Are Retirement Accounts Protected from Florida Nursing Homes?

Nursing home care in the Sunshine State now runs $10,000 to $13,000 a month. Nursing homes are also getting more expensive each year. Two years of nursing care could wipe out everything you’ve worked hard to save.

Are retirement accounts protected from Florida nursing homes? Often yes. But only if you handle them the right way. And Florida happens to be one of the friendlier states in the country on this issue. Let me walk you through it, plain and simple.

Why This Question Is So Important

For most people, the retirement account is the life savings. Decades of 401(k) contributions, employer matches, and IRA rollovers: it’s all sitting in one or two accounts that represent everything you’ve worked for. The house and the IRA are usually the two biggest things a family owns. So when Medicaid says you can only keep $2,000 in countable assets, the terrifying question becomes obvious: does that nest egg count? Florida’s answer is kinder than you’d expect when it comes to retirement accounts. Here’s how it works.

The Florida IRA Medicaid Advantage: The “Payout Status” Rule

Most states count your IRA or 401(k) as an asset. Florida does not count the value of your retirement account if the account is in payout status.

“Payout status” simply means you’re taking regular, required distributions from the account (think Required Minimum Distributions, or RMDs). If you are receiving regular, required distributions, then Florida Medicaid treats the account itself as a non-countable asset. It doesn’t matter if there’s $50,000 in the retirement account or if there is $500,000 in the account.

Example: Dolores is 74 and in a Florida nursing home that costs $12,000 per month. Her last remaining asset is her IRA, which is worth $200,000. Her children do not want to spend this down, and they wish to protect it from the nursing home. She took out her RMD for 2026.

Result: Dolores’ IRA is protected from the nursing home since she is 74 and took out her RMD for 2026. Once the RMD comes out of the IRA account, the IRA is protected from the nursing home since the IRA is now treated as income and not an asset.

Even though the retirement account is a non-countable asset, it is still treated as income. So the retirement account could potentially disqualify you from receiving Medicaid here in Florida. Florida is an “income cap” state, meaning that if your income is too high, you will be ineligible for Medicaid.

Here are the 2026 Florida Medicaid numbers:

These figures adjust every year, so always confirm the current numbers before applying.

What Happens if an IRA RMD Puts You Over the Florida Medicaid Limits

Since an IRA in payout status counts as income, not an asset, it can make many people ineligible for Florida Medicaid by pushing them over the yearly income limits. The simple fix is to set up a Qualified Income Trust, also known as a Miller Trust. The Qualified Income Trust is a glorified bank account where income above the Medicaid-allowed limits is placed each month. By placing the excess monthly income into the Qualified Income Trust, an individual can now qualify for Medicaid here in Florida.

Example: Frank has a $300,000 IRA. He is 74 and receiving the required minimum distributions. The required minimum distributions allow the IRA to be excluded from counting against Frank’s assets for Medicaid. However, the required minimum distribution puts Frank over the monthly Medicaid income limit by $400 per month. Frank meets with an elder law attorney in Florida and sets up a Qualified Income Trust to place the $400 per month into the Qualified Income Trust each month.

Result: Frank is now eligible for Florida Medicaid. The IRA is protected as an asset from Medicaid, and the income does not disqualify Frank since the $400 per month goes into Frank’s Qualified Income Trust.

Under RMD Age? Here’s How to Get Into Payout Status Anyway

Good news: you don’t have to wait until age 73 for the payout-status rule to work for you. “Payout status” just means the account is making regular, periodic distributions—it doesn’t require you to be at RMD age. If you’re younger, you (or your financial institution) can simply set up automatic monthly or annual withdrawals from the IRA or 401(k). Elder law attorneys typically calculate the payment using your life expectancy, similar to how an RMD would be figured, so the schedule looks reasonable to the Medicaid caseworker.

One caution before you touch anything: if you’re under 59½, ordinary early withdrawals can trigger a 10% IRS penalty on top of income tax. A properly structured plan of substantially equal periodic payments (the IRS’s “72(t)” rules—explained on IRS.gov) can avoid that penalty. This is fixable stuff, but it’s exactly the kind of detail worth running past a professional before the first withdrawal, not after.

Example: Karen is 70 years old. She fell and is in a rehab. It is looking like she is going to need to stay in skilled nursing permanently. Karen has two assets: a homestead worth $400,000, and an IRA worth $300,000. Since Karen is under 73, she is not required to take out the yearly Required Minimum Distribution. Thus, her IRA disqualifies her for Florida Medicaid. However, her daughter as her power of attorney hires an elder law attorney. The elder law attorney in combination with a CPA calculate what Karen’s yearly equal periodic payments would be under IRS 72(t). Karen takes out a yearly distribution from her IRA under the IRS 72(t) rules.

Result: Karen is now able to qualify for Florida Medicaid even though she has $700,000 in assets. The homestead is excluded as an asset here in Florida, and so is the IRA now that the IRA is in payout status. Her IRA is now counted as income, which still could affect her Medicaid eligibility. If the IRA income now puts her over the monthly allowed income amount, then she will need to set up a Qualified Income Trust.

