Florida is one of only a handful of states where a Medicaid applicant’s primary residence is protected from the nursing home. Florida protects an individual’s primary residence (homestead) from the nursing home if the home equity of the homestead is less than $713,000 (2024). Most states are not as generous as Florida and either do not protect the primary residence during the Medicaid recipient’s lifetime, or they force the recovery of the primary residence after the Medicaid recipient’s death.
There are also many planning techniques to protect the primary residence here in Florida if the home equity exceeds the $713,000 (2024) mark. For example, if a spouse is still living at home, then the homestead will be completely exempt regardless of the equity.
Example: George is a Florida nursing home that costs $13,000 per month. George’s only asset is his primary residence (homestead). George’s homestead is worth 1.2 million dollars, and he does not have a mortgage. George’s wife, Delilah, still lives at home. His family is worried that George and Delilah will lose their homestead to the nursing home since the equity in the homestead exceeds the Florida limit of $713,000.
Result: Since Delilah is still living at the home, and she is George’s spouse, the homestead will be completely protected from the nursing home even though the equity is more than $713,000.
Even though the homestead is protected here in Florida, there are several pitfalls when it comes to protecting the homestead from the nursing home during someone’s life and after they pass away. This Article will cover what type of homes are protected from nursing homes, unique planning techniques to protect the primary residence, whether you can sell or rent the homestead, and how to ensure the homestead stays protected from Medicaid recovery after death.
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What Qualifies as a Protected Homestead/Primary Residence
The Florida Medicaid rules define a home as any shelter in which someone has an ownership interest and is used by the individual as their primary place of residence. The home can be real or personal property, fixed or mobile, and located on land or water. This means that houses, co-ops, condominiums, mobile homes, motor homes, and houseboats are all protected from the nursing home here in Florida.
Example: Joanne lives in a mobile home park that is considered a co-op (a cooperative). Joanne’s mobile home is worth $200,000. Her family is worried that if she goes to a nursing home, the mobile home will be lost to the nursing home.
Result: Joanne’s interest in the co-op and the mobile home are completely protected from the nursing home here in Florida.
The definition of the home very is broad and includes property where an individual does not own the entire property. This means that shared ownership in a property—whether joint tenants with rights of survivorship, tenancy in common, or tenancy by the entirety—will also be completely protected from the nursing home here in Florida.
Intent to Return Home and Temporary Absence: How to Protect the Primary Residence
A temporary absence from the homestead will not make the homestead lost to the nursing home. This temporary absence exclusion will be for an indefinite period as long as one of the following three conditions is met:
- A spouse or dependent relative continues to reside in the home;
- The sale of the home would cause undue hardship due to the loss of primary residence to a co-owner of the property; or
- The individual (or the individual’s designated representative) states an intent to return home.
If a dependent is living in the home, then the home will be completely excluded from the nursing home. A dependent relative includes the following: son, daughter, grandson, granddaughter, stepson, stepdaughter, half-brother, half-sister, niece, nephew, cousin, parents, in-laws, grandmother, grandfather, aunt, uncle, sister, brother, stepbrother, or stepsister. The dependent relative must be dependent for financial, medical, or other reasons.
If a dependent or spouse is not living at home, then the easiest way to protect the primary residence is with the intent to return home. The intent to return home is a simple statement that can be made by the individual who is receiving or applying for Medicaid, or the individual’s representative (such as a power of attorney). Here’s a quick example of an intent to return home statement that you can use when dealing with Florida Medicaid:
I, Jane Doe, hereby declare my intent to maintain 123 Fake Street, Sarasota, FL 34234, as my primary residence and domicile. Although I may be temporarily living elsewhere, I fully intend to return and continue living in my permanent home at 123 Fake Street.
I confirm that I have no intent to establish permanent residence in any other dwelling. I anticipate returning to my 123 Fake Street as soon as practicable.
Signed,
Jane Doe
123 Fake Street
Sarasota, FL 34234
As you can see, the intent to return home statement is short and to the point. Once the intent to return home is made, the home will be indefinitely excluded from the nursing home. So, if an individual is in a Florida assisted living facility or nursing home, the primary residence will remain protected.
Example: George is in a Florida nursing home, and Medicaid is paying for his stay. George’s most significant asset is his homestead, which he lived in before going to the nursing home. George’s son, who is his power of attorney, files a statement of intent to return home for George so that Medicaid will never be able to claim that the homestead was lost due to George’s stay in the nursing home. It is doubtful that George will return home.
Result: By filing a statement of intent to return home, the homestead will remain protected from the nursing home since George intends to return home.
Are Out-of-State Properties Protected From the Nursing Home in Florida
Primary residences out of state can also be protected from the nursing homes here in Florida. A Medicaid recipient’s out-of-state primary residence will be protected if the Medicaid recipient’s spouse or dependent resides in the home. If the Medicaid recipient’s spouse or dependent resides in the home, then the Medicaid recipient can just make a statement of intent to return home.
