Financial advisor's guide: when a client needs nursing home care and Florida Medicaid

Florida's Institutional Care Program (ICP) and SMMC Long-Term Care use a monthly income test and an asset test. For 2026, DCF's Appendix A-9 lists an income cap of $2,982 a month, an asset limit of $2,000 for a single applicant, a Community Spouse Resource Allowance (CSRA) of $162,660, a home equity limit of $752,000 and a penalty divisor of $10,645. How each account is titled, whether it is in payout and when money moves can change the result.

DCF's retirement-fund policy (ESS passage 1640.0505.04) defines retirement funds to include employer and union plans, IRAs and Keogh plans. If a person is eligible to receive regular payments, the payments are treated as unearned income and the fund itself is not a countable asset. If the person is eligible for payments but chooses not to take them, DCF treats the person as ineligible for failing to apply for benefits they are entitled to. If the person is not eligible for payments, the available value counts as an asset, reduced by early-withdrawal penalties but not by income taxes. A fund that can be reached only by ending employment is not an asset.

Two practical points follow. First, DCF treats IRAs the same way as employer plans here: an IRA in payout status is not counted as an asset, and the payments count as income. So the practical question in a long-term care case is often whether to put an IRA into regular payout before applying. Second, for a married applicant, passage 1640.0505.05 says the community spouse's retirement fund is not counted if that spouse is receiving payments from it at application. If the spouse is not taking payments but could withdraw a lump sum, the full value counts toward the couple's assets.

The Deficit Reduction Act of 2005 changed how annuities are treated. Under 42 U.S.C. 1396p(c)(1)(F) and (G), an annuity purchase may be treated as a transfer for less than fair market value unless the State is named as remainder beneficiary, and certain annuities must also be irrevocable, non-assignable, actuarially sound and paid in equal amounts with no deferral or balloon payment. Florida applies this in DCF Appendix A-34 for annuities bought or changed on or after November 1, 2007. The State (AHCA) must be first remainder beneficiary, or second after a community spouse, a minor child or a disabled adult child. The community spouse's annuity also names the State. When the requirements are met, the annuity is excluded as an asset and the payments count as income.

A product sold for growth, with surrender charges and a balloon at maturity, is unlikely to meet these rules. And because payments become income, a compliant annuity on the applicant's side can raise income above the $2,982 cap, which may then call for a Qualified Income Trust. Annuities inside an IRA or employer plan are handled under the retirement-fund policy, not A-34.

DCF counts life insurance by its cash surrender value, not its face value (passage 1640.0554). If the total face value of policies on one person is $2,500 or less, the cash surrender value is excluded. Term insurance and burial insurance are left out of that computation. Above $2,500 in total face value, all of the cash surrender values count. A whole life policy with modest cash value can therefore be the item that puts a single applicant over the $2,000 limit.

Taxable brokerage accounts, money market funds and CDs the applicant can reach are generally countable at their current value. Joint accounts need closer attention. Under DCF's joint-account policy (passage 1640.0302.01), when the applicant is a joint holder with unrestricted access, all of the funds are presumed to belong to the applicant, regardless of who deposited them. The presumption can be rebutted with written statements and bank records showing whose money went in, who withdrew it and how it was spent. Adding an adult child to an account, by itself, usually doesn't remove the money from the count. If the co-owner later withdraws funds, 42 U.S.C. 1396p(c)(3) treats that reduction as a possible transfer.

Florida reviews transfers for less than fair market value made in the 60 months before the application (42 U.S.C. 1396p). The penalty is the uncompensated value divided by $10,645, which gives a number of months without Medicaid payment for long-term care. Under DCF policy (Appendix A-8), the penalty generally starts when the person has applied and is otherwise eligible, which is often when the family can least afford it. A hypothetical: a $106,450 gift to a grandchild two years before an application would produce a ten-month penalty that begins only after the applicant has spent down to $2,000.

Moves that may count as transfers include gifts to family, withdrawals by a non-spouse co-owner, paying a relative for care without a written fair-value agreement made in advance, and buying a non-compliant annuity. Florida also doesn't offer retroactive Medicaid to most adults: since 2019, coverage for non-pregnant adults 21 and older starts the first day of the month of application (AHCA). Timing the application matters.

