Medicaid Asset Limits: What Counts, What Doesn't, and How the Rules Work

Medicaid pays for nursing-home and other long-term care only after the applicant's countable assets are at or below a limit, and that limit is set by each state, not by one national number. Some assets count, others are exempt, and a spouse who stays home keeps a protected share. The state where the applicant lives decides the figures.

Most people facing this question are not reading out of curiosity. A mother has just moved from the hospital into a nursing home, or a husband's care at home has become more than one person can manage, and the bills are arriving faster than the family expected. The questions come all at once: does the savings account disqualify her, is the house at risk, what does the spouse at home get to keep, and what about the money given to the grandchildren two years ago.

This page walks through how Medicaid looks at assets for long-term care: what counts, what does not, how the home and a married couple are treated, how gifts are reviewed, and what can happen after death. It explains the federal framework and shows where each state's own rules take over.

What the Medicaid Asset Limit Actually Means

A countable asset is anything the applicant owns that Medicaid adds up and measures against the limit: cash, bank accounts, investments, and real estate other than the home. The asset limit is the ceiling those countable assets must fall to before the program will pay for long-term care. An exempt asset is one the rules leave out of that total, and the next section covers which assets usually fall into each group.

Federal law sets the framework and each state runs its own program within it. For people 65 and older, or who are blind or disabled, the Centers for Medicare & Medicaid Services explains on its eligibility policy page that eligibility is generally determined using the income methodologies of the Supplemental Security Income (SSI) program, while some states, known as 209(b) states, use certain more restrictive criteria. The same page notes that the income rules used for most younger adults and children do not include an asset test at all, which is why the asset question matters so much for older applicants needing care.

The asset limit and the income limit are two separate tests, and this page covers assets. In California, "share of cost" is an income idea: it concerns monthly income, and it is different from reducing assets to the asset limit. The figures and rules of California's own program are covered in more depth on this site's page on California Medi-Cal asset limits.

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.

Countable vs. Exempt Assets: What Medicaid Does and Does Not Count

The federal SSI resource rule, 42 U.S.C. § 1382b(a), lists what is left out, and the spousal rules in 42 U.S.C. § 1396r-5 borrow it. That list includes the home and the land it sits on; household goods, personal effects and an automobile, to the extent their total value is within what the Commissioner of Social Security finds reasonable; a burial space and agreements for one, subject to limits set by regulation; and property essential to self-support, such as a tradesperson's tools. The list is partial and goes on to more specific items. Each state applies its own version, so the exact exempt items and their limits depend on that state's current rules, including how it treats prepaid funeral plans and life insurance.

Countable assets usually include cash, checking and savings accounts, certificates of deposit, stocks, bonds, mutual funds, and real property other than the home.

Retirement accounts are where families are most often surprised. Whether an IRA or 401(k) in the applicant's name counts, and whether it matters that the account is already paying out regular distributions, depends on the state. There is no single national answer.

Joint accounts are similar: how a joint account is counted depends on the state's current rules.

Trusts turn on their terms. CMS explains that when an individual, a spouse or someone acting for them sets up a trust with at least some of the individual's funds, the trust can be considered available to the individual. A revocable trust, one the person can change or cancel, is generally counted. Whether an irrevocable trust is counted depends on its terms and on state rules.

The Home and the Home-Equity Limit

Under 42 U.S.C. § 1396p(f), a person is not eligible for nursing-facility or other long-term-care services if the person's equity interest in the home exceeds $500,000. A state may choose a higher figure, up to $750,000, and both amounts rise each year from 2011 with the consumer price index. The CMS chart issued with its April 27, 2026 bulletin lists the 2026 home-equity limits as a minimum of $752,000 and a maximum of $1,130,000.

That limit does not apply when the applicant's spouse, child under 21, or child who is blind or disabled is lawfully living in the home, 42 U.S.C. § 1396p(f)(2). The statute also says nothing prevents a person from using a reverse mortgage or home-equity loan to reduce equity, and it requires a process to waive the limit for demonstrated hardship.

