How Stimulus Payments Affect Medicaid Coverage for Nursing Homes or Assisted Living: A Radio Interview of Attorney John R. Frazier by Attorney Joseph Pippen
Attorney Pippen:
Attorney John Frazier, our Medicaid Planning attorney, is on the phone. Good morning, John.
Attorney Frazier:
Hey, Joe, how are you doing today?
Attorney Pippen:
I’m doing great. So what’s our Medicaid tip of the week this week? First, though, if you have a question for John Frazier on Medicaid or on nursing homes or assisted living or anything, any kind of planning dealing with that, we can take your question as well as talk to John this morning. The toll free number is (800) 969-9352. (800) 969-9352. Okay, John, what’s your tip of the week?
Attorney Frazier:
Today I’m going to talk about something that’s been on the news quite a bit this month. Recently I’ve received a number of questions regarding the stimulus payments. President Biden signed a new statute, a new federal statute. It was technically called H.R. 1319, also known as the American Rescue Plan of 2021. It’s a new, a $1.9 trillion economic-stimulus bill, and the stimulus payments are $1,400 for an unmarried person or $2,800 for a married couple filing jointly.
But there are income limits on individuals who can receive those monies. For an unmarried individual, the income limit is $75,000. For a married couple filing jointly, the limit is $150,000, and then those payments decline and zero out for an unmarried person at $80,000 in income or for a married couple at $160,000 in income. This is an important issue for my clients who are on Medicaid or who are applying for Medicaid because as most people know, Medicaid has a strict $2,000 asset limit for Medicaid.
Also, any income can be a significant issue regarding payments received as social security or other forms of income. So the Florida Department of Children and Families has addressed this, and DCF is the primary agency that we deal with in terms of Medicaid planning. It’s where our Medicaid applications are submitted. The Florida Department of Children and Families has cited to a federal statute, 26 USC 6409, in their guidance which they’ve issued recently.
This federal guidance states that the stimulus payments are not treated as income, and furthermore, the statute says that these payments are excluded as an asset for up to 12 months after receiving the money. So that’s very, very important, because if it were an income source, as a general rule, a person’s income must be paid to the nursing facility. If you’re an unmarried person, it’s the person’s gross monthly income minus $130, which is the personal-needs allowance minus anything they pay for private health insurance.
So this is very important because that stimulus payment is not treated as income. It’s also very important because of this $2,000 asset limit. So a with a $2,000 asset limit, a $1,400 or a $2,800 payment could easily put the Medicaid recipient over $2,000. So although I get a lot of questions about this, it’s not anything that my clients need to worry about because of this guidance that we’ve received from the Florida Department of Children and Families and this federal statute. So that’s a basic summary of how the State of Florida treats these stimulus payments affect Medicaid coverage for nursing homes or assisted living.
Attorney Pippen:
So, John, can the money be gifted?
Attorney Frazier:
No, that’s a different issue. Now, well, it could be gifted to a spouse. So for example, let’s say the person, they received $2,800. It could all be transferred over to a spouse, and that would not be a problem. But as a general rule, an unmarried person is not allowed to give assets away as far as Medicaid is concerned. But it could be spent on personal items, so anything that the Medicaid recipient would want to purchase, that would all be fine.
Attorney Pippen:
All right. So yeah, the gifting, I had a client come in yesterday, actually, or Friday, come in, and they had received a $1,200 check, I believe, and the check was made out to parent’s name deceased. So they got a stimulus check to a deceased person. So while the client was there, I kind of Googled because they were asking me what to do with the check. I was starting a probate case for the client, and they wanted to know if they could probate this stimulus check made out to a deceased person.
So I kind of quickly Googled the issue while the client was in the office, and it said, there was a little bit of conflicting information. But I think the decision we came up with was that the check had to be returned to the local IRS office. So I Googled the name of the address of the local IRS office, the regional office, and told them I thought my opinion was he should return the check. Do you have a different opinion on that question? I know it’s a little bit different than your practice area, but?
Attorney Frazier:
Yeah, I have not looked into that issue because my primary practice area involves Medicaid planning for individuals and nursing facilities and assisted-living facilities. But I wouldn’t be surprised if that issue could show up. So I’ll have to look into that at some point.
Attorney Pippen:
So if one of your Medicaid clients had created, or their power of attorney had created, a personal-service contract for them, could the stimulus check be transferred to that?
Attorney Frazier:
It could, but you wouldn’t have to do that for up to 12 months. So it can just stay in the person’s bank account for up to 12 months, and the State of Florida would not object to that. But in theory, it could be paid under a personal-services contract. That would create income for the person receiving that money, though. So that might not be the best way to go with something like that, unless maybe you’re approaching the end of the 12-month period, which will be for quite some time now. So it certainly would be an option, though.
Attorney Pippen:
Can a person that has over the $2,000 limit, can they pay their power-of-attorney travel expenses and other costs that are incurred by the power of attorney?
Attorney Frazier:
As a general rule, I think the State of Florida frowns upon that. Now what they can do, let’s say, for example, the power of attorney has purchased something or paid a bill on behalf of the Medicaid recipient or Medicaid applicant. The State of Florida has been very willing to reimburse the person who makes those sorts of payments as long as you have receipts and proof that the person actually paid the money. I’ve got a case right now where we’ve got a couple thousand dollars’ worth of those types of receipts, but we’re very meticulous in documenting those because the general rule is that the State of Florida treats any transfer as a gift unless proven otherwise.
So that’s why we use this personal-services contract so frequently, and that’s why we need to assemble our documentation for these reimbursements because the State of Florida will presume it’s a gift unless we can prove otherwise. And gifting can be very problematic for a Medicaid applicant or a Medicaid recipient, depending on where the money is gifted to. Like I was saying earlier, you can give the money to a spouse, though, without a problem.
Attorney Pippen:
All right, John, why don’t you give everyone your contact information. They have a Medicaid question on how to protect assets, dealing with nursing homes, and so forth, how do they contact you directly?
Attorney Frazier:
The office number is (727) 586-3306, extension 104. My cell phone number is (727) 748-5374. And my email address is John@attypip.com.
Attorney Pippen:
All right, John, thank you so much for calling. I hope you have a great Sunday.
Attorney Frazier:
Okay. You too. Thank you very much.
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