Limitations of Assets for Medicaid Eligibility

Medicaid is government health insurance that helps low-income families and individuals pay for medical care when they otherwise might not be able to do so. Since it is a program for low-income families and individuals, not only are there income limitations that must be met, but also there are limits on the value of the things you can own if you want Medicare to cover your stay in a nursing home.

Asset Limit

• Federal Medicaid rules require that nursing home residents receiving Medicaid have no more than $2,000 in countable assets. Note that this is a federal rule. Since Medicaid also has a state component, the rules in your state may vary somewhat. States have the leeway to make some of the asset rules less restrictive than the federal rules, but not more restrictive.

Countable Assets

• Not all assets are considered when tabulating the value of your assets. Your personal possessions, including expensive jewelry but also furniture and clothing, are noncountable assets. The value of one vehicle is excluded as long as it used by someone in the house for transportation. You can even get the value of a second vehicle exempted, sometimes, if it is needed for health or self-support reasons. The value of your primary residence is noncountable under certain conditions. Prepaid funeral plans, some life insurance and inaccessible assets are also not counted against you. Countable assets tend to be cash, bank deposits, certain retirement funds, certain securities and life insurance cash values.

Home

• Your home is not considered countable as long as the nursing home resident intends to return to it. Otherwise, up to $500,000 in equity is a noncountable asset, with some states allowing up to $750,000. Other state variations include that if there is a likelihood that the resident can return home, the house may be excluded, or the value of the house may be excluded as long as a spouse or a dependent relative is living in it.

Transfer Penalty

• Because many people will have more than $2,000 in countable assets and expect to soon need to enter a nursing home, they sometimes try to transfer those assets from their name into someone else's name to be able to qualify for Medicaid. If Medicaid determines that you transferred property without receiving fair value for it, you can be penalized by having your eligibility for Medicaid delayed. The penalty is having the value of what you transferred divided by the average private pay cost of a nursing home in your state. The result is the number of months your eligibility for Medicaid will be delayed. If the asset is transferred back to the nursing home resident, the penalty will be erased. There are some exceptions to the transfer penalty that mainly concern transferring property to a spouse or blind or disabled child.

Spousal Protection

• If a spouse enters a nursing home while the remaining spouse remains at home, the remaining spouse has some protections against being forced into poverty so that Medicaid will pay for the nursing home. The spouse living at home is allowed to keep half of the countable assets up to $109,560 (in 2010). This is the most that a state can allow without a hearing or court order. The least a state can allow is $21,912.