)-8 are not available to beneficiaries of a trust with respect to the trusts interest in the employees benefit. In effect, the new position of the IRS is to look no further than the beneficiary form, much like the policy has been on estates. 2000); Luszcz v. Lavoie, 787 So. Finally, accounts may be divided at any time after the IRA owners death but must be divided by the December 31 deadline in order to receive separate share treatment. A respectable, but by no means enormous, retirement account earned through years of hard work can be enough to disqualify an elder from Medicaid nursing home assistance even if the account is entirely insufficient to pay for necessary long-term care. Eligibility. This site is for information purposes; it is not a substitute for professional legal advice. 2d Executors and Administrators 502 (1989). In Florida, the Agency for Health Care Administration (Agency) is responsible for Medicaid. Unlike Nursing Home Medicaid, Floridas SMMC Program is not an entitlement. He died while waiting for the change of beneficiary form, but had made his intent clear to his attorney as well as two brokers. Currently, this would include IRAs if the amount of the IRA inherited exceeds $15,000. As of 2020, the individual income limit is $2,349 per month, and double that for couples. Once those spots are full, additional eligible applicants will be placed on a waitlist. 601.201(1)(1). It is also important to recognize that every state has enacted laws that touch the world of IRA administration, that must be considered together with case law that sometimes seems to have little to do with statutes or the Internal Revenue Code. To determine if the applicant needs this level of care, Florida uses its Comprehensive Assessment and Review for Long-Term Care Services (CARES) Program, and the AHCA 5000-3008 Form, Medical Certification for Medicaid Long-Term Care Services and Patient Transfer Form.. Likewise, PLR 200234019 reflects the same result with regard to estates. measures in the CMS Medicaid and CHIP Child Core Set. Second, plan for contingencies and leave an exit strategy. After financial eligibility requirements are checked and double checked, documentation is gathered, and functional eligibility is clarified, individuals can apply through the states ACCESS website. 2001). If the Internal Revenue Code were the only consideration in IRA planning, the new final rules would be simpler than the prior rules, and planning with these accounts would not present such a challenge. IRAs and qualified plans now fall under the second tier of the three-tier priority system imposed by statute.5 A surviving spouse who is unhappy with his or her share of the decedents estate can now elect 30 percent of the augmented estate, including IRAs. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); document.getElementById( "ak_js_2" ).setAttribute( "value", ( new Date() ).getTime() ); document.getElementById( "ak_js_3" ).setAttribute( "value", ( new Date() ).getTime() ); Business Continuity Succession Planning [An Ultimate Guide], Florida Last Will and Testament [Guidelines], Florida Asset Protection [Ultimate Guide], Florida Medicaid Planning [Ultimate Guide]. 2001) (where court held a custodian has no duty to monitor investments in a self-directed IRA); and Smith Barney, Inc. v. Henry, 775 So. The only thing that makes IRAs different is that, usually, the beneficiary designation form will control over a will. California, Florida, Georgia, and New York, among a few other states, do not count an applicants IRA as an asset for Medicaid eligibility if it is in payout status. However, the monthly payments are counted as income. 1.401(a) (9)-4, A-5(c). All IRA agreements must be approved by the IRS prior to use to ensure that the arrangement will qualify as an IRA under the Internal Revenue Code. 1999); In re Estate of Dellinger, 760 So. 5. 
Nursing Home Compare is a federal government website that has information about more than 15,000 nursing homes across the country. 18 See In re Estate of Roberts, 762 N.E. More. 17 See also Caine v. Freier, 564 S.E. and Results, Medicaid/CHIP 1.2 Legal Authority Functional Requirements Applying to the Statewide Medicaid Managed Care Program 2002); Powers v. Hayes, 776 A.2d 374 (Vt. 2001); Lavitt v. Meisler, WL 21771728 (Conn. Super. With these tools, youll be empowered to direct your own course (and your chosen experts) to design a plan that really makes sense for you and your loved ones. The final regulations followed this PLR. Most Medicaid eligibility and all CHIP eligibility is based on modified adjusted Florida rules for long-term nursing care are complicated and are actually a combination of both state and federal regulations. Some examples of where key information can be found under the new structure are below: For additional information on the program, please choose one of the following links. The length of income tax deferral available depends on whether a beneficiary is named, and who is considered a designated beneficiary under the new IRA rules. 
