Does Florida Medicaid count an IRA or 401(k)?

How Florida Medicaid treats IRAs, 401(k)s, and pensions for the applicant and the spouse at home, why payout status decides it, how the payments affect the income cap, and which asset to spend first.

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Florida Medicaid Guide

Not if the owner is receiving regular payments from it. Under DCF policy, a retirement account in payout status is not a countable asset; the payments count as income instead. An account that is not paying out counts at its available value. For the spouse at home, the rule turns on whether payments have started when the application is filed.

In Florida, whether a retirement account counts for Medicaid depends less on how much is in it than on whether it is paying out. An IRA in regular payout status is not counted at all; the same IRA left untouched can count at its full value. The rule is different for the applicant and for the spouse at home, and the timing matters. It is one of the most expensive points to get wrong, and one of the easiest to get right with a few weeks' notice.

Reviewed by Carl B. Zacharia, Esq. , Florida Bar No. 50784, author of Florida Long-Term Care and Medicaid · Last reviewed November 9, 2026. Figures shown are the ones Florida applies as of that date.

How does DCF treat the applicant’s retirement account?

The rule is in DCF's ESS Policy Manual , passage 1640.0505.04, and it covers IRAs, 401(k)s and 403(b)s, Keogh plans, and employer and union pensions:

  • If the applicant is eligible to receive regular payments, the payments are income and the account is not a countable asset.
  • If the applicant is eligible for payments but chooses not to take them, DCF treats the applicant as ineligible for failing to apply for a benefit they are entitled to. The payments have to be taken.
  • If the applicant cannot receive payments, the amount that could be withdrawn now is a countable asset. An early-withdrawal penalty is subtracted from the value; income tax that would be due is not.
  • An account that can only be reached by quitting a job is not an asset.

Once regular payments are running, the account stays excluded for as long as they continue.

What about the spouse at home’s retirement account?

A separate rule applies (passage 1640.0505.05), and it is tied to the date of the application:

  • If the spouse at home is receiving payments from the account when the application is filed, the account is not counted toward the couple's assets. The payments are the spouse's own income.
  • If the spouse is not receiving payments but could withdraw a lump sum, the whole value of the account is counted with the couple's other assets, against the $162,660 the spouse at home may keep in 2026.

A spouse with a large IRA who has not started taking payments can turn a case with no spend-down into one with a large spend-down. Whether to start payments, and when, has to be decided before the application is filed, and it has tax consequences worth discussing with an accountant as well.

Do the payments count toward the income cap?

Yes. Retirement payments are unearned income ( ESS Policy Manual, chapter 1800 ). For the applicant, they are added to Social Security and any pension in the $2,982 monthly income cap for 2026. If the total goes over the cap, the applicant needs a Qualified Income Trust to qualify.

For the spouse at home, the payments raise the spouse's own income, which reduces how much of the nursing home spouse's income can be diverted to bring the spouse at home up to the $2,705 minimum monthly allowance. That is usually a fair trade for keeping the account out of the asset count, but it should be worked out in numbers before the application is filed.

Which asset should be spent first?

Not the excluded one. Consider a couple, Candy and Norbert, adapted from an example in the book. Norbert enters a nursing home. They have $250,000 in bank accounts and CDs, which count, and Candy has a $200,000 IRA from which she already takes monthly payments, which does not. Their spend-down is the countable $250,000 minus the $162,660 Candy may keep and the $2,000 Norbert may keep: $85,340.

Told that the care costs would be tax-deductible, Candy pays Norbert's nursing home bills from her IRA for a year. When she applies, the spend-down is unchanged, because the bank accounts were never touched. She has used money the law protected to pay bills that the countable money was always going to have to cover.

The order of spending is part of the plan. Know which assets count before anything is spent.

What should you do before applying?

  • List every retirement account for both spouses: IRAs, 401(k)s, 403(b)s, pensions, annuities, and old employer plans.
  • For each one, find out whether payments are being received, how much, and since when.
  • If an account is not paying out, ask the plan administrator what regular payment options exist, and decide with advice whether to start them before the application.
  • Gather five years of statements. DCF asks for them, and moving other money into a retirement account during the look-back is reviewed under the transfer rules.

Annuities bought with savings are treated under different rules from work-related retirement plans, and they are legal work.

How Senior Care Resources helps

We review every retirement account in a case, confirm its payout status for the applicant and the spouse, and work the income figures through the cap and the spousal allowance before anything is filed. When an account raises a legal question, such as an annuity, a trust, or a Qualified Income Trust, that work is done by Zacharia Frey PLLC under a separate engagement, or by any elder law attorney you choose. Start your free Medicaid assessment or call (239) 977-5175.

Adapted from Chapters 15 and 18 of Florida Long-Term Care and Medicaid (2026 Edition), by Carl B. Zacharia, with the figures updated to the ones Florida applies today.

Frequently asked questions

Does Florida Medicaid count my IRA?

Not if you are receiving regular payments from it; the payments count as income instead. If you can receive payments but have not started them, DCF expects you to take them. If payments are not available, the amount you could withdraw now counts, less any early-withdrawal penalty.

Do I have to cash out my 401(k) to qualify for Medicaid in Florida?

No. Cashing it out usually makes things worse, because the lump sum becomes countable cash and taxable income. An account in regular payout status is not counted at all.

My husband is going into a nursing home. Is my IRA counted?

It depends on whether you are receiving payments from it when the application is filed. If you are, it is not counted. If you are not, and could withdraw a lump sum, its whole value counts with the couple's other assets against the $162,660 you may keep.

Do IRA distributions count toward the Florida Medicaid income cap?

Yes. For the applicant, regular retirement payments are income and count toward the $2,982 monthly cap in 2026. Income over the cap requires a Qualified Income Trust.

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This page is general information about Florida Medicaid, not legal advice, and nothing here creates an attorney-client relationship. Medicaid rules change and every family’s facts are different.

Senior Care Resources is a separate company from Zacharia Frey PLLC. Its Medicaid application services are not legal services, and no attorney-client protection applies to them. When an attorney becomes involved, that is a separate legal representation with the law firm.