They Sold the Ohio House and Retired to a Florida Rental. When They Needed a Nursing Home, Medicaid Counted the $310,000 the House Had Once Sheltered
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Consider a scenario elder law attorneys encounter regularly. A retired couple sells their mortgage-free Ohio home, banks the $310,000 in proceeds, and moves to a Florida rental. They are done with property taxes, roof repairs, and hurricane shutters. Three years later, the husband has a stroke and needs a nursing home. That care costs roughly $10,645 a month on average in Florida, based on the state’s own 2026 penalty divisor, and the bills arrive whether Medicaid approves the application or not.
They assume the money is safe because it came from their longtime residence. Florida Medicaid treats the proceeds as cash. It sees a bank balance of $310,000, and that balance is countable. By the time the application is filed three years later, any short-term window to roll sale proceeds into a replacement residence has closed. Florida treats the full $310,000 as an available resource.
A House and Its Proceeds Are Different Assets
Medicaid is the joint federal-state program that pays for most long-stay nursing home care. Medicare, by contrast, covers only short-term skilled nursing following a qualifying hospital stay. These two programs are frequently confused, but they operate under entirely different rules when a family faces a prolonged facility stay.
A home the applicant or spouse occupies is generally excluded from countable resources. An institutionalized applicant can sometimes preserve that exclusion under an intent-to-return rule. Once the house sells, however, the protection does not follow the proceeds.
Some states allow a brief window to reinvest sale proceeds in a new principal residence. Three years is far beyond any ordinary replacement period. The entire balance sitting in checking, savings, or a brokerage account gets counted.
Many families expect the five-year look-back period to shield them here. It does not work that way. The look-back examines only gifts and transfers made for less than fair-market value. Selling a house at fair value is not an uncompensated transfer, so it triggers no penalty. And waiting five years does not wash the proceeds clean, because the couple still owns the money. Time does not erase an owned bank balance from the resource calculation.
What Florida Lets the Couple Keep in 2026
Florida applies federal spousal-impoverishment protections. In 2026, the community spouse (the one not entering the facility) can retain up to $162,660 in countable resources. The institutionalized applicant generally keeps $2,000. Using simplified numbers:
- Bank balance: $310,000
- Community-spouse allowance: up to $162,660
- Applicant allowance: $2,000
- Apparent excess: roughly $145,340
The real calculation depends on details like ownership, the Medicaid snapshot date, other assets, and Florida’s spousal-impoverishment formula. Florida applies the federal maximum community-spouse allowance as a flat figure, so the community spouse does not need to prove that half the couple’s assets reaches that threshold. Some states use the half-of-assets formula subject to a floor and a ceiling, which can produce a lower protected amount for couples with moderate savings.
A Tale of Two States
Had the couple stayed in Ohio and the wife continued living in the marital home, the residence generally would have remained excluded from the husband’s countable resources. A community spouse occupying the home supplies especially strong protection, and Ohio Medicaid would not have counted the home equity at all while she lived there.
The state contrast is worth noting. Ohio calculates the community-spouse resource allowance using a half-of-assets formula, subject to a $32,532 floor and a $162,660 ceiling for 2026. Florida instead applies that $162,660 ceiling as a flat maximum from the start, regardless of how the couple’s assets are split. For couples with more modest savings, Ohio’s formula can actually result in a lower protected amount than Florida’s flat-maximum approach.
Both states apply Medicaid home exclusions. What differed for this couple was the form their wealth took on the day the application was filed: equity in an occupied home versus cash in a bank account. Medicaid treats those two forms very differently, and the move to a rental is precisely what turned protected equity into countable cash.
Spending Down Without Wasting the Money
The excess does not have to go straight to the nursing home. With state-specific legal guidance, couples can spend countable dollars on legitimate expenses or convert them into exempt resources before or during the application process.
Common options families explore include:
- Purchasing a residence for the community spouse
- Paying off debts
- Buying a vehicle
- Making necessary home improvements
- Prepaying permitted funeral arrangements
Annuities, irrevocable trusts, and last-minute transfers are not always available or advisable. Gifting money to adult children is especially risky. Florida divides any uncompensated transfer by the state’s penalty divisor, which is $10,645 per month in 2026, to calculate the number of months Medicaid will not pay for care. A $145,000 gift, for example, would produce a penalty of roughly 13 months, during which the nursing home bill continues to arrive.
Keeping the Ohio house could have preserved eligibility for a longer period while the wife remained in residence. Whether estate recovery would have come into play is a separate question, dependent on Ohio policy and property title details. Florida’s estate recovery rules would have no effect on an Ohio property. Eligibility protection and inheritance protection are distinct legal concerns that require separate planning.
Three Questions to Ask Before Selling
Families weighing a similar move should work through three questions before the sale closes:
- Will the proceeds buy another home, or sit as countable cash?
- How much can the community spouse retain under the destination state’s current allowance?
- Could nursing home care become necessary before the money is reinvested or spent down?
The Ohio couple did not lose $310,000 when they sold the house. They changed how Medicaid classified it, converting a protected place to live into money fully available to pay for care.
Editor’s note: This update adds the 2026 Florida penalty divisor of $10,645 per month and illustrates the gifting-penalty risk with a concrete example; it also adds the Ohio CSRA formula (half-of-assets, subject to a $32,532 floor and $162,660 ceiling) to contrast with Florida’s flat-maximum approach, and includes the average Florida nursing home cost context.
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Gerelyn Terzo is the author of dividend investing handbook "Dividend Investing Strategies: How to Have Your Cake & Eat It Too." A veteran financial journalist, she covers agri-finance for outlets like Global AgInvesting and the broader stock market and personal finance for 24/7 Wall Street. She began at CNBC and later helped launch Fox Business in New York. Gerelyn currently resides in Woodland Park, Colorado and dabbles in nature photography as a hobby.
