Seniors should be aware of a new federal law that may impact their future eligibility for Florida Medicaid nursing home benefits. The law becomes effective in 2028, but there are steps you can take right now that can help protect you from potential negative impact in the future.
New Home Equity Cap
Currently, in order to receive long-term care Medicaid benefits in Florida, the equity in your home may not exceed $752,000. The home equity cap has been annually adjusted for inflation.
Starting in 2028, federal law sets a permanent equity cap at $1,000,000. There will be no annual adjustments for inflation. A state may set lower limits for home equity, but may not exceed the $1,000,000 cap. Florida, for instance, could keep the $752,000 cap, adjust it for inflation, or set it at any other value – but it may not exceed $1,000,000.
Why the New Home Equity Cap Could Make You Ineligible For Medicaid Benefits
The new law could prove problematic for seniors who purchased their homes long ago for a price far below current market value. Given the recent meteoric rise in home prices in South Florida, residents with even modest assets could find themselves house-rich – in other words, holding more than $1,000,000 in home equity, and therefore ineligible for Medicaid benefits. (The state may waive the equity cap if it can be demonstrated that it causes severe financial hardship. But this is by no means guaranteed.)
Steps You Can Take Now
There are several steps you can take right now that can help guard against your home value exceeding the cap.
- Establish A Medicaid Asset Protection Trust. This is an irrevocable trust. Putting your home into a Medicaid Asset Protection Trust means that you can sell your home and move to a smaller home now. Then after the five-year lookback period, the sale will have no impact on your Medicaid eligibility. Read about the Medicaid Asset Protection Trust.
- Transfer a Percentage of Your Home. Another possibility is transferring a percentage of your home to a trusted loved one, retaining a life estate for yourself. After five years, the transfer will be exempt when Medicaid evaluates your eligibility for long-term care benefits.
- Take Out A Home Equity Loan. A traditional home equity loan or line of credit (HELOC) will decrease the equity you have in your home.
- Transfer Your Home To Your Spouse Or Other Qualifying Dependent. If you have a spouse, a child under 21, or a blind or disabled of any age living in the home, the equity cap does not apply.
- Meet With Your Elder Law Attorney To Discuss All The Options. There are a variety of other legal tools that may help reduce your countable home equity. Consult your elder law/estate planning attorney. Because of lookback rules, you should not delay your planning. Call The Karp Law Firm for assistance at 561-625-1100.