2 www.ebri.org/facts/0403fact.pdf. Uniform Principal and Income Act: F.S. This can be avoided by designating a valid beneficiary, not only for IRA owners, but also beneficiaries of inherited IRAs on forms provided by the IRA trustee or custodian. IRAs and qualified plan assets are considered to be marital assets to the extent that the assets were acquired or enhanced during the marriage. The 2023 income limit for a single applicant is $1,084 / month. For a single applicant in 2023, the asset limit is $2,000, which means they must have $2,000 or less in countable assets. As a result, an otherwise nonprobate asset would be subject to probate. It is unclear what impact this outcome may have had on the tax deferral retained by the IRA. Nursing Home Medicaid is an entitlement. Summary Eligibility rules for Medicaid vary from state-to-state (and among different programs within the same state), but the common thread is that Medicaid is means-tested. So, if your income is too high, or you have assets worth more than the programs limit, you cannot qualify for assistance. reporting period. Medicaid is the medical assistance program that provides access to health care for low-income families and individuals. 
For some people, a combination of strategies works best. When an elderly or disabled person is looking to apply for long-term care Medicaid in Florida, the applicant must document their income and assets for Medicaid purposes, which are set forth in our asset and income levels webpage . If they are not, they can apply through the states ACCESS website. This may be a trap for the unwary if the goal was to pay the IRA assets to separate subtrusts over the underlying beneficiarys life expectancy. Enrollment, Total Medicaid & CHIP Enrollment (Preliminary), Net Change in Enrollment July-September 2013, % Change in Enrollment July-September 2013. PACE program participants are required to need aNursing Facility Level of Care, but they must live in the community. Virtual Legal Services Available Statewide! The second step is determining if the applicant meets the financial and functional criteria, also discussed above, for that Long Term Care program. To preserve tax deferral options, it is important that the trust qualify for look through treatment, which means the life expectancy of the oldest beneficiary of the trust can be used for distribution purposes.21 In order to use separate life expectancies for separate subtrusts and qualify for separate share treatment under the final IRA rules, two requirements must be met: 1) the interests of the beneficiaries must be expressed as fractional or percentage interests as of the date of death of the IRA owner; and 2) separate accounts must be established by December 31 of the year after the IRA owners death. This issue may be overcome with the use of disclaimers, valid prenuptial or postnuptial agreements or spousal waivers. 
Even though Nursing Home Medicaid is an entitlement, Florida Medicaid will only cover stays and care in approved nursing homes. In an ideal world, having a spouse beneficiary can result in significant tax benefits because when a spouse rolls over assets, all future distribution dates revolve around the surviving spouses date of birth, rather than that of the deceased IRA owner. Florida Medicaid will conduct an assessment of MEDS-AD Medicaid applicants and their ability to perform Activities of Daily Living (mobility, bathing, dressing, eating, toileting) to determine the kind of services the beneficiary needs and the state will cover. Some of the things that Florida Medicaid wont cover in a nursing home are a private room, specialized food, comfort items not considered routine (tobacco, sweets and cosmetics, for example), personal reading items, plants, flowers, and any care services not considered medically necessary. To make sure they dont, Florida Medicaid has a look-back period of five years. 2d 1049 (Fla. 5th D.C.A. The spouses had divorced and then the husband died without changing his beneficiary designation to remove his former spouse. A big part of a Medicaid-planning attorneys job is to make sure that asset transfers comply with all Medicaid rules and other legal requirements while still accomplishing the ultimate goal of eligibility. This new rule means that even if some disaster occurs where disclaimers and distributions will not work to fix an undesirable beneficiary designation (or perhaps no designation at all), there is still some time available for deferral. 1.401(a)(9)-5, A-5(c)(3). 6 Dist. Official websites use .gov At the time, the IRS ruled that each child could use his or her own life expectancy, as subtrust B was viewed as a look-through trust. Virtual Legal Services Available Statewide! Some institutions will allow a beneficiary of an inherited IRA to name their own beneficiaries, as permitted by the IRS. included below or in the count of measures reported by the state. Floridas Medicaid for Aged and Disabled (MEDS-AD) provides healthcare and personal service benefits to low-income Florida residents who are aged (65 and older) or disabled. WebNotices regarding any third-party benefit, including trust, annuity, or estate probate actions, must be submitted in accordance with sections 409.910, 409.9101, and 733.2121, Florida Statutes (F.S. The beneficiary must be named on the beneficiary designation form to be considered designated. Under the new IRA rules, the post-death distribution period is based on the life expectancy of the designated beneficiary or beneficiaries (if there are separate shares) that remain as of September 30 of the year after the calendar year of the IRA owners death. However, sometimes even charitable bequests have problems. Homeland Security and Labor) rather than paper documentation from families for 15 See also In re Estate of McIntosh, 773 A. Income includes pretty much any funds coming in from any source, whether its wages, a pension, alimony, Social Security benefits, or withdrawals from a retirement account. The financial requirements vary by the applicants marital status, if their spouse is also applying for Medicaid, and what program they are applying for Nursing Home / Institutional Medicaid, Statewide Medicaid Managed Care and Medicaid for Aged and Disabled (MEDS-AD). 