Can I Get a HELOC and Still Get Medicaid?

Whether looking to make renovations, help out a child or grandchild, take a trip or cover a major expense, many Florida seniors consider ways to tap into the value of their home without selling it. A Home Equity Line of Credit (HELOC) is one option that can provide access to cash when needed. But if you’re also applying for Medicaid to help cover nursing home or in-home care costs, it’s critical to understand how a HELOC may impact your eligibility.

At Shalloway & Shalloway, P.A., we often work with clients who want to maximize their financial options while still qualifying for Medicaid. In this post, we’ll explore how a HELOC works, how Medicaid treats home equity and borrowed funds, and what you need to know to protect your benefits. For specific advice related to your particular situation, contact Shalloway & Shalloway, P.A., to discuss your needs and goals with an experienced and dedicated West Palm Beach Medicaid planning attorney.

What Is a HELOC?

A Home Equity Line of Credit is a revolving credit line secured by the equity in your home. Unlike a traditional loan, a HELOC lets you borrow only what you need, when you need it, up to a predetermined limit. You can draw from the line of credit for a set period—usually 10 years—and then begin repaying the balance over time.

Homeowners often use HELOCs to pay for home repairs, medical bills, or other large expenses. In the context of long-term care, some people consider using a HELOC to pay for care privately before applying for Medicaid, or to access funds while preserving the home for their heirs.

How Medicaid Treats Your Home and Home Equity

In Florida, Medicaid allows applicants to keep their primary residence as an exempt asset, meaning the home’s value is not counted toward the strict asset limits for eligibility. As of 2025, the home equity exemption limit is $730,000. As long as the applicant resides in the home (or expresses an intent to return home) and the equity is below this cap, the home does not disqualify them from Medicaid.

Importantly, the exemption only applies to the home’s equity—the market value minus any outstanding mortgages or liens. A HELOC can reduce the amount of equity in your home, which may actually help in certain planning situations. However, the cash withdrawn from the HELOC can be problematic if not handled correctly.

A HELOC Doesn’t Automatically Disqualify You from Medicaid

Simply having a HELOC in place will not disqualify you from Medicaid. The HELOC is a line of credit, not a countable asset. It only becomes an issue when you draw funds from the line. The money you withdraw is treated as a countable resource unless it is immediately spent on exempt items or otherwise protected.

For example, if you borrow $50,000 from a HELOC and deposit it into your bank account, Medicaid will consider that $50,000 to be a countable asset. If your total assets, including the HELOC funds, exceed the Medicaid limit (typically $2,000 for an individual in Florida), you will not be eligible until the funds are properly spent down.

The Timing of Withdrawals Matters

If you’re planning to apply for Medicaid, the timing and use of HELOC funds are critical. Drawing funds from a HELOC shortly before applying could cause you to exceed the asset limit and be denied. Even if you spend the funds quickly, you’ll need to provide documentation showing that the money was used on exempt expenses—such as medical bills, home repairs, or prepaid funeral arrangements—to avoid penalties.

Additionally, gifting HELOC funds to others, including family members, could trigger a Medicaid penalty. Medicaid has a five-year look-back period for gifts and uncompensated transfers, and any transfer made for less than fair market value during this period could result in a delay in benefits.

HELOCs Can Complicate Estate Recovery

Even if you qualify for Medicaid while holding a HELOC, it’s important to consider the implications for estate recovery after your death. Medicaid has the right to recover costs from your estate, including your home, unless it is properly protected.

A home with a HELOC is subject to a lien, which must be satisfied before Medicaid can recover its claim. This can complicate matters for heirs, especially if they wish to keep the home or if the home is transferred through probate. Using tools like a Lady Bird Deed can help avoid probate and shield the home from Medicaid recovery, but you must factor in the outstanding HELOC when planning your estate strategy.

Strategic Planning Is Essential

A HELOC can be part of a sound financial strategy for some Medicaid applicants, but it must be used cautiously. The key is understanding how each step—setting up the HELOC, drawing funds, spending money, and planning for inheritance—affects Medicaid eligibility and recovery.

Here are a few guidelines to keep in mind:

• Don’t leave large HELOC withdrawals sitting in your bank account; spend the money quickly and on exempt items.
• Avoid giving borrowed funds to family members, which can trigger transfer penalties.
• Work with an elder law attorney to determine whether a Lady Bird Deed or irrevocable trust can protect your home from estate recovery.
• Consider whether a HELOC is necessary at all; other asset protection strategies may serve your goals more effectively and with less risk.

Talk to a West Palm Beach Medicaid Planning Attorney Today

Qualifying for Medicaid eligibility while preserving your assets is not something you should attempt without knowledgeable legal assistance. Even well-meaning decisions—like setting up a HELOC to make ends meet—can have unintended consequences if they’re not properly coordinated with your Medicaid and estate planning goals.

At Shalloway & Shalloway, P.A., we help individuals and families in West Palm design Medicaid strategies that protect what matters most. If you’re considering a HELOC or already have one and are worried about how it might affect Medicaid eligibility, we invite you to contact us for a consultation. With thoughtful planning, you can maintain financial flexibility while still qualifying for the care you need.