An exempt asset is something Medicaid does not count when it decides whether a person qualifies for long-term care. Under federal law the home, household goods and personal effects, a car, burial space and certain business property can be excluded, with limits. Each state applies these rules its own way, so what is protected depends on the state.
Most people facing this question are a husband or wife whose spouse has just moved into a nursing home, or an adult child sitting with a parent's bank statements and deed and wondering what will be lost. The worry is concrete: will the house count, will the savings disqualify Mom, and what will Dad have left to live on at home. This page sets out what the rules exclude, what they count, and where each state's own rules decide the answer.
It also explains how the home-equity limit, the spousal protections and the look-back period fit around exempt assets, because those three rules shape what an exemption is actually worth.
What 'Exempt Asset' Means Under Medicaid Rules
The first question most families ask is simple: which of these accounts and belongings will Medicaid add up? The answer turns on one distinction. A countable asset is a resource Medicaid adds up and measures against the eligibility limit: cash, savings and checking accounts, investments and similar property. An exempt asset, also called a non-countable or excluded resource, is one Medicaid leaves out of that total. That distinction decides whether a person is over or under the limit.
Federal law sets the framework every state follows. Medicaid is "a joint federal and state program," as CMS describes it, and each state runs its own program under its own rules. As a result, the same savings account, car or life-insurance policy can be treated differently in two states. Federal provisions such as 42 U.S.C. § 1396p and 42 U.S.C. § 1396r-5 draw the outer lines; the state fills in the figures.
This page covers Medicaid for long-term care, meaning nursing-home care and home- and community-based services. It does not cover Medicare, private long-term-care insurance or veterans' benefits.
Two timing points matter from the start. The asset test is applied as of the application, so what the person owns then is what gets counted. Separately, the agency looks backward at transfers made before the application, a review called the look-back period, explained in its own section below.
The Primary Home: When It Is Exempt and When It Is Not
For many families the house is the largest asset and the one they most want to keep. Federal resource rules exclude "the home (including the land that appertains thereto)" under 42 U.S.C. § 1382b(a)(1). That exclusion has a ceiling for long-term care. Under 42 U.S.C. § 1396p(f), a person "shall not be eligible" for nursing-facility or other long-term-care coverage if the person's equity interest in the home exceeds the limit, unless one of three people lawfully lives there: the person's spouse, the person's child under 21, or the person's child who is blind or disabled.
Home equity means the home's fair-market value minus any debt secured by it, such as a mortgage. The statute sets a base amount, lets each state choose a higher figure up to a stated ceiling, and raises both every year with inflation. The current number for a given year comes from the state's Medicaid agency. The statute also says a reverse mortgage or home-equity loan may be used to reduce equity, and requires a process to waive the limit for demonstrated hardship.
Estate recovery is the second part of the home question, and often the one adult children worry about most. It means the state seeks repayment from a Medicaid member's estate after death. Under 42 U.S.C. § 1396p(b), states must seek recovery for members who were 55 or older, at least for nursing-facility services, home- and community-based services and related hospital and prescription-drug services, and for certain permanently institutionalized members regardless of age. Federal law under 42 U.S.C. § 1396p(b)(2) delays recovery, rather than cancelling it, while a surviving spouse, a child under 21 or a blind or disabled child survives. CMS adds that states must have procedures for waiving recovery that would cause undue hardship.
What a state can reach after death is set by that state's law. California, for example, has its own estate recovery rules, and other states draw their own lines.
Spousal Protections: What the Community Spouse Keeps
A husband or wife at home usually wants to know one thing first: what will be left to live on? The community spouse is the spouse who stays at home while the other spouse, the institutionalized spouse, receives long-term care. Federal spousal-impoverishment rules in 42 U.S.C. § 1396r-5 exist so the spouse at home is not left with nothing.
Resources are pooled first. When the institutionalized spouse begins a continuous stay, the state totals the resources either spouse owns, leaving out those excluded under 42 U.S.C. § 1382b, and computes a spousal share of one-half. At application, all of the couple's resources are treated as available to the institutionalized spouse, but only to the extent they exceed the amount protected for the community spouse. That protected amount is the community spouse resource allowance (CSRA). The community spouse minimum and maximum resource allowances are adjusted each January, as the CMS 2026 bulletin explains; the figure a state actually uses comes from its own Medicaid agency. Either spouse may ask the state to assess the couple's resources, and that notice must describe the right to a fair hearing.
Income is handled separately. During any month of the stay, the community spouse's own income is generally not treated as available to the institutionalized spouse. If the community spouse's income is low, part of the institutionalized spouse's income can be set aside under the minimum monthly maintenance needs allowance (MMMNA). Federally, the MMMNA is adjusted effective July 1 of each year and the maximum community spouse income maintenance allowance is adjusted each January, as the same CMS bulletin explains. A state's own figure applies from the date that state's page gives. If a spouse establishes that the community spouse needs income above the standard allowance "due to exceptional circumstances resulting in significant financial duress," the statute provides for a higher amount, and either spouse who is dissatisfied with the allowance is entitled to a fair hearing.
Couples are often relieved to learn that moving assets between spouses carries no transfer penalty: 42 U.S.C. § 1396p(c)(2)(B)(i) exempts a transfer to the person's spouse. For couples, the spousal protection rules in crisis planning often sit at the center of the first conversations.
Other Assets Medicaid Typically Does Not Count
Beyond the house, families tend to ask about the everyday things: the car in the driveway, the furniture, the funeral already paid for. Federal law in 42 U.S.C. § 1382b(a) lists further exclusions, and 42 U.S.C. § 1396r-5(c)(5) carries several into the spousal rules. Each state decides how they apply in long-term-care Medicaid.
Household goods and personal effects are excluded under federal law "to the extent that their total value does not exceed" an amount set as reasonable. The SSI regulations, as in force in October 2026, do not count household goods such as furniture and appliances or personal effects such as wedding and engagement rings, but do count items held for their value or as an investment.
An automobile appears in the same federal provision with the same value condition. Under the SSI regulations, one automobile used for transportation for the person or a household member is excluded regardless of value, and the equity in any other automobile is counted.
Burial space, and an agreement representing its purchase, is excluded when held for the burial of the person, a spouse or immediate family, subject to size or value limits. Separately, the SSI regulations exclude up to $1,500 each of funds set aside for the burial expenses of the person and a spouse, if the funds are kept separate and clearly designated for burial.
Life insurance is treated differently by policy type. Term coverage has no cash surrender value to count. Under the SSI regulations, a cash-value policy counts to the extent of its cash surrender value, unless the total face value of all policies on the person is $1,500 or less.
Business property matters to families with a farm, a shop or a small company. Federal law excludes property "so essential to the means of self-support" as to warrant exclusion, including property used in a trade or business. Whether a particular business interest, including an LLC interest, is exempt turns on the state's rules and how the business is structured.
No category on this list is exempt everywhere without conditions. The California Medi-Cal asset rules show how one state applies its own.