Does Medicaid Consider Assets for Eligibility?

Medicaid is a joint federal and state healthcare program providing coverage to millions of Americans, including children, pregnant women, parents, seniors, and individuals with disabilities. Eligibility for Medicaid often depends on an applicant’s financial resources, encompassing both income and assets. The consideration of assets is particularly relevant for those seeking long-term care services, such as nursing home care or home and community-based services.

Understanding Asset Limits

Medicaid eligibility is subject to specific asset limits, which represent the maximum value of financial resources an applicant can possess to qualify for benefits. These limits are designed to ensure that Medicaid primarily supports individuals with demonstrated financial need. The precise thresholds can vary significantly depending on the state and the specific Medicaid program for which one is applying.

States set these limits to manage program costs and direct aid to those who cannot afford necessary medical care, especially long-term care, out-of-pocket. While the general individual asset limit for long-term care Medicaid in most states is $2,000, some states may have higher limits or even no asset limits for certain programs.

Assets That Count

When determining Medicaid eligibility, various assets are considered “countable” because they are liquid or can be converted to cash to pay for medical expenses. Common examples include cash, funds in checking and savings accounts, and certificates of deposit (CDs). These forms of wealth are expected to be used towards the cost of care before Medicaid benefits commence.

Investment vehicles such as stocks, bonds, and mutual funds are also counted as assets. Annuities and real estate beyond the primary residence, such as second homes or investment properties, fall into the countable category. Certain retirement accounts, including Individual Retirement Accounts (IRAs) and 401(k)s, may be considered countable once the individual is receiving distributions or can access the funds. If an asset can be liquidated to cover care costs, it is included in the eligibility assessment.

Assets That Do Not Count

Certain assets are considered “exempt” or “non-countable” by Medicaid. The primary residence is exempt, provided it is used as the principal place of residence by the applicant, a spouse, or a dependent, and falls within equity limits, which can range from $730,000 to $1,000,000 in some states. One vehicle is exempt, as are household goods and personal effects like furniture, clothing, and jewelry. These items are considered essential for daily living and are not expected to be sold to pay for care.

Specific financial arrangements also receive exempt status. Burial plots and burial funds (up to a specified limit or if irrevocable) are not counted. Term life insurance policies, which have no cash value, are also exempt. Assets held within certain trusts, such as irrevocable trusts or special needs trusts, may be exempt, as they are established to protect resources for specific purposes or beneficiaries.

The Look-Back Period

Medicaid employs a “look-back period” to review an applicant’s financial transactions before applying for long-term care benefits. In most states, this period extends 60 months, or five years, immediately preceding the application date. This scrutiny identifies any uncompensated transfers of assets, meaning assets given away or sold for less than fair market value. This rule prevents individuals from divesting their assets to quickly meet Medicaid’s financial eligibility requirements.

If uncompensated transfers are discovered during the look-back period, a penalty period of Medicaid ineligibility may be imposed. The length of this penalty is calculated by dividing the total value of the transferred assets by the average monthly cost of nursing home care in the state, known as the “penalty divisor.” This means the applicant or their family must cover the cost of care out-of-pocket for that duration. The penalty period begins when the applicant would otherwise be eligible for Medicaid.

Special Rules for Spouses

Medicaid includes specific provisions to protect the “community spouse” (the spouse not applying for Medicaid long-term care) from financial hardship. The Community Spouse Resource Allowance (CSRA) permits the community spouse to retain a portion of the couple’s combined countable assets. This allowance ensures that the non-applicant spouse has sufficient resources to continue living independently. For 2025, the federal minimum CSRA is $31,584, and the maximum is $157,920, with states setting limits within this federal range.

Beyond assets, the Minimum Monthly Maintenance Needs Allowance (MMMNA) addresses the income needs of the community spouse. If the community spouse’s own income falls below a certain threshold, they may receive a portion of the institutionalized spouse’s income to meet living expenses. This allowance helps prevent the community spouse from becoming impoverished while their partner receives Medicaid-funded care. The MMMNA varies by state and is subject to annual adjustments, with ranges falling between $2,644 and $3,948 per month in 2025. These spousal protection rules are exceptions to general asset limits, acknowledging the financial challenges faced by couples when one spouse requires extensive long-term care.