Savings Bonds and Florida Medicaid: Series EE, Series I, and the Shoebox in the Closet

Mildred's Shoebox: A Common Discovery

When Mildred's daughter started gathering paperwork for a Florida Medicaid application, she found a shoebox tucked in the back of her mother's closet in St. Augustine. Inside were paper Series EE savings bonds going back to the 1980s, bought a few at a time over the decades, plus a printout showing some Series I bonds her late husband had purchased electronically through TreasuryDirect before he passed. Mildred is 91 now and needs nursing home care. Her daughter had no idea what any of it was worth or whether it would knock her mother off Medicaid eligibility before they even applied.

Mildred is a composite example, not an actual Truestead client, but her situation is one I see often enough that it deserves its own explanation. Families frequently discover old bonds only when they start preparing an application, and the questions are always the same: do these count, what are they worth today, and how do we even turn them into cash.

This article assumes you already understand the basic Florida Medicaid asset limit and the concept of spend-down, which Truestead covers elsewhere. Here we stay narrowly focused on bonds themselves.

Do Savings Bonds Count as a Medicaid Asset?

Yes. Whether they are paper Series EE bonds from decades ago or electronic Series I bonds held in a TreasuryDirect account, savings bonds are a countable resource for Florida Medicaid purposes, just like a bank account, a brokerage account, or a certificate of deposit. The Department of Children and Families, which administers Medicaid eligibility through its ACCESS system, does not care what the bond looked like on the day it was purchased. What matters is its current redemption value on the date eligibility is being determined.

This is the detail that surprises families the most. A bond purchased for twenty-five dollars in 1985 is not worth twenty-five dollars today. Series EE bonds accrue interest over time, and that accrued interest increases the redemption value every month the bond is held. A box of old bonds that looks modest on its face can easily represent several thousand dollars in current value once decades of accrued interest are added in.

Because Florida's countable asset limit for an individual Medicaid applicant is a relatively small, fixed number, a shoebox of old bonds can be the single item that pushes someone from eligible to over the limit, even though the family never thought of the bonds as part of Mom's accessible savings.

Figuring Out What the Bonds Are Actually Worth

Before anything can be redeemed or counted accurately, the bonds need to be valued. For paper Series EE bonds, the Treasury provides tools and tables to calculate current redemption value based on the issue date and denomination printed on the face of each bond. For Mildred's family, this meant going through the shoebox bond by bond, noting the issue date on each one, and running the current value.

For electronic Series I bonds held in a TreasuryDirect account, like the ones Mildred's late husband purchased, the current value is simply visible by logging into the account online. If the account owner has passed away, the surviving co-owner or a properly authorized representative can typically access the account to view holdings, though actually redeeming electronic bonds involves its own process.

• Paper Series EE bonds: value calculated from issue date and face denomination using Treasury tables
• Electronic Series I bonds: current value visible directly in the TreasuryDirect account
• All accrued interest to date is included in the redemption value, not just the original purchase price

This valuation step has to happen regardless of whether the family intends to redeem the bonds right away or simply needs to disclose their value accurately on the Medicaid application.

Co-Ownership: Whose Asset Is It, Really?

Many older savings bonds were registered with a co-owner, often a spouse, exactly as Mildred's were with her late husband. Co-ownership matters in two distinct ways for Medicaid purposes.

First, when one co-owner on a bond dies, the surviving co-owner typically becomes the sole owner by operation of the bond's registration, similar to how a jointly titled bank account passes to the survivor. For Mildred, this meant the bonds her husband originally bought in both of their names, or in his name with her as co-owner or beneficiary, generally became hers outright after he passed.

Second, and this is the part families often don't expect, a bond that is co-owned by the Medicaid applicant and someone else is generally counted at its full redemption value as the applicant's asset, not divided in half or apportioned by whoever actually contributed the money to buy it. If Mildred were co-owner on a bond with one of her adult children, the full value of that bond would likely be attributed to Mildred for Medicaid purposes, regardless of who originally paid for it. This mirrors how Florida Medicaid treats most jointly held accounts and is a detail worth confirming with an elder law attorney when a bond's registration is unclear or involves someone other than a spouse.

How Mildred's Family Actually Redeemed the Bonds

Redeeming old paper bonds is not quite as simple as walking into a bank, especially once someone is relying on a power of attorney to act on the owner's behalf. Many banks will not allow an agent under a general power of attorney to cash paper savings bonds, even when that same power of attorney works fine for ordinary bank accounts.

For Mildred's family, the practical path for the paper bonds was to work directly with the Treasury Department. Paper bonds can be submitted for redemption by mail, along with the appropriate Treasury form and the physical bonds themselves, sent to the Treasury's retail securities processing operation. When an agent is redeeming bonds under a power of attorney, Treasury has its own specific power of attorney form for securities and savings bonds transactions, separate from a general Florida power of attorney document, and it is worth confirming which form a given bank or the Treasury will actually accept before bonds are mailed off or presented.

For the electronic Series I bonds in the TreasuryDirect account, redemption happened online directly through the account, which was more straightforward once the family confirmed who had legal authority to act on it.

The Tax Bill Hiding Inside the Redemption

Here is the piece that catches families off guard even after the Medicaid asset question is settled: redeeming a savings bond is a taxable event. All of the interest that accrued over the life of the bond, sometimes decades of it, becomes taxable income in the year the bond is actually cashed in, not spread out over all the years it was quietly accruing.

For Mildred, this meant that redeeming a stack of bonds bought in the 1980s and 1990s could generate a meaningful amount of reportable interest income in a single tax year, even though she never received a dime of that interest until the moment of redemption. This is worth planning around, particularly if someone is also managing a Qualified Income Trust or working through Florida's income cap for the same Medicaid period, since a large redemption can temporarily spike reportable income in the month of cashing even though it does not create an ongoing income stream.

Sequencing matters here. Mildred's family worked with us to time redemptions across the application process so that the family understood which tax year would absorb the interest, and so that proceeds earmarked for spend-down on exempt purposes, such as prepaid funeral arrangements or home repairs, were redeemed and spent in a coordinated way rather than all at once with no plan for where the cash would go.

Where This Leaves a Family Mid-Application

If bonds are discovered after a Medicaid application is already filed, or while a redetermination is pending with the Department of Children and Families, it is important to disclose them accurately rather than hope they go unnoticed. ACCESS caseworkers and the CARES unit at the Department of Elder Affairs, which handles the medical and functional eligibility side of long-term care Medicaid, both rely on accurate asset disclosures, and undisclosed resources discovered later can complicate or unwind an approval.

If a family disagrees with how DCF has valued or counted a bond, Florida's Office of Appeal Hearings provides a formal process to contest that determination. And for families still assembling records or trying to understand what local long-term care resources and waiver programs are available, the Aging and Disability Resource Centers are a useful starting point, separate from the Medicaid eligibility process itself.

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.