The rules for Medicaid and homestead in Florida have different rules depending on if you are single or married.
If you are married, the spouse can live there and there are no potential problems or hitches for the homestead property. There is not asset limit here and the cost of the home may help the community spouse keep more income. We may be concerned if the spouse at home - the community spouse - were to predecease the Medicaid recipient, but that is another issue.
If the Medicaid applicant is single and needs Medicaid in the nursing home or assisted living facility, the applicant is allowed to own a home of up to $572,000 in value (2018). Even if the applicant never returns to the home, the homestead is protected and will never be made a countable asset for Medicaid purposes (unless rented!). Upon the applicant's death, the homestead is protected from creditors, including the state of Florida, if it descends to your heirs at law. We have more on Medicaid estate recovery here. Problems occur though because all of your income goes to the nursing home as part of your patient's responsibility. This means that your family will have to pay for the home's mortgage, upkeep, insurance, taxes, etc., as your assets have been depleted and your income goes to the nursing home! Renting the home is possible but this removes the homestead protection, so that can be an issue as well.
If you want to learn more, please read our Free Guide to Protecting Your Florida Homestead.
Also, we have more on selling your homestead in the event you are in the nursing home.