What Are Considered Assets for Medicaid Long Term Care Purposes?

Summary
Seniors need to meet two financial requirements to qualify for Medicaid Long Term Care – an asset limit and an income limit. This article is focused on assets and what Medicaid considers assets as it evaluates the eligibility of applicants and beneficiaries. How assets affect eligibility status also depends on the type of Medicaid Long Term Care, as well as the applicant’s state of residence and marital status, and this article will examine all of those variables. Read a related article on What Medicaid Considers Income.

Asset Limits and the 3 Types of Medicaid Long Term Care

There are three types of Medicaid Long Term Care relevant to seniors – Nursing Home Medicaid, Home and Community Based Services (HCBS) Waivers and Aged, Blind and Disabled (ABD) Medicaid. Nursing Home Medicaid covers all basic nursing home expenses, including room and board. HCBS Waivers and ABD Medicaid cover long-term care services and supports for seniors living in their own home or the home of a family member, or, in some states, other places in the community like an assisted living facility, adult day care or a memory care unit for seniors with Alzheimer’s disease or other dementias.

In most states in 2024, the individual asset limit for all three types of Medicaid Long Term Care is $2,000. This means Medicaid applicants and beneficiaries can only have $2,000 or less worth of countable assets to qualify for Medicaid or maintain their eligibility. Explaining what Medicaid considers countable assets, and what it doesn’t, is the focus of this article, but it’s not simple. First, we need to look more closely at Medicaid’s asset limits.

There are plenty of exceptions to the $2,000 asset limit mentioned above. In New York, for example, the individual asset limit for all three types of Medicaid Long Term Care is $31,175. In Florida, the individual asset limit for Nursing Home Medicaid and HCBS Waivers is $2,000, but it’s $5,000 for ABD Medicaid. In California, there is no asset limit for Medicaid Long Term Care.

When applying for Medicaid Long Term Care, seniors must submit official documentation that clearly illustrates the value of their assets. This can include paperwork like bank statements, life insurance policies, vehicle titles and home deeds. The state will also re-evaluate a Medicaid beneficiary’s assets once a year during their annual Medicaid Renewal to make sure they are still under the asset limit. The state will do this electronically and without and input from the beneficiary if possible, but some Medicaid Long Term Care recipients may have to supply more financial documents during their Medicaid Renewal.

Impact of Marital Status on Asset Limits

The asset limits mentioned above are all for individual applicants and beneficiaries who are single. But these limits are different if the applicant or beneficiary is married, and they can also vary if the applicant is married but their spouse is not applying for or receiving Medicaid Long Term Care.

Before discussing the assets limits for married couples, one rule must be made clear: Medicaid considers all assets of a married couple to be jointly owned.

In most states in 2024, the asset limit for a married couple for all three types of Medicaid Long Term Care is $3,000 or $4,000, but there are significant exceptions. In Illinois, the asset limit for all three types of Medicaid Long Term Care for married couples is $17,500. In Florida, the asset limit for Nursing Home Medicaid and HCBS Waivers for married couples is $3,000, but it’s $6,000 for ABD Medicaid. In New York, the asset limit for married couples is $42,312 for all three types of Medicaid.

When only one spouse in a married couple is applying for either Nursing Home Medicaid or HCBS Waivers, the asset limit of the non-applicant spouse (often called the community spouse) increases dramatically thanks to the Community Spouse Resource Allowance (CSRA). Depending on the state and the financial situation of the couple, the non-applicant spouse’s asset limit can be as much as $154,140 as of 2024, thanks to the CSRA. To be clear, the CSRA does not apply to ABD Medicaid applicants.

The Medicaid state agency should automatically use the CSRA when appropriate, but this doesn’t always happen. So, applicants should also be aware of the rules and what their CSRA might be. Making these calculations can be difficult, and we recommend consulting with a professional like a Certified Medicaid Planner or an Elder Law Attorney before attempting it on your own.

What Medicaid Considers Assets

Many financial resources (except for income streams) and items of value are considered assets by Medicaid and will be counted toward the applicant’s asset limit for eligibility. These can include:

• Savings accounts
• Checking accounts
• Certificates of Deposit (CDs)
• Stocks
• Bonds
• Vehicles (excluding a primary vehicle)
• Second homes (including timeshares)
• RVs / motorhomes / campers
• Life insurance policies with a cash value greater than $1,500 (in most states)
• Jewelry, art, collectibles, etc.

But there are some assets that are not counted toward Medicaid’s asset limit, which is also known as being exempt. These exempt assets can include:

• Clothing
• Personal items (like wedding rings)
• Primary vehicle
• Life Insurance Policies with a cash value under $1,500
• Essential household furniture and appliances
• Primary home (in most cases)

Retirement accounts like IRAs, 401(k)s, 403(b)s, Keoghs and TSAs can shift between countable and exempt assets, and countable and exempt income sources, depending on several factors: their payout status, if they are owned by the Medicaid applicant/beneficiary or their spouse, and the applicant/beneficiary’s state of residence. Learn more about retirement accounts and how they impact Medicaid Long Term Care eligibility.

