Home Law How to Avoid Medicaid Estate Recovery: Strategies to Protect Your Assets

How to Avoid Medicaid Estate Recovery: Strategies to Protect Your Assets


If you or a loved one requires long-term care, you may be concerned about losing your house or assets to Medicaid estate recovery after passing away.

Medicaid often attempts to recoup expenses for nursing home care and other long-term care costs after the death of a Medicaid recipient. However, with proper planning, it is possible to protect your home and assets while still qualifying for Medicaid benefits in Florida.

How Medicaid Estate Recovery Works in Florida

When a Medicaid recipient passes away, the state Medicaid agency has the right to recover payments made for nursing home care, home health services, and related medical expenses.

Medicaid expenses subject to recovery can include:

  • Nursing home costs
  • Home and community-based services
  • Hospital and prescription drug expenses

Florida has the option to file a claim against the deceased recipient’s probable estate, which may include assets like bank accounts, stocks, real estate, and other property that doesn’t have a named beneficiary.

Notably, Florida does not allow recovery against assets that pass directly to a surviving spouse or child under 21 years old. The state also cannot force the sale of a primary residence subject to a life estate held by a surviving child or sibling.

Sheltering Your Home from Medicaid Recovery

For many families, protecting the home is a top priority when planning for long-term care costs. While Medicaid cannot force the sale of your primary residence while your spouse or dependent child lives there, the state can still place a lien against the property. This allows Florida to eventually recover expenses once the home is sold or transferred.

However, several strategies can help shelter your home equity from Medicaid estate recovery:

Purchasing a Life Estate

Transferring your home but retaining a life estate is an effective tactic. This grants you the right to live in the home for the rest of your life. Since Medicaid cannot force the sale of a home subject to a life estate, this protects the property while you receive benefits.

Transferring Ownership

You may also consider transferring full ownership of your home to your children or other beneficiaries. To avoid Medicaid lookback penalties, the transfer must occur at least 5 years before applying for long-term care Medicaid. An elder law attorney can advise whether an outright gift of your home is appropriate based on your situation.

Converting Countable Assets into Your Home

Using funds to pay down your mortgage or make improvements to your exempt residence can shift countable resources into a non-countable home asset protected from Medicaid. This strategy must also be implemented before the 5-year lookback period.

Protecting Assets with Trusts

Irrevocable trusts offer one of the most effective options to shield assets from Medicaid estate recovery in Florida. Assets placed in a properly drafted irrevocable trust are no longer counted for Medicaid eligibility.

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Types of trusts include:

  • Income-Only Trusts – Allow the grantor to receive income from trust assets while limiting access to the principal, which passes to beneficiaries upon death.
  • Asset Protection Trusts – Designed to hold assets out of reach from Medicaid estate recovery. Can provide income to beneficiaries as the grantor receives long-term care benefits.
  • Special Needs Trusts – Created to benefit a disabled beneficiary without affecting government benefits. Can provide supplemental needs while allowing the beneficiary to qualify for Medicaid.

Long-Term Care Insurance

Purchasing a long-term care insurance policy is another option to cover nursing home and in-home care costs instead of spending down assets to qualify for Medicaid. This allows you to preserve wealth for your spouse and heirs while still obtaining needed care.

Other Strategies to Avoid Medicaid Estate Recovery

Additional techniques that may help limit exposure to Medicaid estate recovery include:

  • Gifting assets to children or others before applying for Medicaid. Must be completed outside the 5-year lookback period.
  • Converting assets into exempt resources like prepaid funeral plans or a burial plot.
  • Purchasing annuities that convert countable assets into protected income streams.
  • Applying for Veterans benefits, which are not subject to Medicaid estate recovery.

Work with a Medicaid Planning Attorney

Avoiding Medicaid estate recovery requires understanding complex regulations that vary by state. Changes to Medicaid rules are also possible, underscoring the value of professional legal guidance. No one knows this better than the Miami estate planning lawyers at Stivers Law.

Their team is intimately familiar with Florida’s current Medicaid estate recovery program. They can provide tailored solutions to help you or your loved ones qualify for long-term care benefits while implementing strategies to protect assets from Medicaid recoupment.

Whether your goal is to preserve the family home for your children or shield your life savings, they can help create an effective Medicaid asset protection plan. Visit them online today at https://miamiwealthplanning.com/ for a free consultation with their estate planning attorneys.




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