Florida Medicaid Planning: Eligibility, Asset Protection & Long-Term Care

Why Medicaid Planning Matters

The average cost of nursing home care in Florida ranges from $8,000 to $12,000 per month ($96,000 to $144,000 per year). Assisted living facilities average $3,500 to $6,000 per month. Most families cannot sustain these costs indefinitely from their savings. Medicare does not cover long-term custodial care, and long-term care insurance covers only a fraction of the need. Medicaid is often the only viable option for families facing extended long-term care needs, but qualifying requires meeting strict financial criteria.

Types of Florida Medicaid Long-Term Care Programs

Florida offers two primary Medicaid programs for long-term care. The Institutional Care Program (ICP) covers care in a nursing home. The SMMC Long-Term Care (LTC) program provides services in the community, including home health aide services, adult day care, assisted living, and other supports that allow individuals to remain in their homes or in community settings rather than nursing homes. Both programs have the same financial eligibility requirements.

Income Limits

Florida is an 'income cap' state, meaning the applicant's gross monthly income cannot exceed a specific threshold to qualify for Medicaid long-term care. For 2026, this limit is approximately $2,829 per month (300% of the federal benefit rate). If the applicant's income exceeds this cap, they may still qualify by establishing a Qualified Income Trust (QIT), also called a Miller Trust, which receives the excess income and disburses it according to Medicaid rules. A QIT is an essential tool for many Florida Medicaid applicants whose income exceeds the cap but who clearly need Medicaid assistance.

Asset Limits

The applicant may have no more than $2,000 in countable assets (resources) to qualify for Medicaid. Countable assets include bank accounts, investment accounts, stocks, bonds, CDs, cash value of life insurance (if face value exceeds $2,500), additional real property (beyond the homestead), and certain personal property. Some assets are exempt (not counted) and can be retained while still qualifying for Medicaid.

Exempt Assets

Several categories of assets are exempt from Medicaid eligibility calculations. Understanding which assets are exempt is critical for protecting family wealth while qualifying for benefits.

• The homestead (primary residence) up to $730,000 in equity (2026 limit), provided the applicant intends to return home or a spouse or dependent resides there
• One motor vehicle of any value
• Personal belongings and household furnishings
• Prepaid, irrevocable burial plans and burial plots
• Life insurance with a total face value of $2,500 or less
• Income-producing property essential for self-support
• Assets held in certain types of trusts (properly structured irrevocable trusts, special needs trusts)

How the Penalty Is Calculated

The penalty period is calculated by dividing the total value of disqualifying transfers by the average monthly cost of nursing home care in Florida (called the 'divisor,' which is set by the state and updated periodically). For example, if someone transferred $100,000 to their children within the look-back period and the monthly divisor is approximately $10,000, the penalty period would be approximately 10 months. During this penalty period, Medicaid will not pay for nursing home care, and the family must cover the costs from other sources.

What Counts as a Disqualifying Transfer

Disqualifying transfers include gifts of cash, transfers of real property for less than fair market value, adding a child's name to a bank account, transfers to irrevocable trusts (with certain exceptions), and paying for another person's expenses. Transfers between spouses are generally not penalized. Transfers to a child who is blind or disabled are also exempt from the penalty, as are transfers of the homestead to certain family members (a spouse, a minor child, a blind or disabled child, a child who is a caretaker, or a sibling with an equity interest).

Exceptions to the Look-Back Penalty

Certain transfers are excluded from the look-back penalty even if made during the 60-month period. These include transfers to a spouse or for the sole benefit of a spouse, transfers to a blind or disabled child, transfers of the homestead to a spouse, minor child, caretaker child (who lived in the home for at least 2 years before the applicant's institutionalization), or sibling with equity interest, and transfers where the applicant can demonstrate that the transfer was exclusively for a purpose other than qualifying for Medicaid.

