Medicaid and the Florida Homestead Exemption

The Florida homestead exemption is Florida’s best known asset protection law. The exemption becomes more complicated, and more limiting, when it interacts with certain provisions of federal law. One example is federal tax law pursuant to which the IRS may place a lien on a taxpayer’s homestead to collect taxes. Another lesser-known change to Florida homestead is the provisions of federal Medicaid law applicable to Medicaid’s nursing home payments.

Medicaid eligibility for federal assistance with long term care in nursing facility has strict asset limits. To be eligible for Medicaid’s assistance with residence in a nursing home facility a person can  own assets no greater than approximately $2,000 in the aggregate. An applicant has to spend down his assets to the $2,000 ceiling, and if they have more than the maximum asset limit the government will take their assets to pay part of the patient’s nursing care. My clients  assume that the asset ceiling does not apply to their Florida homestead; they expect that Florida’s homestead exemption protects their house from a Medicaid lien.

In fact, Medicaid does consider a Florida  homestead to be exempt from asset calculations, but the exemption has a limit. Whereas the homestead exemption from general judgment creditors is unlimited in amount, Medicaid protects Florida homestead value up to approximately $560,000. A Medicaid applicant with a more valuable home is ineligible for Medicaid even through the applicant may have low income and meet every other Medicaid criteria. In practice, most low-income Medicaid applicants have already sold expensive homes to help pay for private care before considering Medicaid.

Florida homestead exemption does apply to a government effort to reclaim Medicaid benefits paid. Medicaid law gives the state Medicaid agency a Medicaid lien on the patient’s assets in order that the agency be paid back at the patient’s death the amount of benefits Medicaid paid during the patient’s lifetime. The government may not asset a claim on a property that was the homestead of the patient or the patient’s spouse.  There is no limit on the value of the Florida homestead exempt from Medicaid liens.