To qualify for Long-Term Care Medicaid in Florida, a single applicant can have no more than $2,000 in countable assets. If you have more than that — and most people do — you need to “spend down” before applying.
But spend-down is not about wasting money. Done right, it’s about converting countable assets into exempt assets or necessary goods and services so your money benefits you and your family rather than disqualifying you from Medicaid.
Here’s what Florida Medicaid allows, what it doesn’t, and how to do it strategically.
The Key Numbers
$2,000
Asset Limit (Single Applicant)
$162,660
Spouse Can Keep (CSRA)
$160/mo
Personal Needs Allowance
The Golden Rule: You can spend your money on anything for yourself or your spouse — as long as you receive fair market value in return or use it for your own needs. The only thing you cannot do is give it away to others.
What You CAN Spend Down On
✅ Permitted Spend-Down
- Home improvements — roof, plumbing, HVAC, wheelchair ramps, walk-in tubs, flooring, kitchen renovations
- Vehicle purchase — one car of any value is exempt
- Prepaid irrevocable funeral — immediately removes funds from countable assets
- Paying off YOUR debts — mortgage, car loan, credit cards, medical bills
- Medical expenses — glasses, hearing aids, dentures, wheelchairs, scooters
- Household furnishings — furniture, appliances, electronics
- Personal care — clothing, toiletries, vacations, wellness
- Long-term care insurance premiums
- Legal and accounting fees — for Medicaid planning itself
❌ Triggers a Look-Back Penalty
- Gifts to children or grandchildren — cash, property, tuition
- Paying someone else’s debts — child’s mortgage, grandchild’s student loans
- Buying assets for others — car for a child, home repairs on someone else’s property
- Selling below market value — selling house to family at a “discount”
- Charitable donations — to churches, nonprofits, any organization
- Funding a revocable trust — assets remain countable anyway
- Informal caregiver payments — paying a child for care without a written contract
Spend Down vs. Asset Conversion
There are two distinct strategies, and both are legitimate:
| Strategy | What Happens | Examples |
|---|---|---|
| True Spend-Down | Money is exchanged for goods, services, or debt payoff. The cash is gone but you received value. | Paying off mortgage, buying hearing aids, prepaid funeral, home repairs |
| Asset Conversion | Countable asset is converted into an exempt asset of equal value. Nothing is “lost” — the form changes. | Cash → vehicle, savings → home equity (mortgage payoff), cash → prepaid funeral |
IRA Strategy (Florida-Specific): In Florida, IRAs and retirement accounts that are in “payout status” (taking required minimum distributions) are treated as exempt assets. The monthly distribution counts as income, not the account balance as an asset. If you have a large IRA, putting it into payout mode before applying can remove it from the countable asset calculation entirely. This is a Florida-specific rule — many other states count IRAs as assets regardless.
Exempt Assets: What Doesn’t Count
| Asset | Exempt? | Limit / Notes |
|---|---|---|
| Primary residence (homestead) | EXEMPT | Equity under $752,000 (single); no cap if spouse lives there |
| One vehicle | EXEMPT | Any value |
| Irrevocable prepaid funeral | EXEMPT | No dollar limit |
| Burial plots and grave markers | EXEMPT | No dollar limit |
| Burial account | EXEMPT | Up to $2,500 |
| Personal belongings, furniture | EXEMPT | No specific dollar limit |
| Term life insurance | EXEMPT | No cash value = always exempt |
| IRA in payout status | EXEMPT | Florida-specific rule; distributions count as income |
| Wedding/engagement rings | EXEMPT | No limit |
| Medical equipment | EXEMPT | Wheelchairs, hospital beds, etc. |
| Cash, savings, checking | COUNTABLE | Must be at or below $2,000 |
| Stocks, bonds, mutual funds | COUNTABLE | Must be spent down |
| Non-primary real estate | COUNTABLE | Rental/investment property counts |
| Whole life insurance (cash value >$2,500) | COUNTABLE | Surrender value counts as asset |
| Revocable trust assets | COUNTABLE | You retain control = Medicaid counts it |
Strategic Spend-Down: A Step-by-Step Approach
If you have excess assets and need to qualify for Medicaid, here is the recommended order of operations:
| Step | Action | Why |
|---|---|---|
| 1 | Pay off all personal debts (mortgage, car loan, credit cards) | Reduces countable cash; increases exempt home equity |
| 2 | Purchase irrevocable prepaid funeral for applicant AND spouse | Can shelter $15,000–$25,000+; immediately exempt |
| 3 | Purchase or upgrade vehicle if needed | One car of any value is exempt |
| 4 | Complete home improvements and disability modifications | Increases exempt home value; improves quality of life |
| 5 | Pay outstanding medical bills | Legitimate expense; reduces countable assets |
| 6 | Purchase needed medical equipment (hearing aids, glasses, wheelchair) | Exempt personal property; improves health |
| 7 | Put IRA into payout status (if not already) | Converts countable asset to exempt asset + income stream |
| 8 | Pay attorney fees for Medicaid planning and estate planning updates | Legitimate professional expense |
Documentation Is Critical. Keep receipts for every expenditure over $200. Medicaid will review 60 months of bank statements. Every large withdrawal needs a paper trail showing what you bought and why. Without receipts, DCF may treat the expenditure as a gift and impose a penalty.
What Happens After You Qualify: The Personal Needs Allowance
Once you are on nursing home Medicaid, nearly all of your monthly income goes to the facility. Florida allows you to keep:
$160/mo
Personal Needs Allowance
~$185/mo
Medicare Part B Premium (deducted)
$2,644–$4,067/mo
Spousal Maintenance (MMMNA)
Everything else — Social Security, pension, annuity payments — goes to the nursing home as your “patient pay” amount. Medicaid covers the difference between your patient pay and the facility’s actual cost, which often exceeds $10,000/month.
Common Spend-Down Mistakes
| Mistake | What Happens | Better Approach |
|---|---|---|
| Giving $50,000 to children “before applying” | 4.7-month Medicaid penalty ($50,000 ÷ $10,645) | Spend the $50,000 on home improvements, funeral, vehicle, debts |
| Paying daughter’s mortgage ($30,000) | 2.8-month penalty (gift to another person) | Pay off YOUR OWN mortgage instead |
| Making $5,000 church donation | Treated as gift; adds to penalty calculation | Spend on personal needs or exempt assets |
| Paying grandchild $10,000 for “helping out” | Treated as gift without a written care agreement | Execute a formal Personal Care Agreement before any payments |
| Transferring house to child | Full home value as penalty (unless caretaker exception met) | Execute a Lady Bird deed instead — no penalty |
Need Help with Your Medicaid Spend-Down?
The difference between a strategic spend-down and a costly mistake is often just one wrong check. Our attorneys help Florida families preserve their assets while meeting Medicaid’s eligibility requirements — legally, ethically, and efficiently.
Call (813) 501-5071 for a free consultation, or schedule online.