Medicaid also has a detailed set of rules when it comes to home ownership, which we will discuss in the next section.

How Medicaid Treats the Home

Most homeowners would not be able to qualify for Medicaid Long Term Care if the home counted toward their asset limit for eligibility. However, the home is exempt from the asset limit in many circumstances.

The home is exempt from asset limit if the Medicaid applicant/beneficiary lives in their home, and their home equity interest in the home is less than the state’s home equity interest limit. Home equity interest is how much of the home’s equity value the applicant/beneficiary owns minus any outstanding debt on the home, like a mortgage. As of 2024, the home equity interest limit in most states is either $1,071,000 (in states with higher property values) or $713,000.

The home is also exempt if the applicant/beneficiary’s spouse lives in the home, or if the applicant’s minor child or blind or disabled child of any age lives in the home. The value of the home and the applicant/beneficiary’s home equity interest do not matter when it comes to this kind of exemption.

The home can even be exempt if no one lives in it, as long as the applicant/beneficiary files an “intent to return home” statement with the state Medicaid office. These statements are official written documents declaring the applicant/beneficiary’s desire to return home if their health conditions allow. Most states will accept intent to return statements even if the Medicaid applicant/beneficiary is not likely to return home, although some states are more strict.

Understanding Medicaid’s Look-Back Period

To prevent Medicaid Long Term Care applicants from simply giving away their assets to qualify, Medicaid uses the Look-Back Period. In most states, the Look-Back Period is 60 months (five years). This means the state will look back into the applicant’s financial history for the 60 months before they applied, but only if they are applying for Nursing Home Medicaid or HCBS Waivers. The Look-Back Period does not apply to ABD Medicaid.

If the state finds the applicant has given away any assets, or sold them at less than fair market value, their application will be denied and they will face a penalty period of ineligibility that could last months or years, depending on the value of the assets in question.

The only exceptions to the Look-Back Period are California and New York. In California, there is no Look-Back Period for  HCBS Waivers and it’s 30 months for Nursing Home Medicaid. Since California eliminated its asset limit as of Jan. 1, 2024, the state will not look into any of the applicant’s financial transactions after that date, but transactions prior Jan. 1, 2024, are still subject to a 30-month Look-Back Period. New York uses the standard 60-month Look-Back for Nursing Home Medicaid, but there is no Look-Back Period for Community Medicaid, which is similar to HCBS Waivers.

Protecting the Home from Medicaid’s Asset Limit

In addition to the exemptions discussed above, there are other ways to protect the home from counting against the asset limit, including the Child Caregiver Exemption and the Sibling Exemption.

The Child Caregiver Exemption lets Medicaid Long Term Care applicants transfer ownership of their home to a qualified adult child without violating the Look-Back Period. The adult child is qualified if they are biological or adopted, if they have lived in the home for at least two years prior to their parent receiving Medicaid Long Term Care benefits, and if during that two years they provided care that prevented their parent from needing Medicaid Long Term Care benefits. Once ownership of the home is transferred from the applicant to their adult child, it will not count against the applicant’s asset limit.

The Sibling Exemption lets Medicaid Long Term Care applicants transfer ownership of their home to a qualified sibling without violating the Look-Back Period. Siblings are qualified if they are biological or adopted, if they have lived in the home for at least one year prior to the applicant receiving Medicaid Long Term Care benefits, and if they are a co-owner of the home. Once ownership of the home is transferred from the applicant to their sibling, it will not count against the applicant’s asset limit.

Other Asset Protections

Any asset placed in a Medicaid Asset Protection Trust (MAPT), including a home, is protected from the asset limit. However, MAPTs violate the Look-Back Period, so in order to use them effectively as a Medicaid planning strategy they need to be utilized at least five years in advance of a senior applying for Medicaid Long Term Care (in most states). MAPTs are also expensive to create and they are not recommended for anyone with less than $100,000 in assets.

Irrevocable Funeral Trusts worth $15,000 or less (in most states) are exempt from the asset limit and purchasing one does not violate the Look-Back Period. So, a Medicaid Long Term Care applicant could purchase an IFT to help them get below the asset limit and qualify for Medicaid, and the IFT will pay for all of their funeral and burial expenses.

Medicaid Long Term Care applicants can also reduce their assets to meet their asset limit without violating the Look-Back Period by purchasing a Medicaid Compliant Annuity (MCA). The applicant would use a lump sum of money (assets) to purchase the MCA from an insurance company, and then company pays back that lump sum in regular monthly payments over a predetermined length of time. Those payments will count toward the applicant’s income limit, and there are specific rules the annuity must follow in order to be Medicaid-compliant.

Using these tools and strategies can be complicated, so we recommend consulting with a professional like a Certified Medicaid Planner or an Elder Law Attorney before attempting them on your own.