Spend-down means reducing countable assets to the level Florida’s long-term care Medicaid program allows, and for a single applicant that limit is $2,000 in countable resources. Long-term care Medicaid in Florida is delivered through Statewide Medicaid Managed Care Long-Term Care (SMMC LTC), and eligibility requires clearing both a clinical level-of-care test and this financial test.
This page is written for families in Miami-Dade, Broward, and Palm Beach counties, where the applicant pool is unusually large. Roughly 21% of Florida residents are 65 or older, the highest share in the country, and the region’s snowbird and second-home retiree base means many applicants hold assets and insurance contracts originally purchased in other states.
The single most common obstacle in these files is not the house and not the car. It is an old life insurance policy the family assumed was irrelevant.
In This Article
The $2,000 Limit and What Counts Toward It
Florida measures countable resources against a $2,000 limit for a single applicant. Countable generally means bank accounts, investment accounts, non-homestead real estate, and the cash surrender value of life insurance above the small-policy disregard. Exempt items typically include the homestead within federal equity limits, one vehicle, personal belongings, and properly structured burial arrangements.
South Florida adds a specific complication: out-of-state property. A condo in New York or a lake house in Michigan is not a Florida homestead, and it counts. Snowbird families are frequently surprised by which of their two homes the program is willing to exempt.
Why an Old Policy Blocks the Application
In most states a life insurance policy is disregarded only when the total face value across all policies the applicant owns is $1,500 or less. Above that threshold, the policy’s full cash surrender value becomes a countable resource.
Do the math on a typical Aventura or Boca Raton file. A $250,000 universal life policy issued in 1998 might carry $34,000 of cash value. Against a $2,000 limit, that one line item is the entire reason the application will be denied, and it is often discovered late, after the applicant is already in a facility accruing private-pay charges.
The 60-Month Look-Back
Florida reviews sixty months of financial history for transfers made for less than fair market value. California has historically been the exception to the 60-month standard; verify its 2026 status. Any uncompensated transfer in the window can create a penalty period, calculated from the value given away, during which Medicaid will not pay.
The look-back does not penalize spending. It penalizes giving. Helping a grandchild with tuition is a gift. Paying a licensed contractor to widen doorways in the homestead is spending. Both feel generous to the family; only one costs eligibility.
A Sale Is Not a Gift
Transferring a policy to a child for nothing is the classic look-back mistake. Selling the same policy to a licensed buyer at fair market value is an arm’s-length transaction: the asset leaves and fair value arrives, so there is no uncompensated transfer to penalize.
What proves it is documentation. Keep the settlement contract, the escrow disbursement record, the life expectancy reports, and evidence that the policy was shopped to multiple licensed providers. That package answers the caseworker’s fair-value question before it becomes an argument.
| Asset | Generally countable under SMMC LTC? | Notes for South Florida families |
|---|---|---|
| Florida homestead | Generally exempt | Subject to federal home equity limits; estate recovery may apply later |
| Out-of-state second home | Countable | A common snowbird surprise; only one residence gets homestead treatment |
| One vehicle | Generally exempt | Titling it to a child converts it into a transfer |
| Bank and brokerage accounts | Countable | Measured against the $2,000 single-applicant limit |
| Life insurance, total face over $1,500 | Cash surrender value countable | The most common single obstacle in these files |
| Term life with no cash value | Generally nothing to count | May still be sellable if convertible |
| Irrevocable funeral trust | Generally exempt | Must be genuinely irrevocable and within program limits |
| Settlement proceeds sitting in the bank | Countable cash | Plan the destination before the money arrives |
Spend-Down Options Florida Families Use
Common tools include an irrevocable funeral trust, a prepaid burial contract, home repairs and accessibility modifications to the homestead, purchase of a vehicle, and a written caregiver agreement paying a family member a fair market wage for documented future care. Married couples can also shift assets to the community spouse up to the Community Spouse Resource Allowance.
Florida also has income rules distinct from the asset test, and applicants over the income cap commonly use a qualified income trust, often called a Miller trust. That is a drafting exercise for an elder law attorney, not a form to download.
Sequencing the Sale With the Application
Settlement proceeds are countable cash the day they arrive. If the money lands the month before filing with no plan attached, it pushes the applicant above the $2,000 limit and delays eligibility, which is a self-inflicted wound.
