Other Important General Rules

Not all assets are considered in determining eligibility for Medicaid. While specifics may vary in each case, the following are general rules that apply in most cases – consult an attorney to determine how they apply to you:

  • The Medicaid applicant’s home of any value is exempt and remains so, as long as the applicant, the applicant’s spouse, a child under 21, or a blind or disabled child of any age lives in the house.
  • The first $840,000 of equity in the Medicaid applicant’s home is exempt if the house is not inhabited by the applicant, the applicant’s spouse, a child under 21, or a blind or disabled child of any age (if the equity exceeds $840,000, the Medicaid applicant can still qualify by reducing the equity through a reverse mortgage or home equity loan.
  • Most IRA’s and 401k’s are exempt – to any value – if they meet certain rules.
  • The Medicaid applicant’s (or spouse’s) personal necessities, which includes clothing, furniture and a car, to any value, are exempt provided the items are for personal use or benefit.
  • The Medicaid applicant’s life insurance that has no surrender value, such as term insurance, is exempt. Life insurance that has a cash surrender value in excess of $1,500 is not exempt.
  • The Medicaid applicant and the spouse may maintain burial funds of up to $1,500 each. Additionally,
  • The Medicaid applicant may pre-pay the entire cost of a funeral and burial, by creating an irrevocable burial trust, without restriction on the cost of the funeral.
  • Every Medicaid applicant may retain a personal expense account of $14,850 and may also keep $50 each month from his or her income.

Result: A nursing home resident may potentially qualify for Medicaid even if she owns a multi-million dollar house inhabited by her husband, the couple owns a Rolls Royce and a Bentley, and the remainder of their assets is in IRA’s and 401k’s of any value.

This is a very brief overview Medicaid basics, and is not specific legal advice on how you should plan your financial affairs. We strongly recommend that you contact an attorney to review your own circumstances before you decide on a course of action.