If you’re trying to understand how much money you can have to qualify for Medicaid and receive coverage for a nursing home, there’s a figure you’ve probably heard: $2,000. But that amount doesn’t automatically mean that everything you own must be counted in that calculation. Medicaid distinguishes between countable and exempt resources, and that difference can completely change your financial situation.
Moreover, rules vary by state. Therefore, before you sell a property, gift money, or move your savings, it’s wise to check local rules and not rush into decisions.
What assets don’t count toward Medicaid’s $2,000 limit?
For someone applying for Medicaid for long-term care, certain assets can be excluded from the resource calculation. Among the most common are:
The Centers for Medicare and Medicaid Services (CMS) explain that states have leeway to determine how they apply certain resource rules within federal parameters. Therefore, just because a resource is protected in one state does not automatically mean you’ll receive the same treatment in another.
What money can count toward Medicaid?
Here enters the part that tends to cause the most concern. Bank accounts, investments, and other assets that can be turned into cash may be considered countable resources.
That can include money in checking or savings accounts, stocks, bonds, mutual funds, and certain properties that are not protected by an exemption.
But there’s an important caveat: not all Medicaid applicants are subject to exactly the same resource limit. The rules depend on the type of coverage and the state where you live. In fact, CMS notes that state programs can apply different methodologies for certain groups.
That’s why, if you’re looking for information about the Medicaid asset limit for a nursing home, looking only at a national figure isn’t enough.
Can you spend your savings before applying for Medicaid?
You can legitimately use your resources for your own needs. The problem comes when you try to transfer assets to someone else to appear that you no longer own them.
Paying real debts, covering medical expenses, making necessary repairs to your home, or purchasing goods and services for yourself are very different from giving $30 to a relative.
And here Medicaid has an especially important rule.
What happens if you gift money before applying for Medicaid?
Medicaid can review transfers made during the five years prior to the application for long-term care coverage. The federal program states that a transfer below market value can trigger a penalty period for receiving certain long-term care services.
That period should not be taken lightly. A transfer that seemed like family help can end up becoming a problem when you need Medicaid to cover a nursing home.
Put simply: giving away your savings is not the same as spending your money on your own needs.
What happens to your home if you enter a nursing home?
This is perhaps one of the biggest sources of confusion.
Entering a nursing home does not automatically mean that Medicaid considers your home an available resource. There are protections and specific conditions. Estate recovery may also come into play after death.
CMS notes that states must attempt to recover certain Medicaid payments made to people aged 55 and older, including nursing home services and other long-term care costs. There are exceptions and protections for certain surviving family members.
Therefore, selling your home or transferring it to a relative solely to try to meet Medicaid requirements can be a decision with enormous financial consequences.
What should you review before moving your money?
If you or a relative are thinking about applying for Medicaid to pay for long-term care, review first:
Medicaid itself recognizes special protections for the spouse who continues living at home. These rules are designed to prevent the spouse who remains in the community from ending up with virtually no resources due to the cost of institutional care.
The $2,000 figure, then, is only the beginning of the story. What truly matters is to know what your state counts as a countable resource and what assets you can legally retain. And before gifting, selling, or moving a substantial amount of money, it’s worth consulting a Medicaid or estate planning professional in your state.