Community Spouse Resource Allowance (CSRA)

The community spouse is entitled to keep a portion of the couple's combined countable assets, called the Community Spouse Resource Allowance (CSRA). For 2026, the CSRA is up to approximately $157,920 (or one-half of the couple's combined countable assets, whichever is less, with a minimum of approximately $31,584). Assets above the CSRA must be spent down or converted to exempt form before the institutionalized spouse can qualify for Medicaid.

Minimum Monthly Maintenance Needs Allowance (MMMNA)

The community spouse is also entitled to a minimum monthly income from the couple's combined income. For 2026, the MMMNA is approximately $3,948 per month. If the community spouse's own income is less than the MMMNA, a portion of the institutionalized spouse's income can be diverted to the community spouse to bring their income up to the MMMNA level. This ensures the community spouse can pay for housing, food, and other basic needs.

The Home and Spousal Protection

The homestead is exempt from Medicaid asset calculations as long as the community spouse resides there. The community spouse can continue to live in the home indefinitely without it being counted as an asset for Medicaid eligibility purposes. Additionally, transfers of the homestead between spouses are not subject to the look-back penalty, allowing strategic retitling of the home to protect it from potential Medicaid estate recovery after the institutionalized spouse's death.

Advance Planning (More Than 5 Years Before Need)

When planning well ahead of a potential need, families have the most flexibility. Strategies include making gifts to family members or trusts (which will be outside the look-back window by the time Medicaid is needed), purchasing long-term care insurance, converting countable assets into exempt assets (such as paying down the mortgage, purchasing a prepaid burial plan, or improving the homestead), creating irrevocable asset protection trusts, and establishing lady bird deeds to transfer the homestead outside of probate while preserving Medicaid eligibility.

Crisis Planning (Within 5 Years of Need)

When a loved one already needs or will soon need long-term care, planning options are more limited but still available. Strategies include spending down assets on legitimate needs (home improvements, vehicle purchase, debt payoff, prepaid burial), Medicaid-compliant annuities that convert countable assets into an income stream for the community spouse, half-a-loaf gifting strategies (giving away approximately half the assets and using the remainder to pay privately during the resulting penalty period), and personal care agreements that compensate family members for caregiving services at fair market rates.

Irrevocable Trusts

An irrevocable Medicaid asset protection trust can remove assets from Medicaid countability, but the trust must be created and funded more than 5 years before the Medicaid application to avoid the look-back penalty. The trust must be carefully drafted to comply with both federal Medicaid rules and the Florida Trust Code. The grantor typically cannot serve as trustee and cannot retain the right to revoke the trust or access the principal for their own benefit. Income generated by the trust may or may not be counted depending on the trust terms.

Lady Bird Deeds and Homestead Planning

A lady bird deed (enhanced life estate deed) is a particularly valuable Medicaid planning tool in Florida. Because the owner retains full control and the power to revoke, the creation of a lady bird deed is not considered a disqualifying transfer for Medicaid purposes. The deed ensures the homestead passes to the designated beneficiaries at death without probate, potentially avoiding Medicaid estate recovery. This strategy works best when combined with other planning tools.

How Estate Recovery Works in Florida

Under F.S. 409.9101, the Florida Agency for Health Care Administration (AHCA) can file a claim against the estate of a deceased Medicaid recipient to recover the cost of benefits paid during the recipient's lifetime. The claim can be made against any assets in the probate estate. In practice, this most commonly affects the homestead property, which was exempt during the recipient's lifetime but becomes subject to recovery after death if it passes through the probate estate.

Protections Against Estate Recovery

Florida Medicaid estate recovery is limited to probate assets only. Assets that pass outside of probate — through beneficiary designations, joint ownership, trusts, or lady bird deeds — are generally not subject to estate recovery. Additionally, estate recovery cannot be pursued while a surviving spouse, minor child, or blind or disabled child survives. These protections make non-probate transfer planning an essential component of any Medicaid plan.

Hardship Waivers

In limited circumstances, the state may waive estate recovery if it would cause undue hardship. This can apply when the estate consists primarily of a family home and recovery would force the sale of the home, displacing family members who depend on it for housing. Hardship waivers are decided on a case-by-case basis and require a formal application.