What Assets Can You Keep When You Go On Medicaid?

Medicaid is a state and federal program that provides health insurance coverage to those who qualify.  Medicaid will cover certain long-term care expenses, such as nursing home costs.  Many families though, face challenges meeting Medicaid’s strict income and asset eligibility requirements.  Individuals in most states must have no more than $2,000 dollars in countable, or non-exempt, assets in order to qualify for Medicaid.  The spouse (community spouse) may retain more assets and/or income, but specific restrictions vary by state. 

The good news is that not all assets are included in this strict limit.  Certain assets are not countable, or exempt, when determining eligibility for Medicaid.  A person can reduce or “spend down” his or her countable assets by purchasing exempt assets to qualify more quickly. 

Exempt assets include:

Primary residence (up to $552,000 subject to state limits)

Personal belongings and household essentials

One personal vehicle

A funeral contract or trust that cannot be canceled.  (Irrevocable)

Certain life insurance policies and annuities

Countable assets include: 

Cash and bank accounts

Certificates of Deposit, stocks, bonds and money market accounts

IRAs, 401(k)s generally

Additional real estate besides your primary residence

Luxury personal property

Funeral contracts that can be canceled

Trusts that can be accessed by the applicant (Revocable) Understanding the difference between countable and exempt assets is crucial for effective Medicaid planning.  It is important to understand the look-back period, Medicaid spend down, and improper asset transfers when determining Medicaid eligibility. Irrevocable funeral trusts and immediate annuities can be helpful in obtaining the Medicaid asset limits. Proper planning can help preserve assets for a community spouse while ensuring eligibility for long-term care coverage. It is essential to speak with an elder law attorney or Medicaid professional to guide you through the process. The earlier you start planning, the more options you have to protect your assets and ensure quality care.