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How Would the Medicaid Lien Effect Planning?

After I gave my talk at the Fourth Annual Caregiver's Conference in Seminole on Friday, I was approached by a fellow who asked about Medicaid payback in Florida. His basic statement to me was that "most people do not know that Medicaid [for the elder] is only a loan to pay for long-term care, not a gift." His basic point was that if the elder is on Medicaid, any leftover assets the decedent owned upon death is subject to a lien by the state of Florida. This is commonly known as the Medicaid "pay back" or reimbursement provisions, and many people are unaware of this provision in the law.

My answer to him was that he was correct - Florida Medicaid does have a pay back provision, just like all states. During your lifetime, if you receive Medicaid benefits, if you die after age 55, the State of Florida is a creditor in your estate. The state has a claim in the amount of funds expended for your benefit during your lifetime, which can definitely become a great deal of money if you spend time in long-term care. I told him this was generally not much of an issue in most situations.

First, if the Medicaid applicant was single, he or she was only allowed to have less than $2,000 in countable assets in order to be on Medicaid. This means that the applicant likely has nothing for Medicaid to make a claim against upon the applicant's death. A single applicant is already impoverished and has generally nothing for the state of Florida to take.

Next, even if the decedent owned a homestead property, this property is not subject to creditor's claims (including the state of Florida!) in most circumstances. I have more on Medicaid and homestead property here.  There are exceptions to this rule though, such as:

  • The decedent's property lost its homestead status before death (maybe by renting the home, for instance)
  • Not all homestead properties are equal. If the property is a co-operative share, such as in a mobile home park, this does not get statutory protection for Florida homestead purposes.
  • The decedent's last will and testament called for the sale of the decedent's home.

Ok, so the Medicaid lien is not an issue in most circumstances. So where would a Medicaid lien take place?  We can think about a few circumstances there the lien could/would be applicable:

  • The decedent sold their home and went off of Medicaid before death (i.e., the applicant went on private pay)
  • The decedent received an inheritance - either before they died or after, which could then be subject to the lien
  • The decedent did not disclose or discover all known assets as part of the application process and the assets had to be probated upon death
  • The decedent's spouse died first and left money to the Medicaid applicant, who then dies

One big point to be made is that good estate planning can avoid any potential Medicaid lien, regardless. That is one reason to see a good elder law attorney and to make sure the family creates a good estate plan, with a great durable power of attorney, to help avoid any probate or creditor problems upon the elder's death.

In summation, the Medicaid lien is not a worry for most Medicaid applicants if you have a good elder law attorney. This also means that good asset protection planning can protect assets during your lifetime and upon your death.

Want to Learn More about Medicaid and Long-Term Care?

Please feel free to download a copy of my book, Don't Lose Your Nest Egg to a Florida Nursing Home.  This book will help when you and your family are dealing with long-term care for your loved one, dealing with Medicaid, Medicare, nursing homes, getting care at home and more.

If you read this, you may also want to read:

D. Rep DeLoach III
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Estate Planning and Board Certified Elder Law Attorney
In my will, I advised my daughter to sell the house rather than to rent it. Is that regarded as a directive to sell it? Looks like I need to amend my will. I have partial Medicaid benefits, not full. Age 87.
by Daniel Winfield March 6, 2023 at 04:37 PM
That is a good question! If the last will and testament directs that the homestead be sold, the homestead will lose its homestead status and be subject to creditors. If the heirs sell the property on their own, has no effect on the homestead status. As estate planners, we sometimes call for the home to be sold for various reasons, but that is not a cause for concern under most circumstances or wills. So, unless the home is required to be sold under the terms of the will, the loss of homestead status is not a concern if your home descends to your family upon your death. Obviously, an estate planning attorney could review your estate plan if you have any further questions.
by Rep DeLoach December 9, 2022 at 11:09 AM
You say above that Medicaid can put a lien on a home in Florida if “The decedent's last will and testament calls for the sale of the decedent's home.” I am not married and own a small condo in Broward County FL. What Is the difference between “calling for the sale of the property,” and simply the descendants, after my death, wanting to sell the property at their choosing? In other words, is the deciding factor an actual provision in the will calling for or directing the sale of the home? Thanks…
by Peter Melaragno December 7, 2022 at 11:57 AM
Hello! Estate planning with homestead can be very complicated so you would want to meet with an attorney to discuss your own situation. However, in most scenarios for a married couple, the homestead is jointly held. If one spouse is sick and needs Medicaid, the homestead is not an issue. If the spouse at home (the community spouse) dies before the Medicaid spouse, the home would just go to the surviving spouse, no problems. Medicaid pay-back would then only be an issue when the institutionalized spouse dies, but only if the homestead goes to non-family heirs. Again, this is complicated, but most of the time Medicaid "payback" is not an issue between spouses.
by Rep DeLoach June 24, 2021 at 04:40 PM
Can you elaborate on if the community spouse - were to predecease the Medicaid recipient what happens to the homestead?
by Joseph Wingate June 24, 2021 at 04:15 PM
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