If you are browsing this and other Medicaid / elder law websites, you likely already know that, in order to be eligible for the Medicaid nursing home benefit, one must have $2,000 or less in total assets and earn less than $2,250 per month in income (as of 2018). This article focuses on the asset test: and luckily, Medicaid does not require all if it’s recipients to be completely impoverished because certain assets will be “exempt”. This means that Medicaid will not count certain assets when it runs its asset test to see if the Medicaid applicant qualifies. Many people consulting with a local elder care attorney ask: “which assets are exempt from Medicaid?” or “which assets are not-counted by Medicaid?” Here they are:
House May be Exempt from Medicaid
I wrote an article that explains, in detail, what factors determine If the house is counted for Medicaid: if within equity limits ($572,000 as of 2018) and Medicaid applicant has “intent to return home,” the house is exempt.
If married: If spouse continues to reside in the house, it is exempt, regardless of value (no equity limits) and not subject to. This also applies if there is a minor child or special needs
child living at home.
Adult Child Care-giving Exception. If adult child has lived in the home for two years prior to the parent’s admission to the nursing home, then parent can convey house to child for nominal value and it will be deemed a compensated transfer (not subject to penalty). Read more about the Medicaid Sibling Exception. If sibling co-owns home and resides there for one year prior to the Medicaid Recipient’s admission to a nursing home. Institutionalized sibling can convey their portion of home to well sibling and it will be deemed a compensated transfer (not subject to penalty).
Community Spouse Resource Allowance
Medicaid provides special protections for the spouses of Medicaid applicants to make sure the spouse, that does not require nursing home care, will have the minimum support needed to continue living in the community while their husband or wife is receiving LTC benefits. After the Supreme Court ruled in 2015, these benefits are now available to same-sex marriages as well. In 2018, the Community Spouse Resource Allowance (CSRA) is: $123,600. This is the value of assets that can be shifted to the community spouse
Other Medicaid Exemptions
1. One Car – regardless of value (within reasonable limits, don’t buy a Lamborghini). Also a second vehicle that is seven years old or older, will not be counted by Medicaid.
2. Personal property – also have to be reasonable. Medicaid is not going to expect you to inventory your jewelry, clothing, refrigerator and armoires…but if a new diamond ring is
purchased, or if an original Picasso is in the living room, those will be questioned and counted.
3. Home improvements – (any amount…can get that new kitchen, put on a new roof, etc… but intent is for people to install railings, wheelchair ramps, etc…)
4. Life Insurance – up to $2,500 total and combined cash value. See the article on how medicaid counts life insurance. The death benefit is not calculated because Medicaid is only looking for accessible resources (and the death benefit is not accessible to the Medicaid recipient while they are alive).
5 401k or IRA - if properly structured (i.e. in payout mode with certain restrictions), these assets can be excluded. However, the payout amounts will be deemed countable income.
6. Assets to Income – Assets that can be converted to income for MMMNA purposes.
7. Assets that cannot be sold - classic example is a timeshare. Timeshares can be extraordinarily difficult to sell, yet they are an asset (and not protected by homestead exemption). If you can show that you attempted to sell (i.e. get a letter from a broker or the timeshare company indicating that a "good faith effort" to sell has been made and the asset cannot be sold or timeshare company will not buy back), then Medicaid cannot count it as an asset.
8. Prepay for funerals – the Medicaid applicant can buy irrevocable pre-paid funerals for themselves and basically their entire family (e.g. applicant, spouse, siblings, sibling’s spouses, sibling’s children, applicant’s children, children’s spouses, children’s children).
9. Rental or Income producing property - non-homestead property that is rented out will not be counted as an asset (however, the income will be counted)
After exempt assets have been determined or purchased, if there are still excess assets, your Medicaid lawyer can help you strategize on how best to legally and ethically convert countable assets into non-countable assets for Medicaid purposes.
Medicaid Lawyer Resources