Your Florida Home Is Worth Far More Than the Medicaid Equity Limit. Is Medicaid Off the Table?

Gordon and Elaine's Situation

Gordon and Elaine are a composite couple I use to illustrate a scenario I see often along Florida's coast, not actual clients. They are 82 and 80, living in a paid-off riverfront home in Ponce Inlet worth about $1.4 million, with modest savings behind it. When Gordon's health declined and a nursing home began to look likely, their daughter did what a lot of adult children do: she looked up Florida's Medicaid home equity limit, saw a number far below $1.4 million, and assumed the house had taken them out of the running entirely.

That assumption is the single most common misunderstanding I run into in this practice. The equity limit is real, but it is narrower than most families think, and it has a major exception built right into it for married couples. Gordon and Elaine's home was never automatically disqualifying. What mattered was figuring out which rule actually applied to them.

What the Home Equity Limit Actually Is

Florida Medicaid, like every state program, exempts an applicant's primary residence from the countable asset test up to a certain amount of equity. Equity is the home's current market value minus any mortgage or other debt secured against it. Below that threshold, the house simply does not count against the asset limit, regardless of what it is worth on paper. Above it, the excess equity becomes a problem for eligibility.

This equity cap adjusts periodically, and the number that applies depends on the year the application is filed. Because these figures change, I always tell families to confirm the current threshold with a Florida elder law attorney or the Department of Children and Families rather than relying on a number from an old article or a neighbor's experience. What stays constant is the concept: it is equity above a cap that causes a problem, not the home's sticker price.

When the Equity Limit Does Not Apply at All

This is the part of the law that changed everything for Gordon and Elaine. When the Medicaid applicant is married and the other spouse continues living in the home, Florida treats the residence as exempt regardless of its value. There is no equity ceiling to worry about in that situation. The same full exemption applies if a child under 21, or a blind or permanently disabled child of any age, lives in the home.

Because Elaine intended to remain in their Ponce Inlet home while Gordon received nursing home care, the $1.4 million value was never actually at issue for his eligibility. The home's worth becomes relevant only when there is no spouse, minor child, or disabled child residing there, or when the well spouse later moves out or passes away and the home no longer has that protection.

• Spouse remains in the home: no equity limit applies, no matter the home's value.
• Minor or disabled child remains in the home: same full exemption.
• No qualifying resident, applicant is single or widowed: equity above the current cap becomes countable.

It is also worth remembering that even a single applicant who intends to return home after a nursing home stay generally keeps the home exempt for that period, since Florida only requires a stated intent to return, not proof that it is realistic.

If the Exception Doesn't Apply: Legitimate Ways to Reduce Countable Equity

Not every family is in Gordon and Elaine's position. A widowed parent living alone in a valuable home, or a couple where the community spouse has already passed, may face the equity cap directly. In those situations, Florida families have a few legitimate strategies worth discussing with an elder law attorney:

• Home equity line of credit (HELOC): Drawing against the home's equity reduces the countable equity figure, since equity is calculated after subtracting secured debt. The cash drawn must then be used or spent in a way that does not simply recreate a countable asset, such as paying for a properly structured caregiver agreement, funeral planning, home modifications, or other exempt purposes.
• Reverse mortgage: Similar in concept to a HELOC. It converts home equity into debt against the property, lowering countable equity, and the proceeds need a plan for exempt or spend-down use.
• Downsizing: Selling a high-value home and purchasing a more modest residence can bring equity within range, though timing and reinvestment of proceeds require careful handling to avoid creating a new countable asset in the interim.

Each of these tools involves real trade-offs, including interest costs, loan terms, and the practical question of whether the family wants to keep the home at all. None of them should be attempted without professional guidance, because a poorly timed transaction can create the very asset problem the family is trying to avoid.

The Lady Bird Deed and Estate Recovery on a Valuable Home

Whether or not the equity limit ever comes into play during life, families with a high-value homestead are usually just as focused on what happens after a Medicaid recipient passes away. Florida's Medicaid estate recovery program can seek reimbursement from a deceased recipient's probate estate, and a $1.4 million home left through a will or through intestacy could pass through probate and be exposed to that claim.

An enhanced life estate deed, commonly called a lady bird deed, is one of the tools Florida elder law attorneys use to address this. Because the property passes directly to named beneficiaries outside of probate, it generally falls outside the reach of Florida's estate recovery claim, which is limited to probate assets. Florida's homestead protections under the state constitution also limit which creditors can reach the home at all during the owner's lifetime, and Medicaid estate recovery is not one of those permitted creditors during life. A hardship waiver may also be available in some cases if recovery would leave an heir who lives in the home homeless or without adequate means.

What Gordon and Elaine Chose

For Gordon and Elaine, the analysis turned out to be simpler than their daughter first feared. Because Elaine intended to keep living in the Ponce Inlet home, the $1.4 million value did not disqualify Gordon from Medicaid coverage for his nursing home care. The couple's attorney also recommended putting a lady bird deed in place naming their children as beneficiaries, so that whenever the second spouse passes, the home transfers directly without going through probate and without exposure to estate recovery.

Their plan did not require a HELOC, a reverse mortgage, or selling the family home, because the spousal exception did the heavy lifting. That will not be true for every family. A widowed parent in a similar house, with no spouse or dependent child living there, would need to look seriously at the equity-reduction strategies described above. The lesson from Gordon and Elaine's situation is less about the specific tools used and more about not assuming the worst before someone actually runs the numbers.

Sources

• Elder Needs Law, "Important Changes to Florida Medicaid in 2026: What You Need to Know," January 23, 2026
• Alper Law, "Florida Homestead and Medicaid Eligibility, Estate Recovery, and Planning," April 21, 2026
• Medicaid Planning Assistance, "When is a Home Exempt from Medicaid's Asset Limit?," August 11, 2026
• Shalloway & Shalloway, P.A., "Can I Get A HELOC & Still Get Medicaid," May 31, 2025
• Elder Needs Law, "Your Home is Worth $800K, Can You Still Qualify for Medicaid in Florida?," March 25, 2026
• CNY Elder Law / R.F. Meyer & Associates, "New Law Caps Home Equity for Medicaid Long-Term Care," 2026

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.