Medicaid is a joint federal and state program that helps people with limited income and few assets cover health care costs. But, can you qualify for Medicaid if you own a home? What about a car or a life insurance policy? Many people feel that they are ineligible for Medicaid coverage of medical expenses like 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’s just a matter of knowing the rules and making a legal and financial plan to ensure those requirements 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.
Generally, though, the government considers certain assets (usually up to a specific allowable amount) to be exempt. Any cash, savings, investments or property that exceed these limits are considered “countable” assets and will disqualify an applicant.
Medicaid Asset Limits
- Cash: An applicant can possess up to $2,000 cash that will not be counted as an asset in determining Medicaid eligibility.
- Primary Residence: An applicant’s primary residence is exempt if it meets two fundamental requirements. First, the home must be in the same state in which the owner is applying for Medicaid. Second, the applicant’s equity interest in their home must be valued at $572,000 or less, although some states use a higher limit of $858,000.
- Car: 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 pre-paid funeral or burial arrangements exempt. Pre-purchased burial plots are exempt not only for the applicant but also for their immediate family members. If arrangements have not been pre-planned and pre-funded, a separate bank account containing up to $1,500 for funeral expenses can be excluded.
- Property: According to federal law, any real or personal property that is essential to an applicant’s self-support, regardless of value or rate of return, is excluded. That could include farms, rental properties and other real estate investments that generate income. The catch is that the property must generate at least six percent of its value annually to qualify for the exclusion.
- Life Insurance: Only the cash value of a life insurance policy owned by an applicant is counted, therefore all term life insurance policies are ignored. The combined cash value of any universal, permanent and variable life insurance policies must not exceed $1,500 to be exempt.
Medicaid is a very complex government program. In addition to asset limits, there are many other rules for calculating countable income and determining one’s medical need for care and assistance. Furthermore, slightly different financial rules apply for married couples. It is recommended to familiarize yourself with these guidelines 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.