Can I Sell My Home and Become Medicaid Eligible?

Yes, you can sell your home and still qualify for Florida Medicaid, but only if you plan the sale before it closes. The problem is arithmetic. Florida long-term care Medicaid allows just $2,000 in countable assets, so sale proceeds sitting in a bank account will push almost any homeowner over the limit and end their eligibility. Two provisions in the Florida Medicaid manual create room to work. While you are actively trying to sell at a fair price, the property is temporarily excluded, and once it sells, the proceeds can be excluded for up to three months if you are replacing the home. Those windows are short, which is why the plan for the money has to exist before the closing, not after.

Why Selling the Home Is Sometimes the Goal

As an elder law attorney who focuses on Medicaid planning, most of my clients are interested in saving their home. I cover the ways to do that in a separate article on whether Florida requires someone to sell their home to qualify for Medicaid, which walks through the circumstances in which a house can remain or become an exempt asset, meaning Medicaid does not count it for eligibility purposes.

But keeping the home is not always the goal. Your Medicaid attorney should not be handing out cookie-cutter qualification strategies. Your elder care lawyer should give you options tailored to your situation and your goals. This article covers what can be done when a client has, or is seeking, long-term care Medicaid benefits through ICP or the Medicaid Waiver, and wants to sell.

What if I Want to Sell the Home and Obtain or Keep Medicaid?

The asset limit problem

The initial concern is that with Medicaid allowing only $2,000 in countable assets, selling any home will almost certainly bring the owner above the allowed amount and, at first glance, appear to disqualify them. At the same time, the costs of maintaining a home, including taxes, insurance, lawn care, repairs, and utilities, often become a burdensome expense, especially when the client is already living in an assisted living facility or a skilled nursing facility. The house stops being an asset and starts being a drain.

Treating it like any excess-asset case

We would treat this situation the way we treat any client who comes to us with excess assets and either does not want to, or cannot, spend it all down to under $2,000. Most of my clients come to me owning a home and holding somewhere between $25,000 and $750,000 in excess resources. They want to preserve whatever they can, to live a higher quality of life, and to avoid waiting to qualify for long-term care Medicaid benefits covering home care, assisted living, or nursing home care.

For those who want to sell, our firm can put together, in advance of the sale, a combination of strategies that protect the proceeds and preserve eligibility. The protected proceeds can then pay for the things Medicaid will not cover, including extra home care, paying a family member to provide care, entertainment, additional therapies, and other goods and services the person needs or simply wants.

We Provide Options: Benefit From the Money or Buy a New Home

Some Floridians want to sell in order to downsize and save on expenses. Others want to upsize, perhaps so a child or caretaker can move in with an aging parent. In either case, with proper planning, eligibility can be maintained. Our Medicaid planning lawyers frequently work with realtors when clients want to sell a house and protect the proceeds, or want to purchase real estate for asset-protection purposes.

If you dig into the Department of Children and Families ESS Medicaid policy manual, which I call the Florida Medicaid manual, you will find Sections 1640.0537, 1640.0543.03, and 1640.0307.01. Those three sections do most of the work here. The full text of Section 1640 on assets is available from the state, or you can start with our plain-language summary of Section 1640.

Section 1640.0537, good faith effort to sell

This section states that property may be temporarily excluded if the individual is making good faith efforts to sell at fair market value. So simply by attempting to sell a property, whether a homestead, a second home, or income-producing property, that property is treated as not countable for eligibility purposes.

The application examiner will not take your word for it, though. They will ask for proof. You can verify the attempt by providing your listing agreement with a real estate broker, an MLS listing, a newspaper listing, or similar documentation. If the property is alleged to be unmarketable, the manual requires statements from two different types of knowledgeable sources in the area confirming it cannot be sold because of a specific condition.

You also must be reasonable. If your property is worth $200,000 and you are attempting to sell it for $800,000, that would not pass the good faith test.

Once the real estate sells, you should already have a plan with your elder law attorney for what happens to the proceeds and how the money will be sheltered in a Medicaid-compliant way. If the sale proceeds simply sit in your bank account, that will almost certainly leave you over-resourced and remove you from the Medicaid ICP program.

Section 1640.0543.03, home replacement exclusion

Sometimes the goal is not simply to sell, but to upsize or downsize. Most people want to downsize for the lower property taxes, utility bills, maintenance, and upkeep, especially when one spouse will remain in the community while the other enters a nursing home. But upsizing can be an effective Medicaid spend-down strategy.