1 www.ebri.org/facts/1203fact.pdf. After an applicant has been approved for Nursing Home Medicaid through Florida Medicaid, they need to choose which Medicaid-approved nursing home they will live in. While Florida has a look-back period of five years for Nursing Home Medicaid and Home and Community Based Service Waivers applicants to make sure they dont give away their assets to get under the limit, there is no look-back period for MEDS-AD Medicaid applicants. The functional, or medical, criteria for Florida Medicaids Nursing Home Medicaid is needing a Nursing Facility Level of Care (NFLOC), which means the applicant requires the kind of full-time care that can only be provided in a nursing home. One must be mindful that IRAs are not taxable until monies are distributed to a beneficiary, at which time the distribution is taxed as ordinary income at the beneficiarys tax rate. more of the targeted enrollment strategies outlined in guidance CMS issued on May 17, 2013, 
Now you can get the insight needed to take charge of your family wealth protection plan and your future. A lock ( Many older documents also have a default regarding who the IRA is payable to in the event that no beneficiary is named. For a single applicant in 2023, the asset limit is $5,000, which means they must have $5,000 or less in countable assets. Conclusion It is up to all practitioners in the area of IRA administration, estate planning, and retirement planning to be aware of all of these idiosyncrasies and to stay as well-informed as possible. If the IRA owner is out of state but the IRA account is housed within the State of Florida, a foreign guardian may need to appoint a resident agent.8 This may be avoided with a properly drafted power of attorney. 2002). Fourth, designate as many layers of contingent beneficiaries as possible. 4) Estate Beneficiaries Are Not the End of the World As discussed earlier, estates are not considered designated beneficiaries. Applying for Florida Medicaid when not financially eligible will result in the application, and benefits, being denied. doing so, it may be possible to update an outdated beneficiary form postmortem by use of qualified disclaimers, and still achieve the desired result. Floridas PACE programs can be used by people who are dual eligible for Medicaid and Medicare, and it will coordinate the care and benefits from those two programs into one plan. the CMS Medicaid Adult Core Set. Version Including Medicaid and Children with Chronic Conditions Supplemental Items (CPC-CH) or the Central Line-associated Bloodstream Infection (CLABSI-CH) measures. With almost $10 trillion in tax-deferred retirement accounts, $2.5 trillion of which is estimated to be held in IRAs, they have become an estate and tax planning force to be reckoned with.1 According to the Employee Benefits Research Institute, over 90 percent of all households in America have some sort of financial account, and of those households surveyed, retirement accounts were second in popularity only to transactional accounts such as checking and savings accounts.2 It is important to recognize the significance of these accounts and perhaps examine some of the nuances that prevent them from being just another product of the Internal Revenue Code, since it is likely under current tax law that a generous portion of the approximate $7.5 trillion that are in non-IRA retirement accounts will eventually be rolled into IRAs at some point in the future. Medicaid also assists the elderly and people with disabilities with the costs of nursing facility care and other medical and long-term care expenses. The trust in question contained language that made it possible for someone older than the primary beneficiary to ultimately inherit the IRA proceeds. It is important to know whether the document provides for distributions between beneficiaries to be per stirpes or per capita. Many of the older documents had a default provision of per capita, meaning that if the IRA owner died and left funds to three children, and one of the three children predeceased the IRA owner, the funds would be payable to the surviving two children rather than to the heirs of the deceased child. An IRA owner cannot give the IRA away intact during his or her lifetime. In federal fiscal year (FFY) 2019, reported of 22 frequently reported health care quality WebUnder the new IRA rules, the post-death distribution period is based on the life expectancy of the designated beneficiary or beneficiaries (if there are separate shares) that remain as of Financial Requirements is eligible for Medicaid and CHIP. To avoid this potential pitfall until the IRS clarifies its position, be sure that the benefits of any subtrust named directly as an IRA beneficiary will not revert to someone older than the beneficiary whose life expectancy you want to be able to use, or that the trust will be treated as a conduit trust, which requires current distribution of RMDs to the beneficiary. 3 Dept. Floridas Agency for Health Care Administration provides a Nursing Home Guide that will help individuals find and compare nursing homes in the state. Under the SMMC program, most Medicaid recipients are enrolled in a health plan. 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