Caution: Make sure to consult with an experienced elder law attorney and tax professional before using this strategy. Miscalculating the 72(t) could cause Medicaid denial, and it could cause serious issues with the IRS.

What About Retirement Annuities?

Annuities can either count as an asset, or they can be excluded as an asset and only count as income. The threshold question is whether or not the annuity is a retirement annuity. A retirement annuity—an annuity purchased with retirement accounts funds—is excluded from counting as an asset if the retirement annuity pays out the Required Minimum Distribution. If the retirement annuity pays out the Required Minimum Distribution, then the annuity is excluded as an asset, and it only counts as income.

Example: Ray is currently in a nursing home. Ray purchased an annuity using retirement account funds. He is 74. He receives a Required Minimum Distribution from the annuity company each year.

Result: Ray’s retirement annuity is completely protected from Florida Medicaid.

Some elder law attorneys will use a Medicaid-compliant annuity to protect assets from Florida Medicaid. A Medicaid-compliant annuity—also known as a speed up annuity—converts a lump sum of money into a guaranteed income stream. Done right, the lump sum stops being a countable asset. To pass muster in Florida, the annuity generally must be irrevocable (you can’t cancel it and take the money back), non-assignable (you can’t sell it), actuarially sound (payments finish within your life expectancy), and it must pay in equal installments with the State of Florida named as a beneficiary for benefits it pays out.

Caution: We never use Medicaid-compliant annuities in our elder law practice. There are often so many better ways to protect assets from Medicaid. Be cautious of elder law attorneys who are pushing you towards purchasing a Medicaid-compliant annuities. They may have ulterior financial motives.

A deferred annuity—the kind still growing and not yet paying out—is usually a countable asset, because it has a cash value you could surrender. Be careful when purchasing annuities if you are at all concerned about long-term care planning in the future.

Medicaid Retirement Planning Traps

Florida’s rules are generous, but they punish sloppy moves. Watch out for these:

• ⚠ Cashing out the account. The moment you liquidate an IRA and park the money in a bank account, it becomes a countable asset. Not only will your IRA now not be protected from Medicaid, but you will likely have a very large tax bill from the IRS.
• ⚠ Gifting money to kids. Florida Medicaid has a five-year look-back period. Give away assets within five years of applying, and you can trigger a penalty period where Medicaid won’t pay. Medicaid.gov covers the federal framework behind this. Never gift away retirement assets to children.
• ⚠ Forgetting to start distributions. An IRA that’s not in payout status may be counted. If you’re under RMD age, an attorney can often structure distributions to satisfy the rule.
• ⚠ Ignoring estate recovery. After a Medicaid recipient passes away, the state can seek repayment from the probate estate. Retirement accounts with named beneficiaries skip probate. Make sure to always have a beneficiary listed on a retirement account. If a beneficiary is listed on a retirement account, then Medicaid will not be able to recover the funds from the retirement account after you pass.

Married? Will My Spouse’s IRA Affect My Medicaid Eligibility

Your spouse’s IRA can affect your Medicaid eligibility. However, the same IRA rules above apply to your spouse’s IRA. If your spouse’s IRA is in payout status—whether through yearly RMDs ot 72(t) periodic distributions—then your spouse’s IRA will not count against your Medicaid eligibility.

If a spouse is under the age for required minimum distributions and does not want to take out required minimum distributions to avoid paying early taxes, the IRA may still be excluded. The healthy spouse (the “community spouse”) can keep up to $162,660 in countable assets in 2026, plus the house (within equity limits), a car, and their own income. If the spouse’s IRA is less than $162,660, then the spouse’s IRA will also be excluded if the IRA is not yet in payout status.

Example: Jim and Delores are married. Jim is currently in a nursing home. The nursing home costs $13,000 per month. Jim and Delores have four assets: a homestead, a bank account with $1,500 in it, an IRA worth $130,000, and a car. The IRA is in Delores’ name. Delores is 70 and is not yet required to take out required minimum distributions.

Result: Delores’ IRA will not affect Jim qualifying for Florida Medicaid since the total of Delores’ IRA ($130,000) is less than the amount that she can keep as the community spouse ($162,660).

Tip: If Delores’ IRA was more than $162,660, she could just take out 72(t) periodic distributions to protect the account.

The Bottom Line

Are retirement accounts protected from Florida nursing homes? Yes, more than in almost any other state, thanks to the payout-status rule and Florida’s strong creditor protections. But that protection isn’t automatic. It depends on how the account is structured, when distributions start, and whether you avoid the classic mistakes.

If a nursing home stay is on the horizon for you or a parent, don’t wing it. Sit down with a Florida elder law attorney before you move a single dollar. One conversation now can protect a lifetime of savings later.

Got questions about your own situation? Feel free to reach out to our law firm for a free initial consultation.