So the home is often exempt, but not whatever its value. The federal limit turns on the equity figure and on who lives in the home.

Whether a home stays excluded during a nursing-home stay when the person says they intend to return is a matter of each state's current rules. CMS also explains that a state may place a lien on the real property of a person who is permanently institutionalized, except when the spouse, a child under 21, a blind or disabled child, or a sibling with an equity interest lives there, and must remove it if the person is discharged and returns home. Under 42 U.S.C. § 1396p(a)(2), the sibling exception applies to a sibling who lived in the home for at least one year immediately before the person's admission.

The home is also the asset most often reached by estate recovery after death, covered further below.

How Asset Limits Work When a Spouse Stays Home: Spousal Impoverishment Rules

The community spouse is the husband or wife who stays at home while the other, the institutionalized spouse, receives long-term care. Federal law at 42 U.S.C. § 1396r-5 keeps the community spouse from having to spend down to a single person's limit.

The count starts with a snapshot. As of the beginning of the first continuous period of institutionalization, the state computes the total value of resources either spouse owns and a spousal share equal to half, 42 U.S.C. § 1396r-5(c)(1). At application, all resources of either or both spouses are treated as available to the institutionalized spouse, but only to the extent they exceed the protected amount, regardless of state community-property law. Either spouse may ask for an assessment of the total at the start of institutionalization, and the state must give notice of the right to a fair hearing. Once eligibility is established, the community spouse's resources are no longer counted against the institutionalized spouse.

The protected amount is the community spouse resource allowance (CSRA). The CMS 2026 chart lists a minimum resource standard of $32,532 and a maximum of $162,660; federally, these resource figures and the maximum income allowance change each January 1. Where a state sets its own figure, it applies from the date that state publishes, as this site's page on Florida Medicaid planning shows for one state.

Income is treated separately. During the stay, the community spouse's own income is not counted as available to the institutionalized spouse, 42 U.S.C. § 1396r-5(b)(1). The minimum monthly maintenance needs allowance (MMMNA), the income floor protected for the spouse at home, changes each July 1 federally; the CMS chart's housing allowance tied to it is $811.50 in most states, effective July 1, 2026.

A transfer to the spouse carries no transfer penalty, 42 U.S.C. § 1396p(c)(2)(B)(i). Whether a state allows "spousal refusal," where the community spouse declines to contribute, depends on that state's current rules.

The Look-Back Period and How Transfers Affect Eligibility

The look-back period is the window before an application during which the agency reviews any transfer of assets for less than fair market value. Under 42 U.S.C. § 1396p(c)(1)(B)(i), it is 60 months for any transfer made on or after February 8, 2006. For a person in a nursing home, it runs back from the first date the person is both institutionalized and has applied. States apply this within their own programs; California's look-back period, and the date it started, depend on that state's current rules.

The penalty period is the time during which Medicaid will not pay for nursing-facility care, an equivalent level of institutional care, or home- and community-based waiver services, after a transfer for less than fair market value. For an institutionalized person, the statute measures it in months: the total uncompensated value of the assets transferred, 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), at the time of application, 42 U.S.C. § 1396p(c)(1)(E)(i).

The penalty starts 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, 42 U.S.C. § 1396p(c)(1)(D)(ii). A gift made four years ago, inside the window, is penalized the same way as one made last month: the clock usually starts only when the person has applied and otherwise qualifies. This is often the hardest point for a family that gave money to children years before anyone needed care.

Not every transfer is penalized. The statute lists exceptions in 42 U.S.C. § 1396p(c)(2), including a transfer to the person's spouse, and a sale for fair market value is not a transfer for less than fair value in the first place. Whether another listed exception applies depends on the facts and the statute's exact terms.

How transfers fit into a care crisis is covered on this site's page on Medicaid crisis planning.

Spend-Down: Reducing Countable Assets to Reach the Limit

Spend-down, on the asset side, means lowering countable assets to the state's limit by legitimate means before or during the application. Money paid for full value, for real goods, services or debts, is not a gift and is not a transfer penalty problem.

