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Asset protection strategies for Medicaid: what you need to know

On Behalf of | May 31, 2024 | Estate Planning

Navigating the complexities of Medicaid qualification while preserving your assets can be challenging. It’s important for Florida residents to fully understand what their options are so they can get the benefits they need in the future.

Understanding Medicaid asset rules

Medicaid is a needs-based program with strict asset limits. To qualify, your countable assets must fall below specific criteria, but not all assets are equal under Medicaid rules. Countable assets include cash, stocks, bonds, and real estate other than your primary residence. Non-countable assets include your primary residence (with equity limits), personal belongings, one vehicle, and prepaid funeral plans.

Establishing Medicaid trusts

Medicaid trusts are powerful tools for asset protection. There are two main types: irrevocable trusts and income-only trusts. Irrevocable trusts are the most effective for Medicaid planning. Once assets are being put into an irrevocable trust, they are no longer considered part of your estate. However, you cannot change or dissolve the trust, and you lose direct control over the assets.

These trusts allow you to receive income generated by the trust’s assets but not access the principal. This can help maintain some level of financial support while protecting the principal from Medicaid’s reach.

Converting assets to non-countable forms

Reallocating countable assets into non-countable ones is another effective strategy. For example, you can invest in your primary residence by making necessary repairs or renovations. This turns countable cash into non-countable equity in your home. Purchasing exempt assets such as a vehicle or other personal property can also help protect your wealth.


Annuities can be a viable option for converting countable assets into a stream of income, which can help with Medicaid eligibility. Purchase immediate annuities with a lump sum and then pay out regular income. The terms must comply with Medicaid guidelines to be non-countable.

Spousal refusal

In Florida, spousal refusal is a legal strategy where the non-applicant spouse (community spouse) can refuse to use their income or assets to pay for the applicant spouse’s care, allowing the applicant to qualify for Medicaid while preserving the couple’s combined wealth.

Plan ahead and protect your assets

Medicaid has a five-year look-back period, scrutinizing any transfers made during this time. Transfers made within this period can result in penalties, thus delaying Medicaid eligibility. Protecting your assets while qualifying for Medicaid requires strategic planning and a deep understanding of legal tools and Florida regulations.

Protecting your retirement

When you’re putting together your estate plan, it’s important to ensure that you have a plan for the future. Protect your assets and ensure that you fully understand what you need to do to be eligible for Medicaid.