How a Florida Nursing Home Spend-Down of $190,000 Can Be Converted Into Monthly Income and Help Secure Medicaid Eligibility

In Florida, a spouse in a nursing home may be allowed only $2,000 in savings while the facility waits for the rest of the couple’s assets to be spent. There is, however, a legal strategy that can redirect that money before it disappears, and it is something nursing homes are unlikely to highlight.

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Consider a married couple in Florida. He needs long-term care in a facility, while she remains in the home they have owned for many years. A Medicaid worker totals their countable assets at $354,660. Under the rules, she may retain $162,660 and he may keep $2,000, leaving $190,000 to be spent before Medicaid begins paying.

That remaining $190,000 is the spend-down amount. Many families assume the only option is to pay the nursing home until the funds are gone. But there is another lawful approach: the wife can use the extra money to purchase monthly payments in her own name. If the annuity is structured to meet Florida Medicaid requirements, the lump sum is removed from the asset total and returns to her as income.

How Medicaid Determines the $190,000 Spend-Down

When one spouse applies for Medicaid, the program looks at the couple’s assets together. Federal spousal impoverishment rules then protect a portion for the spouse who remains at home. That protected amount is called the Community Spouse Resource Allowance, and the 2026 range is from $32,532 to $162,660.

State rules affect the outcome. Florida uses the full 2026 maximum of $162,660 for the spouse at home. Other states calculate the allowance differently, so a similar couple could face a much larger spend-down elsewhere.

Turning $190,000 Into About $1,924 a Month

Here is the basic idea: the wife uses the $190,000 to buy an immediate annuity and becomes the annuitant. The money leaves the asset column, and monthly payments begin. Medicaid treats those payments as her income, and it cannot require the spouse at home to use her own income to pay for her husband’s care.

That figure assumes a 10-year term and a 4% interest rate, which are used here only as an example. Over the full term, she would receive roughly $230,839. Even with no interest, the $190,000 principal alone would work out to about $1,583 a month. Putting the same money into a CD would not solve the Medicaid issue because the funds would still count as an asset.

Five Rules a Medicaid Annuity Must Meet

Medicaid’s annuity rules apply to contracts purchased after February 8, 2006. A qualifying contract is generally:

• Irrevocable: she cannot cash it in.
• Nonassignable: she cannot sell the payments to someone else.
• Actuarially sound: the payments must end within her life expectancy. Florida’s eligibility manual measures this against the average number of years of expected life remaining for the annuitant.
• Equal payments: the checks must be level, with no deferral and no balloon payment.
• State as remainder beneficiary: Florida generally must be named to receive what is left after the annuitant dies, though the state can come after a surviving spouse or a minor or disabled child in some cases.

Florida also applies these annuity rules when the contract is purchased for the spouse at home. If the annuity does not satisfy state requirements, including the beneficiary and life-expectancy standards, the purchase can be treated as a transfer for less than fair value and can trigger a penalty.

Why Timing and Income Can Complicate the Plan

Buying the annuity does not guarantee that Medicaid approval will happen the following month. The insurer must first issue the contract and accept the premium. The couple’s countable assets must then fall to about $164,660, and the application must be filed with the contract attached. A Florida caseworker then reviews the terms. If paperwork is missing or the contract needs correction, eligibility is delayed, and each month of private payment reduces the amount the annuity could have preserved.

The annuity also affects the income calculation. Medicaid may allow the wife to keep part of her husband’s income, but only enough to raise her to a maintenance allowance capped at $4,066.50 a month in 2026. The more income she receives from the annuity, the less of his income can be assigned to her, and the more of his income may have to go toward the nursing home.

If the couple spends the $190,000 directly on nursing-home bills, that money can simply disappear into care costs. A properly arranged annuity can turn the same lump sum into monthly income for the spouse who still has a household to support. The family budget does not lose that money just because one spouse needs Medicaid.