Key Takeaways

• Nursing home care in Florida now costs $9,000–$13,000 per month — and neither Medicare nor private health insurance covers long-term stays. Medicaid is the primary safety net, but qualifying requires careful planning.
• Florida Medicaid has a three-part eligibility test covering health, income (under $2,982/month gross), and assets (under $2,000 in countable assets) — but key exemptions exist, including your home and retirement accounts.
• The five-year lookback period means Medicaid reviews every gift or transfer you made in the five years before you apply. Informal transfers to children — even with promises to return the money — almost always backfire.
• Irrevocable trusts, properly structured as grantor trusts, are the gold standard for Medicaid pre-planning — protecting assets, preserving income, and minimizing tax consequences.
• Families who plan five or more years in advance sail through the Medicaid process. Families in crisis still have options — but fewer of them, and the stakes are much higher.

Most families don’t think seriously about nursing home costs until they’re already in one. By then, the financial reality hits hard: thousands of dollars a month draining out of savings, a loved one who needs care, and a spouse at home wondering how they’re going to survive.

Stephen Lacey of Lacey Rezanka Attorneys at Law has spent decades helping Florida families navigate exactly this situation. As an estate planning, elder law, probate, and real estate attorney — and one of the few practitioners in Central Florida with a master’s degree in taxation whose practice encompasses the key areas that intersect in Medicaid planning  — he has seen every version of this story. His firm serves families throughout Brevard County, Indian River County, and Palm Beach County, including communities like Titusville, Rockledge, Viera, Melbourne, Suntree, Palm Bay, Malabar, Merritt Island, Cape Canaveral, Cocoa Beach, Satellite Beach, Indian Harbor Beach, Indialantic, Melbourne Beach, and beyond.

In this episode of Legacy Liftoff, Stephen Lacey walks through what Medicaid planning in Florida actually looks like — from the eligibility rules and the lookback period, to the legal strategies that work, and the critical difference between planning ahead and scrambling in a crisis.

The Real Cost of Nursing Home Care — And Why Most People Aren’t Ready

When families finally sit down to talk about nursing home costs, the numbers are almost always a shock.

Stephen Lacey: “Most people put it off. They think it’s not going to happen to them. They say, ‘I’m just going to stay home.’ And then it hits them, and it’s quite eye-opening.”

Nursing home care on Florida’s Space Coast now runs approximately $9,000 to $13,000 per month — up from $5,000 to $7,000 just five to ten years ago. And those costs aren’t likely to come down. With Brevard County’s population of adults 65 and older sitting at roughly 25% — higher than Florida’s average and significantly above the national figure — demand for skilled nursing facilities is growing. Alzheimer’s and dementia are the fastest-growing disease categories in the country, and as people live longer, nursing home stays are getting longer too.

Even families with substantial assets can be caught off guard. Stephen Lacey describes a client whose spouse entered a nursing home while they had over a million dollars in investable assets. It didn’t take long for those assets to be nearly depleted before they came in seeking help. A million dollars sounds like a lot — until you’re paying $12,000 a month.

What Medicare and Health Insurance Actually Cover

One of the most persistent misconceptions families carry into these conversations is that Medicare or private health insurance will cover long-term nursing home costs. It won’t.

Medicare may cover up to 100 days of rehabilitation after a qualifying hospital stay — a fall that leads to a hospital admission, for example. After that, coverage ends. Private health insurance and TRICARE, which serves many of the military families and retirees on the Space Coast, cover medical care — not custodial nursing home care.

The gap between what people assume is covered and what they actually owe is often the entire bill. That’s where Medicaid planning becomes essential — not as a last resort for people with nothing, but as a legitimate financial strategy for ordinary Florida families who have worked hard and want to protect what they’ve built.

Florida Medicaid Eligibility: The Three-Part Test

Qualifying for Florida Medicaid nursing home benefits requires meeting three separate tests. Understanding each one is the foundation of any Medicaid planning conversation.

The health test simply requires that the applicant needs a nursing home level of care. In practice, this is almost never a barrier — people in nursing facilities are there for a reason.

