Medicaid Myths That Could Cost You

When you or a loved one faces long-term care, navigating the world of Medicaid can feel overwhelming. It’s important to remember that incorrect assumptions can lead to costly mistakes. 

At Carr Law Group, we frequently encounter clients who were relying on common myths rather than accurate planning. Let’s clear up those myths, especially in light of the latest eligibility rules in Florida, so you can protect your assets and ensure quality care.

Myth #1 — “If I give money away now, I’ll qualify for Medicaid later.”

Many believe that simply gifting assets to children or transferring property right before needing care will make them eligible for Medicaid. That’s not true. Florida enforces a five-year look-back period (60 months) for long-term care Medicaid applications. Transfers or gifts made within that window can trigger a transfer penalty, delaying your eligibility.

For example, an uncompensated transfer of $100,000 would be divided by the state’s 2025 monthly gift divisor of $12,250.01, resulting in a penalty period of roughly 8.2 months of ineligibility.

The takeaway: Gifting must be done thoughtfully, and ideally more than five years before any potential need for institutional care.

Myth #2 — “If the asset limit is $2,000, I’ll lose everything.”

It’s often believed that because the countable-asset limit for a single applicant in Florida is $2,000 (for nursing home Medicaid) they must spend down or lose most of their savings. While the $2,000 countable asset threshold is very real, it doesn’t mean you must lose everything.

Also, other resources protect you:

• Your principal residence may be exempt (if certain conditions are met, e.g., a spouse still lives there or you intend to return) even if the equity is substantial.
  
• Prepaid funeral plans, one vehicle, and household goods often remain exempt.

The takeaway: The asset rule is stringent, but there are legal planning tools to preserve more than you might think.

Myth #3 — “Income doesn’t matter — only assets do.”

Some mistakenly assume only how much you own matters. In fact, for Florida’s 2025 long-term care Medicaid rules, income also matters. For a single applicant, the income cap is approximately $2,901 per month. For married couples with one spouse applying, the non-applicant spouse’s income is generally disregarded, but the applicant still must meet the income threshold. Also, a “Community Spouse Resource Allowance” (CSRA) allows the non-applicant spouse to keep up to ~$157,920 of countable assets in 2025.
The takeaway: Both asset and income tests apply — so planning must address both.

Myth #4 — “Setting up an irrevocable trust now means I’m safe from Medicaid turnaround.”

Irrevocable trusts can be powerful tools, but they’re not magic passes for Medicaid eligibility. In Florida, when you fund an irrevocable trust, each asset transfer triggers its own five-year look-back clock. If you scatter transfers over different dates, you could end up with overlapping look-back periods, increasing your risk.

The takeaway: For trusts to work effectively for Medicaid planning, timing and structure are crucial.

Myth #5 — “Only my children’s future is threatened; Medicaid doesn’t recover from my estate.”

Some believe that once they qualify, Medicaid won’t touch their remaining assets after death. However, Florida law allows Medicaid to carry out estate recovery, meaning the program may seek reimbursement from the beneficiary’s estate for long-term care services paid.
The takeaway: Planning early can help protect your home and legacy from inadvertent recovery claims.

What Smart Planning Looks Like

• ✅ Start early: Waiting until care is imminent severely restricts your options.
  
• ✅ Use trusted advice: Medicaid, elder-law and asset-protection planning intersect.
  
• ✅ Combine tools: Trusts, spousal sharing, exempt asset designations, and proper timing all play roles.
  
• ✅ Review your plan regularly: Eligibility limits and rules change (for example, CSRA increased to ~$157,920 in 2025).
  

At Carr Law Group, our goal is to guide you through these complexities, so a myth doesn’t become a costly mistake. If you or a loved one is concerned about long-term care, asset preservation or Medicaid eligibility, reach out for a consultation. We’ll help you safeguard your future, your care and your legacy.

☎️ Get in touch to see how we can help today: (727) 894-7000