While two-thirds of nursing home residents are covered by Medicaid, at root it is a health care program for the poor. The definition of “poor” has become quite complex in the area of nursing home coverage. In order to be eligible for Medicaid benefits, a nursing home resident may have no more than $2,000 (in most states) in “countable” assets, as of 2022.

All assets are counted against these limits unless the property falls within the short list of “noncountable” assets. These include:

1. Personal possessions, such as clothing, furniture, and jewelry.
2. One motor vehicle of any value as long as it is used for transportation.
3. The applicant’s principal residence, provided it is in the same state in which the individual is applying for coverage. In most states, the home has not been considered a countable asset for Medicaid eligibility purposes as long as the nursing home resident intended to return home to the extent their equity is less than $636,000, (in 2022), with the states having the option of raising this limit to $906,000 (in 2021). In all states, the house may be kept with no equity limit if the Medicaid applicant’s spouse or another dependent relative lives there.
4. Prepaid funeral plans (many states limit the value) of up to $1,500 set aside in a specified burial account, and a small amount of life insurance.
5. Assets that are considered “inaccessible” for one reason or another.
6. Business property that produces income essential for self support.

The spouse of the nursing home resident – called the “community spouse” – is limited to one half of the couple’s joint assets up to $137,400 (in 2022) in countable assets. (In some states the community spouse may keep all of the couple’s assets up to $137,400, not just half up to that amount.) This figure, called the community spouse resource allowance (CSRA), changes each year to reflect inflation. In addition, the community spouse may keep the first $27,480  (in 2022), even if that is more than half of the couple’s assets.

So here are a few examples of how this works for married couples in states that permit the community spouse to keep just half of the couple’s joint assets within these limits:

     Assets               CSRA

Couple A         $20,0000        $20,000

Couple B         $200,000        $100,000

Couple C         $400,000        $128,640

Several planning options often permit both individuals nursing home residents and especially community spouses to preserve more than these limits.

Related Articles:

The Need for Long-Term Care Planning

Transfers of Assets that Medicaid Does Not Penalize

Are Tax Planning Trusts Protected for Medicaid Purposes?

Are Gold and Silver Coins Considered to be Countable Assets?

How Can I Protect My Property for My Sons if I Need Long-Term Care?