The income test requires that the applicant’s gross income be below $2,982 per month. The emphasis on gross is important: Medicare deductions don’t reduce this figure. Income includes Social Security, pensions, dividends, and required minimum distributions (RMDs) from retirement accounts. For clients whose income exceeds this cap, there is a solution called a Qualified Income Trust — sometimes called a Miller Trust — a single-purpose tool that channels income through the trust and out for the applicant’s care. It exists solely to solve the income test problem, and it is not something families should attempt to set up on their own.

The asset test limits the applicant to $2,000 in countable assets. But the list of exempt assets — those that don’t count toward the $2,000 — is significant:

• The Florida homestead (primary residence)
• Retirement accounts such as IRAs and 401(k)s (though RMDs count as income)
• Rental property in some circumstances
• Property jointly owned with others in some circumstances

And critically: the community spouse — the husband or wife who is not in the nursing home — can retain up to $162,600 in assets (not counting exempt assets), plus unlimited income. This is a point that surprises many families who assume they will need to spend down everything.

The Five-Year Lookback Period: Florida’s Most Misunderstood Medicaid Rule

The lookback period is where the most expensive — and most avoidable — Medicaid planning mistakes happen.

When a Medicaid application is filed, Florida is permitted to review the applicant’s financial history for the five years prior to that date. Any transfer made for less than fair market value during that window is treated as a gift and triggers a penalty period during which Medicaid will not pay — even if the applicant is otherwise fully eligible.

What counts as a gift? Selling a car to a family member below its actual market value. Cash transfers to children. Tithing to a church. Any transfer for which the applicant did not receive equal value in return. Paying a contractor to paint the house, by contrast, is not a gift — that’s a legitimate exchange of money for services.

The penalty is calculated by totaling all gifts made during the lookback period and dividing by Florida’s current penalty divisor of $10,645. That number equals the months Medicaid will not pay.

Stephen Lacey: “If you gave a gift fifty-two months ago, it’s often cheaper to pay for eight months and then apply once you’re past that period, rather than triggering a ten-month penalty.”

This is why the timing of the application matters as much as eligibility itself — and why working with an experienced elder law attorney isn’t optional.

The most common version of this mistake: a parent transfers $150,000 to an adult child informally, with an understanding that the child will return it if needed. When the nursing home need arrives and Stephen Lacey calls the son, the answer is almost always the same — braces, air conditioning, a boat. The money is gone, Medicaid won’t pay due to the penalty period, and the family has no way out.

Legal Strategies That Work: Protecting Assets Even in a Crisis

When families arrive without advance planning and a nursing home stay is imminent, there are still legitimate tools available. These are not workarounds or loopholes — they are recognized legal strategies under Florida and federal Medicaid law.

Personal service contracts formalize the caregiving a family member is already providing. A written agreement establishes a payment amount based on a formula: reasonable hours times a reasonable hourly rate times the applicant’s life expectancy. The payment converts a non-exempt asset into a legitimate expense. The downside: the payment is income to the caregiver, meaning roughly 25% is lost to taxes.

Converting non-exempt assets to exempt assets involves repositioning cash or investment accounts into categories Medicaid doesn’t count. Purchasing rental property is one approach — the property becomes exempt as an asset, though rental income counts toward the income test. Paying down a homestead mortgage is another option even when a creditor exists, because the law does not dictate which creditors must be paid first. Purchasing a primary residence or other exempt property may also be appropriate depending on the situation.

Spouse refusal is a Florida-specific strategy where the community spouse formally refuses to provide financial support for the institutionalized spouse and assumes all marital assets for their own support. The well spouse signs documentation affirming they will not contribute financially to the nursing home costs. Income cannot be shifted this way — only assets. The key question is whether those assets are sufficient to sustain the community spouse without the other’s income stream. When it works, it’s a powerful tool.

The Role of Florida Homestead in Medicaid Planning

The homestead is an exempt asset for Medicaid purposes — it doesn’t count against the $2,000 limit. But there’s a detail Medicaid doesn’t advertise: once an applicant is in a nursing home, their income cannot be used toward the home’s expenses — taxes, insurance, or maintenance.