When one spouse enters care and the other stays home, the community spouse may keep assets up to the CSRA of $162,660 in 2026, in addition to the home and other excluded items. The $752,000 home equity limit generally doesn't apply while a spouse lives in the home (42 U.S.C. 1396p(f)(2)). The couple's countable assets are pooled at application, whichever spouse owns them. On the income side, the Minimum Monthly Maintenance Needs Allowance (MMMNA) is $2,705, and the Community Spouse Monthly Income Allowance (CSMIA) can reach up to $4,067 with shelter costs, using the A-9 standards. If the community spouse's own income is below the allowance, part of the institutionalized spouse's income may be diverted to them. The institutionalized spouse keeps a $160 personal needs allowance, and most of the rest goes toward the cost of care.

Required minimum distributions generally start for the year the owner turns 73, and the first one can be delayed until April 1 of the following year (IRS). DCF treats regular retirement payments as unearned income in the month they are received (passage 1640.0505.04). Because the income test is monthly, a once-a-year distribution may push gross income above $2,982 in that month. If a Qualified Income Trust is in place, the excess generally has to be deposited in the same month it is received, and past or future months can't be funded. Spreading distributions into equal monthly amounts, and telling the family before any lump sum or large withdrawal, can keep the QIT deposits predictable.

Florida's Long-Term Care Partnership is still in the statutes as of 2026 (Fla. Stat. 409.9102). AHCA runs it with the Office of Insurance Regulation and DCF under Section 1917(b) of the Social Security Act. DCF's policy (passage 1640.0594) disregards countable assets equal to the benefits a qualified Partnership policy actually paid to or for the insured. A client whose Partnership policy paid $150,000 may, as a hypothetical, keep $150,000 above the normal limit. Not every long-term care policy qualifies, so ask the carrier in writing whether the policy is a qualified Florida Partnership policy and keep a record of benefits paid.

The most useful time to bring in an elder law attorney is before any asset moves, not after the nursing home sends the first bill. Bring a current statement for every account, how each one is titled and who the beneficiaries are, the annuity contracts with their beneficiary pages, the in-force illustrations for life insurance, and any long-term care policy. Share client information only with the client's written consent. Solkoff Legal, P.A. does not pay referral fees or give anything of value for a recommendation, which is consistent with Rule 4-7.17(b) of the Rules Regulating The Florida Bar.

Use this list in an annual review, or whenever a client or spouse has a new diagnosis, a hospital stay or a move to assisted living. Any yes is a reason to bring in an elder law attorney before acting.

A family member asks you to move money to a child, add a child to an account or "get assets out of Mom's name."

A gift, retitling or large withdrawal happened in the last 60 months and nobody kept records of why.

An annuity has surrender charges, a balloon payment or a beneficiary other than the spouse, a minor or disabled child, or the State.

Permanent life insurance with a total face value over $2,500 on someone likely to need care.

Joint accounts with adult children where you can't document whose money went in.

Gross monthly income close to or above $2,982, or a planned lump sum or annual RMD.

A married couple with countable assets well above $162,660 and one spouse whose health is declining.

No durable power of attorney with authority over retirement accounts, annuities and gifting, or an agent who is unsure what they may do.

It depends on whether the account is in payout and whose account it is. Under DCF's retirement-fund policy (passage 1640.0505.04), when a person is eligible for and receiving regular payments, the payments count as income and the fund is not counted as an asset. If the person is not eligible for payments, the available value counts, less early-withdrawal penalties but not taxes. For a community spouse, a fund in payout at application is not counted, while one with a lump sum option is. How DCF applies this to a particular IRA should be confirmed with an elder law attorney before any distributions change.

Sometimes, but only if it meets the federal and Florida rules. Under 42 U.S.C. 1396p(c)(1)(F) and (G) and DCF Appendix A-34, the annuity generally must be irrevocable, non-assignable and actuarially sound, pay equal amounts with no balloon, and name the State as remainder beneficiary in first place, or second after a spouse, a minor child or a disabled child. If it doesn't, the purchase may be treated as a transfer and trigger a penalty. Whether an annuity fits also depends on income, the spousal allowances and the client's other needs, so it should be reviewed with an elder law attorney first.

Ideally before any money moves. Good triggers include a new diagnosis of dementia or another progressive condition, a hospital stay followed by rehab, a move to assisted living, a family request to retitle or gift assets, or monthly income near $2,982. Florida reviews transfers for 60 months and generally doesn't offer retroactive coverage to adults 21 and older (AHCA), so a late start may cost months of private payment. Early coordination lets the attorney review eligibility while you keep responsibility for suitability and tax planning.

If a client or patient is facing one of these questions, Brandon Arkin at Solkoff Legal, P.A. can be reached at (561) 733-4242.