Medicaid Exempt Assets: What You Can Keep and Still Qualify for Long-Term Care Coverage

Many families think they must sell all they own before Medicaid will help with long-term care. That is not how the rules work. Medicaid lets you keep some things. It counts other things. This guide explains the split in plain terms at the federal level. Our Paying for Care section holds more guides on how to pay for care.

What exempt and countable mean

Medicaid uses two groups for the things you own. One group is called exempt. Those items do not count toward the limit. The other group is called countable. Those items do count toward the limit.

If your countable items are over the limit, you may not qualify yet. If they are at or under the limit, you pass that part of the test. There is also an income test. The asset test is just one part of the full check.

States run their own Medicaid programs. They work inside federal rules. So the same item can be treated in a slightly different way from state to state. Always confirm the exact rule with your state Medicaid office.

The resource limit you must meet

The standard limit is $2,000 for one person (Ledger D3). For a couple, the standard is $3,000 (Ledger D3). This is the cap on countable resources for the person who needs care.

Countable resources are things you can turn into cash. The state looks at what you own on the date you apply. It adds up the countable items. It does not add the exempt items.

Keep good records of each account and each item you own. Bank statements and deeds help show what is yours. Clear records make the review faster and cut down on errors.

The home you live in

The home you live in is often exempt. That means its value does not count in most cases when you or your spouse still lives there. But there is a limit on home equity.

Home equity limits run from $752,000 to $1,130,000 (Ledger D8). Each state picks a limit inside that range. If your equity is above your state limit, the home can count against you.

Rules can differ if no one lives in the home. Rules can also differ if you do not plan to return. Ask your state office how it treats a home when the owner moves to care for good.

One vehicle

In most cases, one vehicle is exempt. A car you use for rides to care, work, or shops often does not count. The state may set rules on the type of vehicle or its use.

A second vehicle often counts. So can a vehicle held just as an investment. Check with your state office before you assume a vehicle is safe. Keep the title and proof of use in your files.

Household goods and personal items

Household goods and personal items are often exempt. This group can include furniture, clothes, and items you use each day in your home. These are things for daily life, not things held to make money.

Items held for their cash value are treated in a different way. Jewelry, art, or collectibles held as an investment may count. If you are not sure about an item, ask the state office and keep its answer in writing.

Burial funds and burial plots

Certain burial funds and burial plots can be exempt. State rules set the terms for this group. Some funds must be set aside in a clear way and marked for burial use only.

The details vary a lot by state. The type of fund matters. The way it is set up matters too. Ask your state office what it allows before you set funds aside. Get the rule in writing and keep it with your papers.

What a spouse at home can keep

When one spouse needs care and the other spouse stays at home, the spouse at home is called the community spouse. That spouse can keep a share of the couple's assets. This share is called the community spouse resource allowance.

For 2026, that share runs from $32,532 to $162,660 (Ledger D4). Each state sets the exact amount inside that range. The state looks at the couple's assets at the time care starts. It then sets the share the spouse at home can keep.

This rule helps the spouse at home keep funds for rent, food, and bills. Our community spouse guide explains how that share is set and how it works with income rules. Read it if one spouse will stay at home while the other gets care.

What counts toward the limit

Some items count in full or in part. Common countable items include:

If the total of these items is above $2,000 for one person (Ledger D3), you may need a plan to bring it down. Our spend-down guide explains how families lower countable assets in ways the rules allow. Read it before you spend or move funds.

• Cash and funds in bank accounts above the limit.
• Stocks, bonds, and other investments.
• Extra real estate that is not your home.
• Land you do not live on.
• Funds in accounts you can withdraw.

The income cap in some states

Assets are not the only test. Income counts too. Some states use a hard income cap for long-term care Medicaid.

In income cap states, the cap is $2,982.00 per month (Ledger D2). If your income is above that cap, you may not qualify in those states unless a legal tool the state allows is in place. Other states use a different test and let you spend extra income on care.

Ask your state office which test it uses. The asset rules in this guide and the income rules work side by side. You must pass both tests to qualify.

Do not give assets away without advice

It can be tempting to give a home or funds to family. Do not do that without advice first. Medicaid looks at transfers you made for less than fair value. A transfer like that can cause a penalty period.

In a penalty period, Medicaid will not pay for long-term care for a set period of time. The family then has to pay for care on its own during that time. This rule catches many families by surprise.

Talk to your state Medicaid office or a trusted adviser before you give, sell, or move any asset. A short talk first can prevent a long problem later.

Who pays for what

• Medicaid pays for covered long-term care for people who qualify under their state rules.
• Medicare pays for short-term skilled care in limited cases. It does not pay for long-term custodial care.
• Medicaid can also help some people with Medicare costs if they qualify through their state.
• Private pay covers care and costs that no program covers. Families often pay this way before they qualify or for care a program does not cover.
• The person in care may have to put part of their income toward care costs under state rules. Our guide on the personal needs allowance explains what a resident can keep each month.

Sample situation

James is 78 and needs nursing home care. His wife, Ruth, will stay in their home. They own their home, one car, household goods, and bank accounts. The home equity is below their state limit, so the home is exempt while Ruth lives there. The car and household goods are exempt too. The state sets Ruth's share of their assets under the community spouse rule (Ledger D4). James must bring his countable share down to the $2,000 standard (Ledger D3). James and Ruth do not give funds to their children. They keep their bank records, ask their state Medicaid office to confirm each step in writing, and use the spend-down guide to plan the rest.

Steps to take before you apply

• List all you own, and mark each item as likely exempt or countable.
• Check your home equity against your state limit in the $752,000 to $1,130,000 range (Ledger D8).
• Ask your state Medicaid office to confirm how it treats your home, car, and burial funds.
• Keep bank statements, deeds, titles, and letters in one folder.
• Do not give assets away or sell them below fair value without advice.
• If you have a spouse at home, ask how the spouse share will be set in your state.

Sources

• https://www.medicaid.gov/federal-policy-guidance/downloads/cib04272026.pdf
• https://www.medicaid.gov/medicaid/eligibility/index.html