Maximizing Asset Protection: Navigating the Complexities of Medicaid Planning for Seniors

Long-term care costs are astoundingly expensive. According to the latest data from the Florida Health Care Association (FHCA), the median cost of a private room in a nursing home now runs into the six figures. As Medicare provides very little long-term care coverage, it is imperative that seniors in Florida use the right Medicaid planning strategy to protect their assets. Here, our Fort Lauderdale estate planning attorney explains the key things to know about maximizing your asset protection through proactive Medicaid planning. 

Medicaid Covers Long-Term Care, Not Medicare (Why it Matters)

Knowing how expensive long-term care costs can be, you probably have an important question: Can a senior citizen in Florida access public benefits to help cover long-term care costs? The answer is “yes”—but only when certain financial requirements are met. Here is the big issue: 

• Medicaid, not Medicare, covers most long-term care expenses in the United States. 

Understanding the distinction between Medicare and Medicaid is absolutely crucial for senior citizens who are trying to make viable financial plans for their future long-term care needs. 

Medicare, a federal health insurance program, primarily covers only hospital stays, doctor visits, and short-term rehabilitation services. It does not cover long-term care care in nursing homes or assisted living facilities. Why does that matter? Every senior citizen can qualify for Medicare—but they cannot rely on Medicare to provide coverage for long-term care. 

Medicaid provides long-term care coverage. However, qualifying for Medicaid is not automatic. For many seniors in Florida, Medicaid eligibility is by no means straightforward. The program has both strict income limits and strict asset limits. Without proper planning, seniors in Florida may find themselves exposed to the high costs of long-term care—which can quickly deplete their savings. 

What You Need to Know About the Medicaid Spend Down Requirement

The Medicaid spend-down requirement is one of the most important concepts that senior citizens in Florida need to be aware of. If your income or your assets exceed Medicaid’s eligibility limits, you will be required to”spend down” your excess assets to qualify for Medicaid benefits. That does not mean indiscriminate spending; Medicaid has strict guidelines on acceptable expenditures. 

You may be able to spend down to cover certain costs—such as paying off debts, making home improvements for medical needs, purchasing exempt assets, and prepaying funeral expenses. However, you cannot simply give money to your loved ones to meet the requirements. Anything that is remaining about the asset limit after you follow the spend-down rule will be used to pay for your own long-term care before Medicaid steps in. 

Key Point: If a senior’s assets and income exceed Medicaid’s resource limits, they generally will not qualify for Medicaid coverage for long-term care. They will usually be required to pay for their own care. Medicaid will only step in once those financial resources have been exhausted. 

How Proactive Medicaid Planning Can Protect a Senior Citizen’s Assets

As stressful and confusing as it can be for seniors and their families to navigate long-term care, there is some good news: Proactive planning can help to protect assets. A top-tier Florida estate planning attorney who has experience handling Medicaid planning can help you determine the best course of action. You should start Medicaid planning at least five years in advance of actual long-term care needs to ensure you have every option on the table. Strategies include: 

• Home Equity Protection: A senior citizen’s primary residence can be an exempt asset for the purposes of Medicaid. As of 2024, Medicaid allows a senior resident to protect $713,000 worth of equity in their home. Seniors may be able to use excess funds to pay off a mortgage or make certain qualifying home improvements to protect them from long-term care costs. 
• Early Gifting (Five-Year Lookback): Early gifting refers to transferring assets to family members or into a trust more than five years before applying for Medicaid. Medicaid in Florida has a five-year lookback rule. If a gift is made at least five years before long-term care needs, Medicaid cannot consider those assets. 
• Medicaid Trust (Five-Year Lookback): An irrevocable trust designed to protect a senior’s assets from being counted for Medicaid eligibility purposes can also protect property. Assets transferred into this trust are not accessible to the grantor—meaning they must be managed by an appointed trustee and cannot be returned. The same five-year lookback rule applies. A trust set up five years prior to long-term care needs is solid. 
• Medicaid-Compliant Annuities: A Medicaid-compliant annuity converts a senior’s liquid assets into an income stream—thus reducing countable assets for Medicaid eligibility. These annuities must be irrevocable, non-assignable, actuarially sound, and provide equal payments with no deferral payments or balloon payments. Whether this type of annuity is a viable option depends entirely on the specific situation. 
• Personal Care Agreements: A personal Care Agreement is a formal contract between a senior and a caregiver, which can be a family member, where the senior pays for personal care services provided at home. These agreements justify the transfer of money to family members as payment for services. A caregiving arrangement may be a viable option for a certain transition before more comprehensive long-term care support is required. 

Why Trust Our South Florida Estate Planning and Elder Law Team

Medicaid planning is exceptionally complicated. If you have questions about your options or you find the process confusing, you are certainly not alone. At The Law Offices of Odelia Goldberg, we are here to help you find the solution that works best for your specific situation. As a top-rated estate planning and elder law firm, our Fort Lauderdale Medicaid planning lawyer has the skills, experience, and legal expertise to help you put the best asset protection strategy in place. 

Contact Our Fort Lauderdale Asset Protection Lawyer Today

At The Law Offices of Odelia Goldberg, our Fort Lauderdale estate planning attorney has extensive experience helping people and families protect their assets. If you have any questions about Medicaid planning, please contact us today for a fully confidential, no-obligation initial consultation. With an office in Fort Lauderdale, we provide estate planning services throughout South Florida.