A client approached me the other day, concerned as to whether the Florida Medicaid Recovery Unit could recover monies paid by Medicaid on his behalf from his Homestead Florida real estate after his death. I assured him that in the vast majority of cases, such recovery is unlikely.
As a single person, if you qualify for Medicaid, you already have very little in the way of assets in the first place. However, you are able to own a home which you designate as your homestead property (Florida real estate that you designate as your main place of residence). Florida homestead property is not factored when determining eligibility for Medicaid (it is considered as a non-countable asset). So, you could own a half-million dollar home, or a home with $500,000 in equity, and still qualify for Medicaid.
Generally, Article X, Section 4 of the Florida Constitution protects your Florida homestead property from your creditors’ claims, whether you are alive or dead. In other words, if you rack up an unpaid credit card bill of $10,000.00 and suddenly die, and your only asset is your homestead property, the credit card company cannot assert a claim for payment against that homestead property. And neither can the Medicaid Recovery Unit, with one caveat. As applied in Florida, the Deficit Reduction Act of 2005 limits your homestead property exemption to $500,000.00, where Medicaid is concerned. In other words, the Florida Medicaid Recovery Unit can only recover from the amount that exceeds $500,000.00 in equity in your Florida homestead property.
Given the current state of the housing market, it is unlikely that if you initially qualified for Medicaid (you did not have more than $500,000 in equity in your home) that your homestead property value will inflate rapidly to the point where the Medicaid Recovery Unit can claim against it – at least for the next couple of years. Still, you should consult an experienced Florida estate-planning and/or elder law attorney to ensure maximum financial protection for your loved ones upon your demise.
If you are interested in learning more about this topic, you can either post a comment to this blog, contact me by email, or call me at (954) 458-8655 and I will be happy to answer your questions. I offer a free initial consultation.