Medicaid is a joint federal and state program that helps people with limited income and few assets cover health care costs. But, can you own a home and still qualify for Medicaid? Can you own a car on Medicaid? What about a life insurance policy? Many people feel that they are ineligible for Medicaid coverage of nursing home costs and doctor’s bills simply because they own property or have some money in the bank. The truth is there are a variety of assets seniors can own and still be eligible. It is just a matter of knowing the rules and making a legal and financial plan to ensure they are met.
Keep in mind that each state administers its own unique mix of Medicaid programs and sets its own financial and medical eligibility requirements (within federal parameters) for each. You can find more detailed information about state-specific Medicaid eligibility requirements on Medicaid.gov.
A single Medicaid applicant may keep up to $2,000 in countable assets and still qualify. Generally, the government considers certain assets to be exempt or “non-countable” (usually up to a specific allowable amount). Any cash, savings, investments or property that exceeds these limits is considered a “countable” asset and will count towards an applicant’s $2,000 resource limit.
2020 Medicaid Asset Limits
Countable Liquid Assets
A single applicant who is 65 or older can possess up to $2,000 in cash, stocks, bonds, certificates of deposit (CDs) and other liquid assets. In New York, a single applicant is allowed to retain $15,750 in liquid assets. Asset limits for married couples vary by state, Medicaid program and whether one or both spouses are applying for Medicaid.
Primary Residence Value
An applicant’s primary residence is exempt if it meets a few fundamental requirements. First, the home must be in the same state in which the owner is applying for Medicaid. Second, the applicant’s equity value in their home (fair market value minus debts if owned singly) must be valued at $595,000 or less, although some states use a higher limit of $893,000. California’s Medicaid program, Medi-Cal, does not enforce a maximum equity value limit on primary residences. Third, the applicant must either continue residing in the primary residence or have an “intent to return home” if they are living in a nursing home.
If a Medicaid applicant’s spouse or dependent child continues living in the home following their move to a nursing home, then the house is considered exempt regardless of its value.
One automobile of any current market value is considered a “non-countable” asset for Medicaid purposes as long as it is used for the transportation of the applicant or another member of their household.
Funeral and Burial Funds
Medicaid considers the value of any non-refundable pre-paid funeral plan or burial contract exempt. This includes irrevocable funeral trusts, but most states limit these funds to $15,000 or less per spouse. Some states also allow applicants to set aside up to $1,500 in a revocable burial fund that is considered an exempt asset.
Property for Self-Support
According to federal law, only an applicant’s equity interest in any real or personal property that is essential to their self-support is taken into account. Examples include farms, rental properties and other real estate investments that generate income. Up to $6,000 of an applicant’s equity interest in the property is exempt from their allowable assets, but only if the property generates a net annual income of at least six percent of the equity value annually. Any value above the $6,000 cap is counted as an asset.
Life Insurance Policies
Only the cash value of a life insurance policy owned by an applicant is counted, therefore Medicaid ignores all term life insurance policies. The combined cash value of any universal, permanent and variable life insurance policies must not exceed $1,500 to be exempt.
Seek Help with Medicaid Spend-Down and Application
Medicaid is a very complex government program. Just because a senior’s assets exceed the general limits listed above does not mean they are automatically ineligible for Medicaid coverage. Different states implement slightly different rules and resource limits, and elders can devise a personalized asset spend-down strategy to meet their states’ eligibility criteria.
In addition to asset limits, there are many other guidelines for calculating countable income and determining one’s medical need for care and assistance. Furthermore, different financial rules apply for married couples. It is recommended to familiarize yourself with these eligibility requirements early on in case you ever need to help an aging loved one apply for Medicaid (or file an application yourself).
It is crucial to work with a certified elder law attorney who has extensive knowledge of the unique Medicaid program in your state and is well versed in legal and financial Medicaid planning strategies. In most cases, handling the application process without any professional assistance can result in a determination of ineligibility and even a costly Medicaid penalty period.
To see if you or an aging loved one might qualify for Medicaid to help pay for long-term care or home and community based services (and to explore potential eligibility for other assistance programs), visit Benefits.gov to use the Benefit Finder tool.