The ways the rules allow assets to be spent down commonly include paying for care out of pocket, repairs or changes to the home, paying off a mortgage or other debt, buying a burial space or burial agreement within the applicable limits, and replacing a vehicle with one that qualifies as exempt. These are choices the rules permit, not recommendations, and each state's exempt-asset rules decide whether a purchase actually leaves the countable total.

Asset spend-down is different from California's share of cost. Share of cost concerns monthly income; spending down concerns the assets measured against the asset limit. In California they are separate rules.

Annuities come up often. In concept, an annuity can turn a lump sum, which would count, into a stream of income, which is then judged under the income rules. Federal rules attach conditions to annuities used this way, and state treatment varies; an annuity does not always protect assets. A trust works differently: an irrevocable trust may take assets out of countable status, depending on its terms and the state's rules, and the trust rules CMS describes can treat it as available.

Every asset and transfer must be reported accurately on the application. No spend-down choice guarantees eligibility or protects any particular asset. More on the mechanics appears on this site's page about a Medicaid spend-down attorney.

Estate Recovery: What Happens to Assets After Death

Estate recovery is the state's claim, after a Medicaid recipient dies, for repayment of certain benefits it paid. Under 42 U.S.C. § 1396p(b), states must seek it. CMS explains that for people 55 or older, states must seek recovery from the estate for nursing-facility services, home- and community-based services, and related hospital and prescription drug services, and may choose to recover for other services, except Medicare cost-sharing paid for Medicare Savings Program beneficiaries. For a person of any age whom the state determines cannot reasonably be expected to be discharged from a nursing facility or other medical institution and return home, 42 U.S.C. § 1396p(b)(1)(A) also requires the state to seek recovery.

Federal law delays recovery, rather than cancelling it, while a surviving spouse, a child under 21, or a blind or disabled child of any age survives, 42 U.S.C. § 1396p(b)(2). States must also set up procedures to waive recovery when it would cause undue hardship. The CMS State Medicaid Manual transmittal on estate recoveries adds that a state may limit a hardship waiver to the time the hardship continues.

What a state can recover from depends on its own law. Some states define the estate by their probate law. Others use a broader, "expanded" definition that can reach assets passing outside probate, and the State Medicaid Manual notes a state may collect against an annuity if its probate law includes annuities or if it uses the expanded definition. CMS also explains that money left in a trust after death may, under certain conditions, be used to repay Medicaid. California's recovery scope depends on that state's current rules.

This is why an exempt home is not necessarily a protected home. Exemption during life and recovery after death are separate questions, and the answer to the second depends on the state.

Why Asset Limits Vary by State

Federal law supplies the skeleton: the 60-month look-back, the home-equity limit, the spousal allowance range, estate recovery. Each state fills in the rest through its own program, including its asset limit, its list of exempt assets and their values, its CSRA figure within the federal range, how it computes a penalty period, whether it allows spousal refusal, and how far estate recovery reaches.

The differences can be large. Limits for a single applicant vary from state to state. Within one state, a nursing-facility program and a home- and community-based waiver program may follow different rules, so a person moving from home care to a facility can face a different test.

The figures also move. The CSRA and the maximum income allowance change each January 1 federally, the MMMNA and housing allowance each July 1, and states update their own numbers on their own dates. A figure that was right last year may not be right now.

For a family, this means a national overview explains the framework but cannot decide a case. The answer depends on the rules of the state where the applicant lives and applies, on the program, and on dates. What a Medicaid planning attorney does with those questions is described on this site's page about a Medicaid planning attorney.

If You'd Like to Talk Through Asset Limits

Asset questions rarely stay in one box. Whether a mother's IRA counts, whether the house is above the equity limit, how much a husband at home keeps and how an old gift is treated all depend on one state's rules and on dates. This page does not cover Medicare, private long-term-care insurance or veterans' benefits.

To discuss a situation like this with an attorney, request a consultation about your family's Medicaid and long-term-care options through Medicaid Asset Protection Group.