That's sometimes referred to as an "over-under" situation. Each state handles it differently, but it's almost always complicated. In some cases, your father will have to go on and off of Medicaid each month, paying privately at the beginning of the month until he runs out of money. Medicaid will pick up the cost for the balance of the month. Since this is very complicated for everyone involved, it may be possible to approach the nursing home and get it to agree to accept your father's income because it is more than the nursing home can get from Medicaid. In some states it's also possible to shelter income in a qualified income trust. We recommend that you consult with an elder law attorney in your state to determine how it’s best handled there. To find an attorney near you, go here: http://www.elderlawanswers.com/elder-law-attorneys.