Florida Wills Attorney Serving Aventura and Miami

At the wills and probate Law Office of Steven K. Schwartz, P.A., we provide Medicaid planning for clients as a means of preserving assets for beneficiaries. A common misconception is that you have to be poor to qualify for Medicaid paid nursing home care during old age. However, by spending down assets and maximizing the value of non-countable assets, you may become eligible for Medicaid. Medicaid planning is a personal choice and many factors need to be taken into consideration. These include benefit analysis, predicted longevity of the family member, whether a remaining spouse is living in the home, quantity and types of assets, value of the homestead, etc. A lawyer skilled in Medicaid planning can help you determine whether legal costs and other financial considerations make Medicaid planning a viable option. The longer the life expectancy of the disabled person, the more opportunity there is for Medicaid planning in Florida.

Non-Countable Assets

The character of assets is important in qualifying for Medicaid because some assets are non-countable, whereas others are not. For example, the homestead and prepaid funeral arrangements are non-countable assets. If you sell the homestead and receive cash for it, the cash is not an exempt asset from Medicaid. Managing assets is a matter of turning cash into non-countable assets, which has to be done according to Medicaid’s rules.

Five-Year Look Back Period

The Deficit Reduction Act of 2005, which was enacted in February of 2006, extended the look back period on financial activities or transfers from three to five years. This means that Medicaid will look back at the past five years to determine if any financial activity disqualifies an applicant for Medicaid assistance. Assets transferred for less than fair consideration within the five-year period would make the individual subject to a penalty period.

Homestead Exemption

The Homestead exemption in Florida is an important factor in Medicaid Planning. The homestead refers to the residence where you live, for which the first $500,000 in equity in Florida is non-countable. However, for Medicaid eligibility, the individual has to have less than $2,000 in countable assets. The homestead does not pass through the estate. You still have to pay taxes or you will, of course, lose the house.

Personal Services Contract

A personal services contract can be created that employs close relatives who care for an elderly or incapacitated individual. For example, let’s say the contract would pay a lump sum of $100,000 to care for an incapacitated relative for the next 10 years. Taxes would be paid on the income, say for example,$28,000. The amount of $28,000 would also cover five and a half months of nursing home care. If the disabled person’s life expectancy is projected to be long, a personal services contract option could be viable. Whereas, if the person is not expected to live more than five months, payment out of pocket for nursing home care may be a better option. Financially, there is a break-even point that has to be considered in arriving at the most economical solution.


New rules under the Deficit Reduction Act of 2006 eliminated gifting as a way of spending down assets for Medicaid qualification.

Frequently, persons in their 60’s, 70’s or 80’s do not have certainty regarding who will be in control of their assets. If family members are trustworthy, then transferring assets becomes more of an option, and the person can feel assured that although assets were transferred to their family, the senior would still receive proper care.

Special Needs Trust

A Special Needs Trust or Supplemental Needs Trust is either part of a will or a stand alone document that allows a person with a mental or physical disability to have assets held in trust for his or her benefit. These assets are not considered countable assets for the purpose of qualifying for governmental benefits such as Medicaid.

Let’s say for example, an individual in a car accident becomes disabled, and there is a $1 million recovery from a lawsuit. The injured individual can receive government benefits through Medicaid. Money can be put in a special needs trust to cover things that Medicaid doesn’t cover, such as the expense of a hearing aid. If the disabled person needed a hearing aid at some point, funds could be used from a Special Needs Trust to pay for it.

Arrange a Consultation

Medicaid Planning is complex and numerous factors need to be taken into consideration to determine its benefit. At the wills and probate Law Office of Steven K. Schwartz, we discuss in detail options available to you and explain the advantages and disadvantages to assist you in making decisions. Please email or contact our office at (305) 936-8844 to arrange a consultation.