What Top Estate Planning Attorneys Get Wrong About Medicaid Planning

Common Mistakes Estate Planning Lawyer Make About Medicaid Planning in Florida

Unfortunately, misconceptions about Medicaid planning often lead to confusion and missed opportunities to provide clients with proper guidance. We work with a number of estate planning attorneys throughout Florida. Below, we’ll address some of the most common fallacies surrounding Medicaid planning and clarify some of the most common myths I hear perpetuated by well-meaning estate planning lawyers. I hope this article helps you and your clients make more well-informed decisions.

If you prefer to watch - the embedded video is 7-minutes long. Don't have that kind of time? Here is a link to 1-minute condensed version: Top 5 Medicaid Planning Myths that Estate Planning Lawyers Get Wrong #estateplanning #medicaid-myths

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1. Medicaid Planning is Only About Nursing Home Care

Many believe that Medicaid only covers nursing home care. While Medicaid does indeed help cover the high costs of nursing homes—which can range from $12,000 to $14,000 per month—that’s not the full picture.

Medicaid in Florida also provides coverage for:

• Assisted Living Facilities (ALFs): Participating facilities can receive Medicaid funding to help cover the cost of care. While high-end luxury ALFs may not accept Medicaid, many excellent facilities do.
• Home Care: Medicaid can pay for care provided at home, allowing individuals to remain in a familiar environment. In fact, Medicaid recipients can hire anyone they choose, including family members, to provide this care (or bring in care from a home healthcare agency)

2. Medicaid Recipients Only Qualify for Low-Quality Care

Certainly, many need Medicaid's help to pay for nursing home care. Some worry that being on Medicaid limits them to low-quality nursing homes. This is a myth. In Florida, any nursing home that accepts Medicare must also accept Medicaid. This means some of the best nursing homes in the state accept Medicaid, and being on Medicaid doesn’t diminish the quality of care received in a nursing home.

3. Medicaid Planning is Just About Spending Down Assets

Another common misconception is that Medicaid planning simply involves "spending down" all assets until a person qualifies. While that is one option, it’s far from the only approach. Medicaid planning, when done strategically, focuses on ethically protecting assets while achieving eligibility to get help paying for care at home or in a facility.

For example, through legal and ethical strategies, it’s possible to protect assets without depleting them entirely. These strategies are especially useful for middle-class families who don’t want to lose everything to qualify for Medicaid.

Medicaid Planning is Only for the Indigent

A corollary mistake many Florida estate planning attorneys make is thinking that Medicaid planning is only for the poor. Not true.

Medicaid does have strict income and asset rules to pay one must abide by to get help paying for care at home or in a facility. But Medicaid planning is designed to provide strategies to middle-class individuals who may own their home and have hundreds of thousands of dollars in addition. Medicaid planning, when done right, allows for Medicaid eligibility before becoming indigent. The strategies all utilize state and federal laws. Nothing is hidden from the government. Funds are not simply transferred to children (because that would result in a penalty if done within five years of applying for Medicaid long-term care benefits).

4. The Five-Year Look-Back Period is Insurmountable

We often hear the erroneous advice "you can't do anything with your money or assets for the next five years..." or words to that effect. Yes, Medicaid has a five-year look-back period to identify gifts or transfers that may disqualify someone from benefits. However, this doesn’t mean individuals must wait five years to qualify. There are strategies that allow immediate eligibility without triggering penalties. Proper Medicaid planning can often help clients with substantial assets qualify for benefits within a few months.

For those who can plan in advance, tools like irrevocable Medicaid asset protection trusts may be used to safeguard assets while waiting out the five-year look-back period.

However, most of our clients cannot wait five years. Most of our clients are looking for Medicaid immediately, and we can tailor strategies to address these urgent needs and get them help paying for care without first running out of funds.

5. Medicaid Will Take the House

In Florida, Medicaid cannot take a person’s homestead property due to the state’s strong Homestead protections. Additionally:

• A proper homestead is exempt from Medicaid estate recovery - even if a probate is needed.
• Other assets, if non-countable assets such as an IRA, which bypass probate—such as those placed in a trust or transferred via beneficiary designations—are not subject to Medicaid estate recovery.

By integrating estate planning techniques, such as avoiding probate, Medicaid recovery can often be minimized or even eliminated. In this way, you the estate planning attorney, can help minimize the Medicaid estate recovery process. In fact, when an estate planning attorney refers a Medicaid-planning client to our firm, we are careful to refer back any estate planning work (we always respect the referral source).

6. Medicaid Recovery Will Ask for the Repayment from All Assets After the Medicaid Recipient Passes Away

While Medicaid estate recovery exists, it only applies to probated assets. By using strategic planning, families can retain significant wealth. Tools such as irrevocable trusts (if there is a five-year time horizon) or beneficiary designations can keep assets out of probate and, therefore, out of reach of Medicaid estate recovery. In cases where recovery is unavoidable, other strategies can help reduce its impact.

Why Medicaid Planning Matters

Medicaid planning is about stretching resources further, improving quality of life, and ensuring that families don’t needlessly lose everything to pay for care (as a byproduct it also makes it more likely that there will be something to pass onto heirs). For estate planning attorneys in Florida, understanding these strategies is critical to providing accurate advice and avoiding the spread of misinformation.

If you’re an estate planning attorney and want to explore how Medicaid planning can benefit your clients, I’d be happy to help. Together, we can ensure Floridians receive the accurate guidance they deserve.

For more information or to discuss your clients' Medicaid planning needs, feel free to contact us. If you found this article helpful, please share it with your colleagues or clients to help dispel these common myths.

Let’s work together to spread good information and help Florida families navigate Medicaid planning effectively.

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