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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
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Joseph Wingate 06/24/2021 04:15 PM
Can you elaborate on if the community spouse - were to predecease the Medicaid recipient what happens to the homestead?
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Rep DeLoach 06/24/2021 04:40 PM
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.
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Peter Melaragno 12/07/2022 11:57 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…
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Rep DeLoach 12/09/2022 11:09 AM
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.
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Daniel Winfield 03/06/2023 04:37 PM
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.
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Arnold Organic 08/09/2023 6:20 PM
I have a distant aunt who just passed. She had no close relatives and I recently realized she had been placed in a nursing home under a Baker Act in Sept 2021. She owned real estate, her homestead, exemption was taken off about a year after she was placed in nursing home , a small house assessed at 55,000. She has now died. She had no will. What will happen to the property in this case? Will medicaid force it to be probated or is the amount not enough for them to fool with. Oh I forgot to mention she was not mentally competent and could not take care of herself so I would assume a medical surrogate was appointed.
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DeLoach, Hofstra & Cavonis, P.A. 08/10/2023 8:51 AM
Arnold, you would want to consult a probate attorney. When someone dies with assets in their own name, the asset needs to be probated - it does not matter the size of the estate (for the most part). It is through the probate process where creditors, including the State of Florida, can get paid. It is up to the person who becomes personal representative (executor) who will take care of the creditors.
Pam 08/22/2023 2:14 PM
My 59 year old sister receives disability payments and Medicaid. She has no assets. When my parents die, she will interest a substantial sum. Will her estate be required to pay back Medicaid?
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DeLoach, Hofstra & Cavonis, P.A. 08/25/2023 8:56 AM
Pam, In a situation like this we would assume Medicaid payback could or would be an issue upon your sister's passing. Payback can be avoided with good legal advice. Here, we would also assume that the inheritance would take her off of Medicaid. I think about a few things, such as what type of Medicaid your sister is receiving, what type of disability she is on, and a few more aspects. In any event, if you can talk to your parents about seeing a good elder law attorney, like our law firm, payback is completely avoidable and your sister could keep Medicaid - if that is a priority for your parents.
Dianne Diaz 09/18/2023 5:46 AM
We let our father live in our house in Florida. All he had to do was pay the property taxes and insurance instead of a monthly rent. The property tax and insurance was high because we didn't live in Florida so we put the house in his name so he could handle the bills better. Now my father is on Medicare and medicaid we wanted to sell the house because he is now staying with my aunt but was told that we can't put the house back in our name nor can we sell the house. This was our house in the first place so why can't we do a quit claim deed like we did when we put the house in his name. HELP!!
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DeLoach, Hofstra & Cavonis, P.A. 09/22/2023 10:00 AM
Hello! Wow, that is a big problem as the gift to him gave him a property right that he may not easily give back, but we can definitely help. We charge $200 for our office consultation to review matters, so please give us a call at 727-397-5571 and I am glad to help!
Debbie Fread 09/25/2023 9:02 PM
So Mom started receiving Medicaid 3 years ago while she was living at home. She received 10 hours/wk help with housekeeping and meals. She recently was hospitalized and we decided she could no longer live alone and she is now living in an Assisted Living Facility receiving $1625/mo towards her care from Medicaid. But, we need to sell her condo in order to pay the rest of her monthly charges. Putting the proceeds in her checking account would disqualify her from receiving Medicaid. We were told a Pooled Trust is our only option to continue with Medicaid, but upon her death the remaining balance in the trust would be subject to Medicaid Reimbursement. So what is the point? Medicaid will get paid back regardless as long as she has over $2,000. Thinking of selling her condo and going off Medicaid. Renting is not an option (lost homestead, expenses vs. rental income). Thank you.
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DeLoach, Hofstra & Cavonis, P.A. 09/26/2023 11:23 AM
Debbie, There are typically better ways to preserve assets than a pooled trust. We would charge $200 to review the situation and provide options. We would send you a questionnaire and need a copy of the power of attorney to confirm what legal steps can be made to protect assets, but we are glad to provide a second opinion. Please give us a call and we are glad to help!
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