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Can I Sell a House and Keep Medicaid Benefits in Florida?

Can I Sell a House and Keep Medicaid Benefits in Florida?
September 16, 2022

We must cover several concepts to flesh out and fully answer this question:

As always, it is best to come into our offices (or set up a virtual consultation) to speak to a Medicaid planning attorney about the options specific to you.

Florida Medicaid Limits

The intricate asset restrictions can be a significant problem for someone receiving Medicaid benefits. To qualify for Medicaid in Florida, you cannot own more than $2,000 in countable assets or $2,829.00 in total gross monthly income (from all income sources), effective January 2024. Because this article is focused on selling a home (and obtaining or maintaining Medicaid long-term care benefits), we’ll focus on the fact that when you sell a home, you are taking a non-countable asset and turning it into a countable asset!

Countable and Non-Countable Assets

First, understand that, per Florida Medicaid rules, the applicant’s primary residence is considered a non-countable asset. If the applicant or spouse resides there—or if the applicant intends to return after treatment—Medicaid does not regard the home as a countable asset. That stipulation is qualified by the fact that the house equity cannot exceed $713,000 (as of 2024). So, as long as the primary home is not sold, the value of the house is not an issue. But let's say your elderly parent is in an assisted care facility or nursing home, and the house's maintenance expenses are getting to be too expensive (e.g., the insurance, taxes, repairs and utilities). The asset cap becomes a concern when the applicant decides to sell the house. The good news is, there's a solution.

The sales proceeds, due to the Medicaid applicant from the home sale, is cash. Cash/money in the bank absolutely counts against the Florida Medicaid $2,000 asset limit. So it is definitely an impediment to Medicaid eligibility. Luckily, our law firm specializes in dealing with these kinds of barriers to Florida long-term care benefits! We have tools and strategies that we can deploy to protect assets in a Medicaid-compliant manner. 

The Lookback Period

You cannot simply donate all your wealth to your family to qualify for Medicaid: in other words, don’t just transfer the home-sale proceeds to a child, other family member or friend. Be wary of this Medicaid regulation that restricts the transfer of assets. Transferring the house to a loved one, before the sale, is another common error. 

Unfortunately, a different Medicaid law, known as the five year lookback rule, or lookback period, declares this transfer illegitimate and would make the homeowner ineligible for Medicaid for some time.

A person applying for Medicaid benefits may not have transferred assets during the previous five years (lookback period). If you apply for Medicaid today but transferred your home to a relative as a gift within the last five years, Medicaid will determine the length of time you will be ineligible for Medicaid depending on the value of the asset you transferred. Therefore, your parent should maintain the house in their name unless you plan very far in advance.

What Can I do with Home Sale Proceeds and Still Be Eligible for Medicaid

First, rest assured that with the appropriate medicaid plan in place (hopefully prior to the home sale) the proceeds from the home can be legally and ethically protected in compliance with Florida Medicaid rules and regulations. 

An exact prescription is impossible to provide without a consultation - only because each medicaid-planning strategy has pros and cons - we do not have a one-size-fits-all solution.

Certain strategies have tax consequences. Others have limited medicaid payback obligations. Some strategies involve stowing money away in which it is not accessible until after the medicaid recipient passes away, while others provide for more liquidity. 

The right approach to Medicaid planning is different for every family that we work with.  We take pride in crafting unique combinations of strategies to suit your particular needs. 

Please schedule a consultation to discuss your case. We look forward to serving you!

Jason Neufeld is the Founder and Managing Partner of Elder Needs Law, a Florida estate planning and elder law firm he created in 2017. With more than 15 years of experience practicing law, he represents clients in a wide range of legal matters, including Medicaid planning, estate planning, elder law, probate, Medicare, and life insurance.

Jason received his Juris Doctor from the University of Miami — School of Law and is a member of the Florida Bar and the Broward County Bar Association. He has received numerous accolades for his work, including being named a Rising Star and Super Lawyer by Super Lawyers and among the Florida Legal Elite by Florida Trend in 2024.

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