Medicaid Eligibility & Exempt Assets

For Medicaid purposes, certain assets are considered exempt (or non-countable) when determining eligibility. It can be valuable to be aware of such exemptions prior to the immediate need for long-term care. These exemptions can vary by state, but generally, the following types of assets are commonly exempt:

1. Primary Residence: The home in which the applicant lives is typically exempt up to a certain equity value. Some states have limits on the equity value that can be exempt. Home improvements to the primary residence, including kitchen and bath repairs, safety modifications, carpeting, and handicap accessibility, may also be a way to spend down assets without violating Medicaid’s rules.
2. Personal Belongings and Household Items: Personal effects, household goods, and furniture are usually exempt.
3. One Vehicle: One automobile, regardless of value, can be exempt if it is used for transportation for the beneficiary or a household member.
4. Irrevocable Burial Trusts and Prepaid Funeral Plans: Funds set aside for burial expenses are often exempt, as are irrevocable prepaid funeral plans.
5. Life Insurance: Term life insurance is exempt because it has no cash value. Whole life insurance policies with a cash value below a certain amount (typically $1,500) may also be exempt.
6. Income-Producing Property: Property essential to self-support, such as a farm or business property, may be exempt.
7. Retirement Accounts: Some states exempt certain retirement accounts like IRAs and 401(k)s if they are in payout status, meaning the applicant is drawing income from them.
8. Community Spouse Resource Allowance (CSRA): When one spouse enters a nursing home and the other remains in the community, the community spouse is allowed to keep a certain amount of the couple’s joint assets, known as the CSRA.
9. Certain Trusts: Assets held in specific types of trusts, such as Special Needs Trusts or Pooled Income Trusts, may be exempt.
10. Income-Producing Assets: Some states allow exemptions for assets that produce income necessary for the applicant’s or the spouse’s support.

It’s important to consult with a Medicaid planning expert or an elder law attorney in your state to get accurate information tailored to your specific situation, as Medicaid rules can be complex and vary by location.