The workable order is: identify every policy, get an independent valuation, decide with counsel exactly where the proceeds are going, then close and execute on a known schedule. A settlement takes roughly 60 to 120 days, which is plenty of runway if started before the crisis.
Surrender Versus Sale, in Dollars
If a policy has to come off the books anyway, the question is only how much it produces on the way out. Surrender pays the carrier’s contractual cash value. A life settlement is a competitive bid, commonly landing between 10% and 35% of the death benefit, with GAO-10-775 finding sellers received roughly four to eight times cash surrender value.
On the hypothetical policy above, the difference between the carrier’s number and a market bid can be six figures. That is months of private-pay care in this market, or a much larger cushion before an application is ever filed.
Filing in the Tri-County Area
Applications for families in Miami-Dade, Broward, and Palm Beach counties are handled through the regional offices serving those counties. Be ready with five years of bank statements, deeds for all real property including out-of-state holdings, retirement and annuity records, burial contracts, and a written statement of cash surrender value from every life insurance carrier.
Request those carrier letters first. They take the longest to arrive and are the most frequent cause of a stalled file. Then get a free policy review before surrendering anything: send the cover page or call (305) 209-7183.
This page is educational only and is not legal, tax, or investment advice. Medicaid limits, insurance statutes, and care costs change; verify every figure with the relevant agency and speak with a licensed Florida elder law attorney or CPA before acting. For a free, no-obligation policy review, send the policy cover page or call (305) 209-7183.
Frequently Asked Questions
What is Florida’s Medicaid asset limit for long-term care?
For a single applicant it is $2,000 in countable resources under Statewide Medicaid Managed Care Long-Term Care. Married couples have separate rules including a Community Spouse Resource Allowance. Verify current 2026 figures with the Department of Children and Families before relying on them.
Does my Florida home count against the limit?
The homestead is generally exempt within federal home equity limits while the applicant or spouse lives there, but estate recovery can reach it later. A second home in another state is a different matter and is generally countable. Discuss both with a Florida elder law attorney.
Why does the $1,500 life insurance figure matter?
In most states the disregard applies only when total face value across all policies is $1,500 or less. Above that, the entire cash surrender value counts as a resource. That is how a policy the family thinks of as a funeral plan can single-handedly exceed a $2,000 limit.
Will selling a policy create a transfer penalty?
It should not, because a sale at fair market value is not an uncompensated transfer. Retain the settlement contract, escrow records, and proof the policy was shopped competitively. Confirm current Department of Children and Families treatment before relying on this in a live application.
What is a Miller trust?
It is a qualified income trust used when an applicant’s income exceeds Florida’s cap for long-term care Medicaid, routing excess income through the trust so eligibility can be established. It must be drafted correctly and funded every month. This is attorney work, not a form.
How long is the look-back in Florida?
Sixty months for transfers made for less than fair market value, matching the federal standard. Expect to produce five years of statements for every account. Penalties calculated from a gift begin when the applicant would otherwise have qualified.
Can we pay a relative to provide care?
Yes, under a written caregiver agreement signed before care is delivered, at a fair market wage, with documented hours and reported income. Informal cash payments to family are routinely recharacterized as gifts and can create a penalty period.
Where do Miami-Fort Lauderdale families apply?
Through the regional offices serving Miami-Dade, Broward, and Palm Beach counties. Gather written cash surrender value statements from every life insurance carrier early, since those documents are the most common cause of a stalled application.
Find out what your policy is worth — free, confidential, no obligation.
A 15-minute educational review covers your eligibility, every alternative, and a realistic view of what each path would net you.
Related Reading
- Cash Surrender Value Life Insurance
- Life Settlement Vs Surrender
- Florida Medicaid Asset Income Limits
- Filial Responsibility Law Florida
- How It Works Policy Options
- Education Center
Pine Lake Life Solutions does not purchase life insurance policies and does not provide legal, tax, or investment advice. Information provided is for educational purposes only. Eligibility for any option, including life settlements, is not guaranteed and depends on individual circumstances, policy terms, underwriting, and market conditions. Consult independent legal, tax, or financial professionals before making decisions regarding a life insurance policy.