Common Misconceptions About Medicaid Planning in Florida

Clients often come in with questions about Medicaid eligibility or the effects of Medicaid for themselves or their family members, frequently with misconceptions based on things their friends have told them. It is important to clear up any misconceptions you or your family may have with the help of a knowledgeable West Palm Beach Medicaid planning and elder law attorney. Below, we address a couple of the common confusions we encounter.

Misconception #1 – You Can Give Away $15,000 per Year to Qualify for Medicaid Planning

Many clients believe that they can give away a certain amount of money or assets per year in order to end up below the maximum net value threshold to qualify for Medicaid. The $15,000 gifting limit is not related to Medicaid, however. That number is based on the federal estate and gift tax exclusion, which allows you to give away a certain amount of your assets each year (for example, to your children) without paying tax. 

When you apply for Medicaid, they will “look back” five years at your transfers to determine if you were giving away assets for under fair market value. If you did give away assets during this period, the assets will count against your Medicaid eligibility, and the government may penalize you for trying to skirt the Medicaid eligibility rules by making you ineligible for Medicaid benefits for a period of time.

Misconception #2 – Florida Will Take Medicaid If I Live in My Home

Elderly persons applying for or receiving Medicaid, and their children, are often concerned about what will happen to their homes either when the elder moves into a nursing home or upon their death. A Medicaid recipient can keep a homestead valued at less than $572,000 without losing Medicaid eligibility, even if they move into a nursing home. But, Medicaid is entitled to eventual reimbursement for the care it funds, which can play out differently depending on your circumstances. 

First, as long as you live in your home, Medicaid cannot take it. If you leave your home to your heirs in your will, then Medicaid cannot force the home to be sold. Medicaid, as a creditor, will have a claim to part of the decedent’s estate, but in Florida, your homestead property is exempt from your creditors even upon death.

If you move into a nursing home, you can sign an “intent to return home” statement, which will keep your home exempt under the Medicaid rules. If Florida believes that you will be in a nursing home permanently, then Medicaid can file a lien against your home, which means only that they are entitled to a share of the sale proceeds to reimburse the Medicaid-funded care if and when you sell your home. If the property is sold while the elder is still living, the proceeds will not be immediately taken by Medicaid but will now be counted as income, so the influx of cash can strip the elder of their Medicaid eligibility. If the property is sold at the death of the Medicaid recipient, then Medicaid will collect a share of the proceeds.

A skilled Medicaid attorney can help you and your family plan your estate appropriately to protect the house upon the death of a Medicaid recipient. If you are in need of a skilled Florida Medicaid planning and elder law attorney, contact the seasoned, compassionate, and professional West Palm Beach trust and estates attorneys Shalloway & Shalloway at 561-686-6200.