Medicaid planning & estate recovery in Florida
Florida's Medicaid program (called SMMC LTC) pays for nursing-home care for those who qualify — but assets and income matter, and Medicaid recovers from the estate at death. Here's how the rules actually work.
Long-term-care Medicaid in Florida (Statewide Medicaid Managed Care Long-Term Care, or SMMC LTC) pays for nursing-home and home-care services when someone qualifies. The program is essential — nursing-home care runs $9,000–$15,000 per month in Florida, and most middle-class families exhaust resources within 2–3 years of paying privately.
The catch: Medicaid is means-tested. Florida limits assets to ~$2,000 for a single person (much higher for married couples), with a 5-year look-back on transfers. And after death, Florida's Medicaid Estate Recovery Program (MERP) can claim against the estate to recover what Medicaid paid.
Below: how the rules work, what planning can legitimately do, and the timing that matters.
The eligibility test
- Asset limit (single): ~$2,000 in countable assets. The home, one car, household goods, irrevocable burial reserves, and certain other items are exempt.
- Asset limit (married, one applying): applicant ~$2,000; community spouse keeps a 'Community Spouse Resource Allowance' (~$148,000 in 2026, indexed annually).
- Income limit: ~$2,829/month gross income (2026 figure, adjusted annually). Income above limit doesn't disqualify outright but requires a 'qualified income trust' (Miller Trust).
- Medical necessity: must require nursing-home level of care, certified by a physician.
- Florida resident: must be a Florida resident at application.
What's exempt (countable vs. non-countable)
- Primary residence (homestead): exempt up to a value cap (~$713,000 in 2026), or unlimited if a spouse, minor child, or disabled child lives there.
- One car of any value.
- Household goods and personal effects.
- Irrevocable funeral and burial reserves: unlimited if irrevocable; limited if revocable.
- Term life insurance (no cash value).
- Whole life insurance with face value under $2,500.
- Personal injury settlement (in some configurations).
Countable assets
- Bank and brokerage accounts.
- Retirement accounts (in pay status; varies by structure).
- Investment property (non-homestead).
- Cash value of permanent life insurance.
- Vehicles beyond the first.
- Recreational property and assets (boats, RVs, etc.).
- Most trusts (revocable trusts are countable in their entirety; irrevocable trusts vary).
The 5-year look-back
Medicaid examines transfers for value made within 5 years before application. Transfers for less than fair market value (gifts) trigger a penalty period during which the applicant is ineligible.
- Penalty calculation: total gifted value ÷ Florida's average monthly nursing-home cost = months of penalty.
- Penalty starts when the applicant otherwise meets eligibility (asset and medical) — not at the time of the gift.
- 5-year window: transfers older than 5 years before application don't trigger penalty.
- Exempt transfers: to a spouse, to a disabled child, to a child who lived in and provided care for the home for 2+ years, certain trust structures.
Legitimate planning techniques
- Community Spouse Resource Allowance: married couples can keep significant assets in the community spouse's name without affecting eligibility.
- Spousal refusal (Florida): community spouse can decline to support institutionalized spouse, leaving spouse's separate assets protected. Highly state-specific; Florida allows narrow versions.
- Spousal asset transfer: assets can move freely between spouses without penalty.
- Increased CSRA via court order: in some cases, courts can authorize community spouse to keep more than the standard CSRA.
Asset restructuring
- Spend down on exempt assets: improvements to the homestead, prepaid funeral, replace older car. Reduces countable assets without 'wasting' value.
- Irrevocable funeral reserve: prepaid funeral arrangements with funds held by funeral home. Common spend-down strategy.
- Pay off debt: countable cash → reduced debt = preserved net worth, fewer countable assets.
- Personal services contracts: pay an adult child a fair-market-value monthly amount for personal care. Documented carefully.
- Buy a Medicaid-compliant annuity (married couples): converts countable lump sum to income stream that doesn't count toward the applicant's asset limit.
Trusts and gifting
- Irrevocable trusts (Medicaid-asset-protection trusts): properly structured, can move assets out of countable estate. Must be irrevocable; grantor gives up control. Subject to 5-year look-back.
- Lady Bird deed: keeps homestead protections + avoids probate without triggering Medicaid look-back (because no transfer of legal interest occurs until death).
- Outright gifts: trigger look-back penalty if within 5 years. Generally last-resort; better strategies usually available.
- Half-loaf gifting (sometimes): gift half, keep half for private-pay until penalty period elapses. Sophisticated technique.
Estate recovery (MERP)
When a Medicaid recipient dies, Florida's Medicaid Estate Recovery Program files a claim against the probate estate to recover what Medicaid paid:
- Recovery target: probate estate only. Assets passing outside probate (joint property, beneficiary designations, properly structured trust assets, Lady Bird deed transfers) are generally NOT subject to MERP.
- Limits: recovery limited to amount Medicaid paid; cannot exceed estate value.
- Hardship waiver: surviving family members in genuine hardship can request waiver.
- Homestead constitutional protection: Florida's constitutional homestead protections may shield the homestead from MERP in some configurations. Case law is evolving.
Practical impact: Lady Bird deeds and trust ownership of the home both keep the home out of MERP reach. This is why we recommend these tools so often for families with future Medicaid concerns.
When to start planning
- Pre-need planning (5+ years before need): most flexibility. Asset restructuring, trust planning, gifting all available without penalty.
- Crisis planning (within 5 years of need): more limited. Spousal protection, exempt-asset spend-down, Medicaid-compliant annuities, personal services contracts. Specialized practice.
- Post-application (already on Medicaid): protecting remaining assets, coordinating with caregivers, ensuring continued eligibility.
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