The recommended solution is to transfer the homestead into an irrevocable trust well before the need arises. Counterintuitively, this actually gives families more flexibility, not less. The grantor retains the right to live there. The homestead tax exemption is preserved. And when a nursing home stay eventually becomes necessary, the family can use trust assets to maintain the home or — because title is already held by the trust — sell the property without probate complications. The five-year lookback clock also starts earlier, opening more options at the time of greatest need.

Irrevocable Trusts: The Gold Standard of Medicaid Pre-Planning

Stephen Lacey began using irrevocable trusts for Medicaid planning around 2008 and 2009, when it became clear that crisis-only planning left too many families with too few options. He believes his firm was among the first in Brevard County to deploy this approach — and it has since become a standard pre-planning tool.

The mechanics matter. These trusts must be structured as grantor trusts, which ensures that beneficiaries receive a step-up in cost basis when the client passes away — eliminating accumulated capital gains and minimizing income tax consequences. A non-grantor trust would lock in taxable gains on appreciated assets, a significant and avoidable error.

The income switch is another important feature. Dividend-paying stocks or other income-producing assets can be transferred into the trust while the client continues receiving that income. Social Security and pension income continue flowing to the client as well. The trust is designed for people in protection mode, not those still in the wealth-building phase.

Ideally, the trust is funded at least five years before nursing home care is needed. But health is unpredictable — Stephen Lacey has had clients whose last rites were called while still in the planning process, only to live another year and a half, and others who seemed healthy and passed within a month. Well-designed irrevocable trusts include built-in flexibility: trap doors that allow the plan to be unwound if circumstances change, and a math-based framework for deciding whether to wait out a remaining penalty period or undo the trust and pivot to crisis planning.

Stephen Lacey: “The irrevocable trust gives us our best shot at maximizing protection with minimal tax consequences.”

For families with assets under approximately $3 million — the rough threshold at which self-funding nursing home care becomes financially viable — and who are in their mid-60s to 80s, the irrevocable trust is one of the most powerful protecting assets strategies available.

Planning Ahead vs. Crisis Planning: A Tale of Two Families

Stephen Lacey describes two very different experiences for the families who walk through his door.

The family that arrives in crisis — with a loved one already in a facility and no advance planning — comes in defeated. The emotional weight of placing a family member in a nursing home is already enormous. Adding the reality of $12,000 or $13,000 per month against a $2,500 monthly income makes it feel insurmountable. But there are still options. When Stephen Lacey is able to show them a path to protecting assets or reducing that financial burden, the reaction is visceral: a visible, audible sigh of relief.

The family that planned ahead tells a different story. Seven years after funding an irrevocable trust, the nursing home need arrives. The lookback period has passed. The Medicaid application is straightforward. The family is at peace — not scrambling. The surviving spouse can continue living without financial disruption.

It’s never too late to do something — unless every asset has already been spent down. Before that point, there is almost always a path forward.

What to Do Right Now If Time Is Running Out

For families watching a parent or spouse decline and wondering if they’ve already waited too long, the most important step is to act immediately and arrive prepared. Before the first call or meeting, gather:

• The Social Security statement (to establish gross income)
• All bank and investment account statements
• A complete list of assets and how they’re titled
• A copy of any existing power of attorney
• A list of current creditors and monthly obligations

With that information, an experienced Medicaid planning attorney can quickly assess what options remain and build a roadmap forward.

Don’t Wait Until It’s a Crisis

If your family is facing nursing home costs, wondering whether Medicaid is an option, or simply trying to protect what you’ve spent a lifetime building, the team at Lacey Rezanka Attorneys at Law is ready to help. With a dedicated Medicaid planning practice, deep expertise in estate planning, elder law, tax law, and real estate, they bring a range of disciplines that most Medicaid attorneys simply can’t match.

Families throughout Titusville, Rockledge, Viera, Melbourne, Suntree, Palm Bay, Malabar, Merritt Island, Cape Canaveral, Cocoa Beach, Satellite Beach, Indian Harbor Beach, Indialantic, Melbourne Beach, and across Brevard County, Indian River County, and Palm Beach County trust Lacey Rezanka to show them where they stand — and what options are still on the table.

Call (321) 608-0890 or schedule your consultation at llr.law/contact.

One conversation can change everything. You shouldn’t have to lose what you’ve built just because no one told you there was another way.