Suppose a Medicaid applicant owns a home worth $300,000 and holds an extra $100,000 in stocks and cash. That applicant could put $100,000 of improvements into the home, or sell the $300,000 home and buy a $400,000 home using the extra assets. The higher-value home would still be excluded as an exempt asset, protected from creditors, and able to avoid Medicaid estate recovery. For married couples, if the healthy spouse does not expect to need long-term care in the near term, this approach can shelter a nearly unlimited amount of money. Your attorney should still build a contingency plan in case the well spouse suddenly becomes sick or injured and needs care.

Section 1640.0543.03 instructs that proceeds from the sale of a house can be excluded from assets for up to three months while the home is being replaced. Section 1640.0543.04 governs that replacement period. If the individual applies for Medicaid after selling a home that would have been excluded as an asset, the three-month exclusion period begins the day the individual applies for benefits.

Section 1640.0307.01, the replacement home as principal residence

Because Section 1640.0307.01 states that a home is excluded if it is the individual's principal place of residence, the replacement home will be an excluded home if it can be shown to be their principal place of residence. Florida case law and attorney general opinions indicate that physical presence is not necessary for a home to be considered the principal place of residence for homestead tax exemption purposes.

[VIDEO EMBED, Can I sell a house and keep Medicaid benefits in Florida?

The Timing Is What Matters Most

Every strategy on this page depends on sequence. The good faith exclusion protects you only while the property is genuinely on the market at a fair price. The replacement exclusion runs for three months, not indefinitely. And the moment proceeds land in a bank account with no plan attached, you are over the $2,000 limit and out of the program, whether you are applying for ICP nursing home benefits or already receiving Medicaid Waiver services at home. A plan built after the closing is a plan built too late.

Key Takeaways

• You can sell your home and keep Medicaid eligibility, but the plan for the proceeds has to be in place before the sale closes.
• Florida long-term care Medicaid allows only $2,000 in countable assets, so unplanned sale proceeds will push you over the limit.
• Under Section 1640.0537, property is temporarily excluded while you make a good faith effort to sell at fair market value, proven with a listing agreement or MLS listing.
• Under Section 1640.0543.03, sale proceeds can be excluded for up to three months while you replace the home.
• Buying a more valuable home can shelter assets, since the replacement home stays exempt if it is your principal place of residence.
• Protected proceeds can pay for what Medicaid does not cover, including extra home care, family caregivers, therapies, and quality of life.

Frequently Asked Questions

Q. Will selling my house disqualify me from Florida Medicaid?

A. It will if you do nothing else. Long-term care Medicaid allows only $2,000 in countable assets, and sale proceeds sitting in a bank account count. With planning arranged before the sale, the proceeds can be protected and eligibility preserved.

Q. What is the good faith effort to sell rule?

A. Under Section 1640.0537 of the Florida Medicaid manual, property is temporarily excluded from your countable assets while you are making a good faith effort to sell it at fair market value. You prove the effort with a listing agreement, an MLS listing, or similar documentation. Listing a $200,000 property at $800,000 would not qualify.

Q. How long can I keep the proceeds after selling my home?

A. Under Section 1640.0543.03, proceeds can be excluded for up to three months while the home is being replaced. If you apply for Medicaid after selling a home that would have been excluded, the three-month period starts the day you apply. Outside of a replacement purchase, the proceeds are countable immediately.

Q. Can I buy a more expensive home and still qualify for Medicaid?

A. Often yes, and it can be a legitimate spend-down strategy. If you sell a $300,000 home and buy a $400,000 home using excess cash, the new home is still excluded as an exempt asset provided it is your principal place of residence. It is also protected from creditors and outside of Medicaid estate recovery.

Q. What can I spend the protected sale proceeds on?

A. Properly sheltered proceeds can pay for the things Medicaid does not cover, such as additional home care hours, paying a family member to provide care, extra therapies, entertainment, and other goods and services. That is often the difference between bare coverage and a decent quality of life.

Q. Do I need an attorney to sell a home while on Medicaid?

A. It is strongly advised. The exclusions are narrow and time-limited, and the consequence of getting it wrong is losing benefits and paying privately for care. The plan must be built before the closing, since there is no fix after the money arrives with nowhere to go.

Talk to a Florida Medicaid Planning Attorney Before You List

If you are thinking about selling a home while applying for or receiving Medicaid, the single most valuable thing you can do is call before the property goes on the market. Every exclusion described here is time-limited, and the plan for the proceeds has to exist before the closing rather than after. A good first step is to gather your deed or property tax statement, a realistic sense of what the home is worth, a list of your other assets, and any Medicaid approval or denial letters you have received. Bring that to a consultation and we will map out how to protect the proceeds, whether a replacement home fits your goals, and what the money can be used for once it is sheltered. Our Florida Medicaid planning attorneys help Floridians qualify for long-term care benefits without selling the house, without waiting five years, and without going broke first, and when selling is the right move, we make sure it does not cost you your benefits. When you are ready, schedule a consultation with our Florida elder law team.