Under the SSI program's resource rules, a resource is cash or another asset the owner could convert to cash for support and maintenance, and stocks, bonds, mutual fund shares and financial-institution accounts such as savings, checking and certificates of deposit are examples of resources that are ordinarily liquid. How a state's Medicaid program counts any account, including a retirement account, depends on that state's current rules, and a transfer out of an account for less than fair market value on or after the look-back date can cause a penalty period.
Most people facing this question are sitting with a parent's or spouse's account statements and a nursing-home admission that came sooner than anyone planned. The savings may have taken decades to build, and the worry is simple: will that money disqualify the person who needs care, and what happens to the spouse still living at home? This page walks through how Medicaid for long-term care treats investment accounts, which assets are often left out of the count, how the look-back and spend-down rules work, and where trusts and estate recovery fit in.
What Medicaid Counts as a Resource — and How Investment Accounts Are Treated
A countable asset, also called a resource, is anything the applicant owns and could turn into cash to pay for care. Medicaid for nursing-home and other long-term care looks at the total value of those resources, and if it sits above the limit in the state's program, the person is not yet eligible; that limit depends on that state's current rules.
Medicaid is, in the words of the CMS eligibility policy page, "a joint federal and state program." Federal law sets the framework, and each state runs its own program with its own asset limit, its own list of exempt categories and its own procedures. A rule that holds in Florida may not hold in California, so the answer for a specific account turns on the state where the application is filed. That point applies to nearly everything below.
Under the SSI program's resource rules, stocks, bonds, mutual fund shares and financial-institution accounts, including savings, checking and time deposits (also known as certificates of deposit), are examples of resources that are ordinarily liquid, meaning they can be converted to cash within 20 days (excluding certain nonwork days), and liquid resources other than cash are evaluated according to the owner's equity in them. How a state counts them for Medicaid depends on that state's current rules.
When and how a state determines and verifies resources depends on that state's current rules. Income is treated separately from assets. Under the SSI program's rules, dividends and interest, which are returns on capital investments such as stocks, bonds or savings accounts, are unearned income, while the account itself is a resource. Mixing the two leads to confusion, because each has its own rules.
This page gives no tax advice.
Assets Left Out of the Resource Count
The federal Supplemental Security Income rules at 42 U.S.C. § 1382b set out what is left out of the resource count under that program. In plain terms, those rules leave out:
- the home and the land it sits on;
- household goods, personal effects and a car, as long as their combined value stays within what the Commissioner of Social Security considers reasonable;
- burial plots and agreements to buy one, within set limits; and
- property a person needs to support themselves, such as tools of a trade.
That is not the full list, and which assets a state excludes depends on that state's current rules.
How a state treats a retirement account, such as an IRA or 401(k), depends on that state's current rules.
How the Look-Back Period Applies to Investment Account Transfers
Under 42 U.S.C. § 1396p(c)(1)(B)(i), the federal look-back is 60 months for any transfer made on or after February 8, 2006. The look-back period is the window before the application during which the agency reviews gifts and other transfers. For someone in a nursing home, the window is measured back from the first date the person is both institutionalized and has applied. A particular state's period and start date depend on that state's current rules; California's are the ones the California Department of Health Care Services states.
A transfer for less than fair market value inside the window can lead to a penalty period: months during which an institutionalized person is ineligible for Medicaid payment of nursing facility services, a level of care in any institution equivalent to that of nursing facility services, or home or community-based services furnished under a waiver. Under § 1396p(c)(1)(E), for an institutionalized individual the number of months is the total, cumulative uncompensated value of the assets transferred on or after the look-back date, divided by the average monthly cost to a private patient of nursing facility services in the state (or, at the state's option, in the community where the person is institutionalized) at the time of application. States may not round down a fraction of a month.
The start date follows its own rule. Under § 1396p(c)(1)(D)(ii), the penalty begins on the later of the first day of a month during or after which assets were transferred and the date the person is eligible and would otherwise be receiving institutional-level care based on an approved application, and not during any other period of ineligibility. So for a transfer inside the look-back the clock can start later than the gift itself, and a gift made four years ago inside the window is penalized the same way as one made last month.
Not every transfer is penalized. A transfer to the person's spouse carries no transfer penalty under § 1396p(c)(2)(B)(i). The exceptions in § 1396p(c)(2) include transfer of the home to a spouse, and each exception has its own conditions. How a state applies them depends on that state's current rules. The Medicaid crisis planning page covers the look-back dates and these exceptions.
Spending Down Investment Accounts: What It Means and How It Works
Spend-down means bringing countable resources to or below the state's asset limit by spending or converting them in ways the rules allow. It is different from giving money away, which falls under the look-back rules above.
Which kinds of spending the rules allow depends on that state's current rules.
Annuities get particular scrutiny. Under § 1396p(c)(1)(G), the term "assets" for the transfer rule includes an annuity purchased by or on behalf of an annuitant who has applied for long-term care coverage unless the annuity is described in, or bought with the proceeds of, certain retirement accounts, or is irrevocable and nonassignable, actuarially sound, and pays equal amounts with no deferral and no balloon payments. Separately, under § 1396p(c)(1)(F), buying an annuity is treated as a transfer for less than fair market value unless the state is named as remainder beneficiary as that paragraph requires. A closer look at how Medicaid spend-down works covers the mechanics.
For California readers, Medi-Cal's "share of cost" is a separate idea. It concerns monthly income, not reducing assets to the asset limit.
Protection for the spouse at home
Married couples have added protection. The institutionalized spouse is, in the statute's terms, a person in a medical institution or nursing facility who is married to a spouse not in one; the community spouse is the spouse of an institutionalized spouse (§ 1396r-5(h)). Under 42 U.S.C. § 1396r-5, the couple's combined resources are totaled at the start of the first continuous period of institutionalization, and a share is protected for the community spouse through the community spouse resource allowance. That allowance is set by reference to the spousal share, which is half of the couple's total resources, and to minimum and maximum dollar figures that change each January 1; a State plan may specify a higher minimum, up to the maximum, so the exact protected amount depends on that state's current rules.
Income is protected separately. CMS's 2026 standards bulletin lists the federal minimum monthly maintenance needs allowance as $2,705 in all states except Alaska and Hawaii, effective July 1, 2026; the maximum changes each January 1. A state's own figure applies from the date that state gives.