Agent – The person(s) who have legal authority to act on behalf of someone else, under a power of attorney document.
Aid and Attendance – A Veteran’s Administration compensation or pension benefit that is awarded to a veteran (or spouse) who is determined to be in need of the regular aid and attendance of another person to perform basic functions of everyday life.
Annual Exclusion Gifts – Under federal gift tax laws, a certain amount of money or equivalent value assets may be gifted each year without requiring the filing of a federal gift tax return. In 2014, this amount is $14,000 per gift recipient per year.
Asset – For the purpose of the Medicaid transfer rules, this includes both income and resources.
Basis – The purchase price of an asset, increased by certain transaction costs. For real estate, it also includes improvements. Used in calculating capital gains taxes.
Community Spouse – The spouse who resides in the community, when one spouse of a married couple is in the nursing home. May also be referred to as the “healthy spouse.”
Community Spouse Resource Allowance (CRSA) – The amount of countable resources that are permitted to be owned by the community spouse in order for the institutionalized spouse to qualify for Medicaid.
Countable Asset – An asset that is owned by the Medicaid applicant (or spouse) that is counted for purposes of determining Medicaid eligibility.
Domicile – A person’s permanent residence and the place to which a person intends to return should he or she leave such place temporarily. A person can have multiple residences, but only one domicile.
DCF – The Department of Children and Families: A state agency in Florida responsible for determining initial and ongoing eligibility (among other tasks) for individuals receiving state welfare benefits under the various Medicaid and Medicaid Waiver programs.
Estate Recovery – The legal process of a state to seek reimbursement from the “estate” of a deceased Medicaid recipient for all of the money it spent on that recipient’s care, while that person was receiving Medicaid. The term “estate” for these purposes is defined in various ways by different states.
Exempt Asset – An asset that is owned by a Medicaid applicant (or spouse) that is not counted for purposes of determining Medicaid eligibility. Also referred to as an excluded asset or a non-countable asset.
Fair Hearing – An administrative appeal within the State agency that makes the determination of financial eligibility for Medicaid applicants.
First Party Special Needs Trust – A trust that is established by a parent, grandparent, guardian, or the court that is irrevocable. The beneficiary must be under age 65 at the time the trust is established. At the beneficiary’s death, the state Medicaid agency must be reimbursed for benefits paid.
Fraudulent Transfer – A transfer that is made with intent to hinder, delay, or defraud a creditor of the debtor, or one that is made without receiving a reasonably equivalent value in exchange for the transfer, where the debtor was engaged or was about to engage in a transaction for which the remaining assets of the debtor were unreasonably small in relation to the transaction, or intended to incur, or believed or reasonably should have believed that he or she would incur, debts beyond his or her ability to pay as they became due.
Institutionalized Spouse – The spouse who resides in the nursing home, when the other spouse of a married couple (i.e., the Community Spouse) is living in the community.
Intestate – Dying without a will. In such a case, the law of the State will set forth how the person’s property will be distributed.
Lady Bird Deed – A Lady Bird Deed also referred to as a Transfer on Death Deed, is a reference used to describe an Enhanced Life Estate Deed. It is a document that is primarily used to avoid the probate of real estate. It can also be used to transfer other assets such as tangible personal property. If the person creating the deed does not sell the property during his or her lifetime, the property will pass directly to the named beneficiary(s) after the death of the grantor. The real estate avoids going through probate just like any other deed that conveys ownership of real estate to another person without the danger of triggering adverse consequences.
Look-back Period – The period of time prior to the date of a Medicaid application during which any gifts made by the person applying for Medicaid must be counted.
Minimum Monthly Maintenance Needs Allowance (MMMNA) – This is the minimum amount of income that a Community Spouse is entitled to have. If the Community Spouse has less than this amount, then he or she is entitled to shift from the Institutionalized Spouse’s income that amount of income necessary to increase the Community Spouse’s income to the MMMNA. The Federal government sets the MMMNA and it usually changes annually. The figure typically changes on July 1 of each year.
Maximum MMMNA – In certain cases, the Community Spouse may petition to increase his or her MMMNA. An example would be if the Community Spouse has high shelter-related costs or other unusual expenses such as high medical costs.
Medicaid – A joint Federal and State program that helps low income individuals or families to pay for the costs that are associated with long-term medical and custodial care, provided that they qualify. Although largely funded by the Federal government, Medicaid is run by the State, where coverage may vary.
Medicare – A Federal health insurance program, administered by the Social Security Administration that provides health care for the aged.
Penalty Divisor – The dollar number that is divided into the amount of a gift in order to determine the number of months of the penalty period. The divisor number varies from state to state and is usually updated each year in order to reflect the average monthly cost of a nursing home in a particular state, or even a certain region of the state in some instances.
Penalty Period – The period of time during which an applicant for Medicaid coverage will be disqualified from such coverage, based on the amount of gifts that are made within the look-back period.
Pooled Special Needs Trust – A trust that is managed by a non-profit entity whereby trustees pool all of the trust assets for investing and management purposes, but maintain separate accounts indicating the financial interest of each individual.
Reverse Half-a-Loaf Strategy – A Medicaid Planning strategy whereby an ailing individual gives away half of his or her assets, purchases a promissory note with the other half, lives on the proceeds of the note until the transfer penalty on the gift expires, and thus qualifies for Medicaid in half the time and at half the cost intended by Congress.
Special Needs Trust – A trust into which a disabled beneficiary places his or her own assets. Also referred to as a self-settled trust. These trusts are for the benefit of those who are under the age of 65.
Step-Up In Basis – A tax concept that allows an asset owned at the time of death to be revalued regarding purchase price to the value at the time of death rather than the value at the original purchase – Therefore, eliminating any capital gains tax on appreciated value up to the time of death – when the heir sells the property.
Supplemental Security Income (SSI) – A federal program that provides a minimal amount of income to individuals with very low assets and income. Many of the Medicaid asset and income rules are based on the SSI rules.
TEFRA Lien – A lien that is imposed on the residence of a Medicaid recipient during the recipient’s lifetime to ensure that the house cannot be sold without first repaying the amount of Medicaid expenditures made by the State on behalf of the Medicaid recipient. This law was initially enacted as part of the federal Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982.
Third Party Special Needs Trust – A trust into which someone other than the disabled beneficiary places assets.
Transfer Without Fair Consideration – A gift. For example, selling one’s house to his or her children for $1 is really a gift of the full value of the house, less $1. Such a transfer is considered to be without full consideration, since the amount that is received by the seller was not the full value of the house.
Trust – A form of divided ownership. One person (the trustee) takes title to an asset for the benefit of another (the beneficiary). It is essentially an arrangement between the creator of the trust (known as the grantor or settlor) and the trustee, who oversees the trust property. The terms of the agreement are set forth in the trust document itself. A trust can be a freestanding, separate document, such as a revocable trust, a living trust, or an inter vivos trust, or it can be contained within the terms of a will such as a testamentary trust.
Unavailable Resource – An asset that cannot be sold by the Medicaid applicant for legal reasons such as an interest in an estate prior to distribution.