Example: Tim’s children live here in Florida. Tim is not doing great health-wise and lives in Minnesota where he owns his primary residence. His children decide to move Tim down to Florida so that he can be closer. The children place Tim in a Florida nursing home. Tim’s Minnesota home is his only valuable asset.
Result: Tim will need to make a statement of intent to return home so that his home in Minnesota will be protected from the nursing home here in Florida. Once he makes the statement of intent to return home, then the home will be protected here in Florida.
Can I Sell My Homestead While in the Nursing Home?
Yes, you can sell the homestead. But you must be very careful. If the property is sold and you don’t re-invest the sale proceeds into another homestead or protect them using another Medicaid planning technique, the home sale will disqualify the individual from receiving Medicaid benefits here in Florida. Many people make the mistake of selling the homestead when the owner is currently receiving Florida Medicaid without doing the proper planning.
We often advise clients never to sell the homestead here in Florida once someone is already on Florida Medicaid. However, there are some scenarios where the homestead does need to be sold. One scenario is when there are no assets to pay the expenses of the homestead while the owner is in the nursing home since the owner’s income goes to the nursing home.
Make sure to consult with your elder law attorney before selling the homestead since if you sell it without protecting the proceeds, the equity in the homestead will likely be lost to the nursing home.
Rental Properties are Protected From the Nursing Home
The most common scenario where someone wants to sell the homestead property is when a Medicaid recipient is in a nursing home. This commonly happens when all of the Medicaid recipient’s income goes to the nursing home, and the family does not have the money to pay the mortgage, property taxes, insurance, utilities, etc. Many families will decide to sell the homestead, not realizing that selling the homestead will cause massive issues for the Medicaid recipient and may cause the home’s equity to be lost to the nursing home.
One easy solution is to turn the homestead property into a rental property. The rental property will still be protected from the nursing home since it is now income-producing. Income-producing property (rentals) are excluded from Medicaid if the property is making a return consistent with its fair market value. The rental income can go towards paying for the mortgage, property taxes, insurance, and some general maintenance and repairs to the home. This is an easy way to ensure the primary residence is still protected from the nursing home, and money is coming in to pay for the property’s expenses.
Example: Gary is in a nursing home, and his only asset is his homestead here in Florida. Gary is not married. Gary’s income goes to the nursing home every month, so there is no money left to pay for the property taxes, the insurance, the utilities, and the upkeep. Gary’s family meets with a competent elder law attorney and decides to rent out the homestead so that the home can be protected and the rental income can pay for the property expenses.
Result: Gary’s primary residence turned rental property will still be completely excluded from counting against him for his nursing home care and will not be lost to the nursing home.
Caution: When you turn the property from homestead into a rental property, make sure the property does not go through probate when the Medicaid recipient dies. Once the homestead loses its homestead status, it makes the property susceptible to Medicaid recovery after the Medicaid recipient dies. If the rental property does not go through probate, then Medicaid will not be able to take the rental property after the recipient dies here in Florida.
Selling a Homestead to Buy Another Homestead
If you decide to sell the homestead here in Florida and buy another homestead, then Florida Medicaid gives you three months to purchase another homestead with the funds once the original homestead sells. The three-month window is called the home replacement period. This means that the funds from the sale of the first homestead will be completely protected from the nursing home for up to three months while you search for another homestead to purchase. If you do not reinvest the proceeds within three months, then the funds from the sale of the homestead will not be protected.
All proceeds from the sale of the first home must be placed into the second home for them to be completely exempt from the nursing home. If you purchase a less expensive home, you must use some other Medicaid planning technique with the leftover money to protect the money.
Example: Deborah is in a nursing home, and her spouse, Joe, still lives there. Joe decides to downsize and move into a smaller property. Deborah and Joe receive $400,000 from the sale of their home. Joe purchases a smaller property for $300,000 two months after the first home sells.
Result: The $300,000 that Joe reinvested into another home is still completely protected from the nursing home because he purchased another home within two months. The leftover $100,000 will not be protected from the nursing home, so Joe must do a personal services contract or some other Medicaid asset planning technique to save the $100,000.
How Homestead Equity is Calculated for the Nursing Home
When Medicaid looks at the value of the homestead to see whether the homestead’s equity is less than $713,000 (2024), the equity value of the homestead is determined by figuring out the current market value minus any debt. The current market value is the price the home can reasonably be expected to sell on the open market.
This means that equity value is determined by taking the home’s fair market price and subtracting the value from any mortgages or other home debt. If the homestead equity has a value of less than $450,000, then Medicaid will likely not ask for more information about the value of the homestead.
If Medicaid asks for more details on home equity because the equity exceeds $450,000, then they will ask for proof of the current market value. The current market value must be determined by a real estate broker, mortgage broker, property appraiser, or licensed builder.
