Medicaid – What Can I Keep?

by | Oct 8, 2021 | Medicaid Planning and Asset Protection

The expense of nursing home care can rapidly deplete the lifetime savings of couples. There is a common misconception that a couple must use up all of their available assets for care before one spouse becomes eligible for Medicaid. The Department of Human Services has a five-year look-back period for transfers, so you can’t just give away your money. It is important to know what assets are exempt, what assets you can retain, and how to avoid spending more that you have to.

To qualify for Medicaid, the applicant must have less than $2,000.00 in countable resources. Certain assets are exempt.  This includes the home, one vehicle, and pre-paid funeral or burial plans for both spouses.  Exempt items also include personal possessions, such as clothing, furniture, and other household items.

For married couples, Medicaid also has safeguards in place to ensure that the spouse of a Medicaid-eligible person can retain assets. When a couple applies for Medicaid, an assessment of the couple’s non-exempt resources, regardless of ownership, is made.  The spouse of the Medicaid applicant can retain an amount between $25,728.00 to $128,640.00. This is called the “Protected Resource Amount.” The non-Medicaid spouse gets to keep these assets.

The remaining assets are attributed to the Medicaid applicant, and must be spent down to $2,000.00. One option for spending the money is to pay off debt, including a home mortgage.  Not only is this an appropriate way to spend the applicant’s resource, it is a benefit to the spouse remaining at home, as there is no longer a monthly mortgage payment. Under certain circumstances, the applicant’s share can be placed in a specially drafted Trust prepared by an attorney and approved by the Department of Human Services.

Once an individual is approved Medicaid, the remaining spouse’s funds are not subject to any Medicaid payback. The money can be spent, saved, or invested. This is why it is critical to do a complete financial analysis before applying for Medicaid.

Applying for Medicaid involves gathering and submitting complete and current financial information. Once the application is filed, navigating the rules and regulations on spending down assets can be overwhelming. An experienced attorney can help you determine what assets you can keep.