CDs and Florida Medicaid: Do They Count, and Should You Break Them?

Stan's Four CDs: A Real Decision, Made Simple

Stan is 84, lives in the Villages area, and is being admitted to a skilled nursing facility in three weeks. (Stan is a composite drawn from situations I see often in my practice, not an actual client.) He has four laddered CDs totaling $90,000 at a local bank, each with a different maturity date. His daughter, who holds his durable power of attorney, called our office asking the question I hear constantly: do these count, and do we need to cash them out now?

The honest answer is that all four CDs count toward Florida's $2,000 asset limit for long-term care Medicaid, regardless of when they mature. A CD maturing in two years is just as countable today as cash in a checking account. The only real planning questions are how much each CD will cost to break early, and what the proceeds from each one should be used to fund.

Here is roughly how Stan's daughter mapped it out with our help:

• CD #1 ($20,000, matures in 2 months, small penalty of a few months' interest): Earmarked to fund Stan's facility costs during the application-processing period, since this is the one closest to maturity and cheapest to touch.
• CD #2 ($25,000, matures in 8 months, moderate penalty): Earmarked for prepaying Stan's funeral and burial arrangements (an exempt purchase) and for necessary home repairs tied to his residence.
• CD #3 ($25,000, matures in 14 months, moderate-to-larger penalty): Targeted for payoff of Stan's outstanding medical bills and a portion of facility costs accrued before Medicaid coverage begins.
• CD #4 ($20,000, matures in 2 years, largest early-withdrawal penalty): Held back initially, since breaking it cost the most in forfeited interest; the plan was to use ordinary monthly care costs to draw this down more gradually if the application timeline allowed.

The table is illustrative, not a formula. Every bank sets its own CD penalty terms, and Stan's daughter had to call his bank directly to get the actual penalty dollar figures before deciding which CD to break first and in what order.

How Does DCF Actually Value a CD?

The Department of Children and Families, through its ACCESS system, evaluates a CD as a countable asset at its current, accessible value, meaning the face value of the certificate as of the relevant date. DCF policy requires verification of when the funds can be withdrawn and what penalty applies for early withdrawal, but this documentation exists mainly to confirm the CD is genuine and to pin down its value, not to give an automatic discount.

In practice, this means DCF generally does not subtract the bank's early-withdrawal penalty from the countable value unless and until the CD is actually redeemed early and the penalty is actually incurred. If Stan's family lets a CD sit untouched, its full face value counts. Once a CD is cashed in before maturity, the penalty reduces the actual dollars that land in the account, and that reduced amount becomes what is available to spend down. The sequence matters: redeeming early converts a countable asset into a smaller pool of countable cash, and only spending that cash on qualifying purchases gets it off the books.

Spending CD Proceeds the Right Way

Cashing in a CD does not, by itself, solve anything. The proceeds still count as cash until they are spent on something Medicaid recognizes as a legitimate reduction of assets. Common, well-accepted uses for CD proceeds in a spend-down include:

• Paying down the applicant's own medical bills, including facility charges incurred before Medicaid coverage starts
• Prepaying funeral and burial expenses through an irrevocable prepaid contract
• Paying off a mortgage, credit card balance, or other legitimate debt
• Necessary repairs or modifications to the applicant's home
• Purchasing an exempt asset, such as a vehicle, within the rules that govern exempt resources

What CD proceeds should not become is a gift to children or grandchildren. Any transfer of CD money for less than fair value, inside the five-year look-back period, can trigger a penalty period of ineligibility, separate from whatever early-withdrawal penalty the bank imposed. Stan's family was careful on this point: every dollar from every CD needed a clear paper trail showing it went to Stan's own care, his own debts, or an exempt purchase, not to anyone else.

CDs in a Spouse's Name, and the POA Problem at the Bank

When one spouse needs care and the other remains in the community, CDs titled solely in the community spouse's name are still counted among the couple's combined assets for the initial eligibility snapshot, the same as any other jointly or separately held countable resource. The community spouse resource allowance can let the healthy spouse retain a portion of those combined assets, but that calculation is its own topic, and Stan's situation did not involve a spouse, since his CDs were held in his name alone.

What Stan's daughter ran into instead was a practical snag many families hit: the bank would not let her redeem a CD on her father's behalf without the right paperwork in hand. Holding a durable power of attorney is necessary, but it is not always sufficient at the teller window. Most banks require their own internal POA certification form, a current original or certified copy of the power of attorney document, and sometimes a notarized bank-specific affidavit before they will release CD funds to an agent. Stan's daughter had to call ahead, confirm exactly which documents the branch wanted, and in one case bring Stan himself into the branch briefly because the bank's policy required in-person verification for an account of that size. Building in time for this step, rather than assuming the POA alone would open the vault, kept the three-week admission deadline from becoming a crisis.

This article is for general informational purposes only and does not constitute legal advice, nor does reading it create an attorney-client relationship. Florida estate, elder, probate, and real estate law are fact-specific and change over time. Consult a licensed Florida attorney about your individual circumstances. Arthur Simpson, Esq. is licensed to practice law in the State of Florida. Attorney advertising.