Example: Delores is not married and owns an expensive home on the water in Sarasota worth $900,000. The homestead is her only asset. She currently has a mortgage of $600,000 on the homestead. Delores applies for Medicaid since she needs Florida Medicaid for in-home care services.
Result: Even though Delores’ homestead is worth $900,000, Medicaid will only look at the home’s equity. Delores’ equity is only $300,000, so her homestead will be protected from Medicaid. It is unlikely that Medicaid will ask for a formal estimation of the home’s fair market value.
If the homestead is co-owned with another individual, then Medicaid will only look at the fractional value of the homestead for the individual applying for Medicaid. That means if a homestead is jointly owned (50/50), then Medicaid will only consider 50% of the value of the homestead when determining whether the equity exceeds the threshold.
Example: Jim needs to go to a Florida nursing home and he needs to qualify for Medicaid since he cannot afford to pay the $11,000 per month that the nursing home costs. Jim co-owns his homestead with his sister as joint tenants with full rights of survivorship (JTROS). Because Jim owns only 50% of the homestead, Medicaid will only count 50% of the homestead as owned by Jim when determining whether the homestead will be protected equity-wise.
What Happens if the Homestead’s Equity Exceeds the Allowed Amount
If the homestead is unprotected because the equity exceeds $713,000 (2024), then one planning technique is to submit an undue hardship request. Medicaid can waive the excess equity requirement when it results in hardship for the Medicaid applicant. A hardship exists when the Medicaid applicant is endangered, or the individual is deprived of food, clothing, shelter, or other necessities of life if they are disqualified from Medicaid services. The endangerment must be documented by a medical doctor with knowledge of the Medicaid applicant’s medical condition at the time of the application.
Note: remember, if the applicant’s spouse, minor child, or blind or disabled child resides in the home, then the home equity will not count against the Medicaid applicant.
If there is excess equity and Medicaid does not approve the hardship waiver, then there are other ways of saving the excess equity. The excess equity can be saved through a personal services contract, turning the homestead into a rental property, or selling the homestead and investing the assets into other Medicaid-protected assets. Consult with an experienced elder law attorney before using any of these strategies.
Can Medicaid Take the Homestead After Death (Medicaid Recovery)
Many states allow Medicaid to recover the money they paid out for services after the applicant passes away. The states often do this by taking possession of the home after the applicant passes by placing a lien on the property—this is known as “Medicaid recovery.” Medicaid recovery can only happen in Florida when the property passes through the probate process. If the property does not go through probate after the applicant dies, the State of Florida cannot recoup its expenses through Medicaid recovery.
Example: Derick receives Florida Medicaid for three years while he is in a nursing home. Derick’s only beneficiary is his lifelong partner. He wisely does a ladybird deed for the homestead before he passes away. Derick passes away while owing more than $400,000 to Florida Medicaid.
Result: Since Derick’s homestead is passing to his life-long partner via a ladybird deed, Derick’s homestead will not go through probate. Florida Medicaid cannot recover the $400,000 it spent for Derick’s care.
However, even if the homestead passes through probate, the homestead may still be protected from Medicaid recovery here in Florida. If the homestead goes through probate, it needs to be distributed to a qualified heir to maintain its protected homestead status through the probate process. A qualified heir would be a child or other protected family member, such as a sibling, niece, or nephew.
Example: Derick receives Florida Medicaid for three years in a nursing home. Derick’s only beneficiary is his lifelong partner. He does not do any additional planning for his homestead so that it will avoid probate. Derick passes away while owing more than $400,000 to Florida Medicaid.
Result: Since Derick did not do any planning to make sure his homestead avoided probate, Derick’s homestead will be lost to Florida Medicaid since the homestead will lose its protected status. Derick’s life-long partner will not be considered a qualified heir.
Will a Lady Bird Deed Still Protect the Homestead From the Nursing Home?
Using a ladybird deed for your homestead will not affect the property’s exclusion from the nursing home here in Florida. Using the ladybird deed is an excellent planning option because the homestead will remain protected during the Medicaid recipient’s lifetime and will not go through probate after death. Avoiding probate will prevent Florida Medicaid from recovering any funds from the homestead after the Medicaid recipient dies. The Medicaid recipient also maintains complete control of the homestead, which can be turned into a rental property or sold anytime.
Example: Ellen is receiving Florida Medicaid while she is in a nursing home. Ellen owns a homestead worth $500,000 and is completely protected from the nursing home. Ellen’s daughter, who is also her power of attorney, executes a ladybird deed to ensure the property does not go through probate after Ellen dies.
Result: Even though the ladybird deed gives Ellen a life estate in the homestead while Ellen is alive, Ellen still maintains complete ownership of the property. The homestead will remain exempt from the nursing home during Ellen’s lifetime. After Ellen passes, the homestead will pass straight to her beneficiaries in equal shares. Medicaid cannot recover any monies from the house since the homestead will pass to the children without going through the probate process thanks to the ladybird deed.