Assets count for Medicaid only if you apply through certain pathways. If you are 65 or older, blind, disabled, or seeking coverage for nursing home or home- and community-based care, the state will measure what you own against strict dollar limits. If you are a working-age adult or a child applying through the regular income-based route, your savings, home, and retirement accounts are not part of the decision at all.
Who Has to Pass an Asset Test
Since 2014, most non-elderly, non-disabled adults and children qualify for Medicaid using Modified Adjusted Gross Income (MAGI). Federal regulations prohibit states from applying any asset or resource test to people in MAGI-based eligibility groups.1eCFR. 42 CFR 435.603 – Application of Modified Adjusted Gross Income Your bank balance, home equity, and retirement savings simply do not enter the analysis. Only income does.
Asset tests still apply through the older, non-MAGI pathways. That covers people who are 65 or older, blind, or disabled, and anyone applying for nursing home care or a home- and community-based services waiver. If you are in one of those categories, everything below applies to you.
The Dollar Limits
For a single applicant, the federal countable resource limit is $2,000. For a married couple where both spouses are applying, it is $3,000.2Office of the Law Revision Counsel. 42 USC 1382 – Eligibility for Benefits These numbers have not been adjusted for inflation since 1989.3Social Security. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet Some states set slightly higher limits, but most use the federal floor.
The test is all or nothing. Exceed the limit by a single dollar and you are ineligible; there is no partial benefit.4Social Security. POMS SI 01110.001 – Role of Resources If your income is too high but your medical bills are large, a “medically needy” pathway may still let you qualify in some states.
What Counts and What Doesn’t
The general rule: any resource you could convert to cash to pay for your own support is countable.4Social Security. POMS SI 01110.001 – Role of Resources
Countable assets include:
- Checking and savings accounts, certificates of deposit, and cash on hand
- Stocks, bonds, and mutual funds
- Real estate other than your primary home, including vacation homes, rental properties, and vacant land
- The cash surrender value of life insurance, once the combined face value of your policies exceeds $1,500
Exempt assets, which the agency ignores, include:
- Your primary residence, subject to the equity cap below
- One vehicle
- Personal belongings, furniture, and household goods
- Burial funds up to $1,500
- Life insurance with a combined face value of $1,500 or less per person
The burial fund and life insurance exclusions interact. The $1,500 burial fund limit is reduced dollar-for-dollar by the face value of any exempt life insurance you own. If you already have a $1,500 whole life policy protected from counting, you cannot also set aside a separate $1,500 burial fund on top of it.
The Home Equity Cap
Your home is exempt only up to a set equity level. Each state picks a figure between a federal minimum and maximum, which for 2026 are $752,000 and $1,130,000.5Centers for Medicare & Medicaid Services. 2026 SSI and Spousal Impoverishment Standards Equity above your state’s chosen level can disqualify you. The cap does not apply if your spouse, a child under 21, or a blind or disabled child of any age lives in the home.
If you enter a nursing home, the home can still be exempt as long as you state an intent to return. Federal guidance treats that intent as subjective, so a written statement is enough and a family member can make it if you cannot.6Office of the Assistant Secretary for Planning and Evaluation. Medicaid Treatment of the Home – Determining Eligibility and Repayment for Long-Term Care A few states use stricter criteria.
Retirement Accounts
IRAs, 401(k)s, and similar accounts are handled based on whether you are drawing from them. In many states, an account in “payout status,” with at least the required minimum distribution being withdrawn on a regular schedule, is not counted as an asset; each distribution is treated as income instead. An account not in payout status is generally counted at its full balance, which can push you over the limit on its own.
Roth IRAs create a specific problem. They have no required minimum distributions, so they cannot easily be placed in payout status, and many states count the full balance. Because rules vary by state, retirement savings are one area where getting local advice before applying matters.
Joint Accounts
Federal policy presumes that when a Medicaid applicant co-owns an account with someone who is not applying, the entire balance belongs to the applicant.7Social Security. POMS SI 01140.205 – Jointly-Held Resources You can rebut that presumption, but you carry the burden. Bank statements, deposit records, and other documentation showing the co-owner put in their own money are what the agency looks for.
Rules for Married Couples
When one spouse enters a nursing home and the other stays home, federal spousal impoverishment rules protect the community spouse from being stripped of everything.
Community Spouse Resource Allowance
The Community Spouse Resource Allowance (CSRA) is the pool of assets the at-home spouse gets to keep. For 2026 the federal minimum is $32,532 and the maximum is $162,660.5Centers for Medicare & Medicaid Services. 2026 SSI and Spousal Impoverishment Standards The exact amount is set based on the couple’s total countable resources when the ill spouse first enters institutional care. Generally the community spouse keeps the greater of the state minimum or half of the combined countable resources, capped at the federal maximum. Anything above that has to be spent down before the institutionalized spouse qualifies.
Monthly Income Floor
The community spouse also gets a Minimum Monthly Maintenance Needs Allowance (MMMNA). For 2026 the federal floor is $2,643.75 per month and the maximum, with housing adjustments, is $4,066.50.5Centers for Medicare & Medicaid Services. 2026 SSI and Spousal Impoverishment Standards If the community spouse’s own income falls short, part of the institutionalized spouse’s income can be diverted to close the gap.
The Five-Year Look-Back
Federal law requires states to review every asset transfer you made during the 60 months before your Medicaid application.8Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets Gifts and below-market transfers made during that window trigger a penalty period during which you cannot receive long-term care benefits.
The penalty length is the total uncompensated value of the transfers divided by the average monthly cost of nursing home care in your state.8Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets Give away $120,000 in a state where care averages $10,000 per month, and you face 12 months of disqualification. The clock does not start until you have applied and would otherwise be eligible, so waiting out the penalty in advance is not an option.
Transfers That Don’t Trigger a Penalty
Federal law exempts several categories of transfer, especially for the home:8Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
- Transfers to your spouse or to a trust for your spouse’s sole benefit
- Transfers to a child under 21, or a child who is blind or disabled at any age
- Transfers of the home to a sibling who already has an equity interest and lived there for at least a year before you entered a nursing facility
- Transfers of the home to an adult child who lived with you for at least two years immediately before institutionalization and provided care that delayed your placement
Penalties also do not apply if you can show the transfer was for fair market value, was not made to qualify for Medicaid, or if the assets have been returned. States must waive the penalty when enforcing it would cause undue hardship.
Legitimate Spend-Down
If your countable assets are over the limit, you can bring them down by spending on things of equal value. Because you receive something in return, these are not gifts and do not trigger look-back penalties. Options include:
- Paying off a mortgage, credit card balances, medical bills, taxes, or a car loan
- Repairing, renovating, or making accessibility improvements to your home, which shifts countable cash into exempt home equity
- Buying exempt property such as a more reliable vehicle or new household furnishings
- Prepaying funeral and burial costs through an irrevocable burial contract
One trap: prepaying for services you have not received yet, such as paying a caregiver, landlord, or utility company months ahead, is generally treated as a gift. Stick to paying for goods already delivered or debts already owed.
Estate Recovery After Death
Assets that were protected during your life are not necessarily protected after it. Federal law requires every state to seek repayment from the estates of deceased Medicaid recipients who were 55 or older and received nursing home care, home- and community-based services, or related hospital and prescription drug coverage.9Medicaid.gov. Estate Recovery The home that was exempt while you were alive can be reached to reimburse the state.
Some protections limit when recovery can happen. States cannot recover from your estate if you are survived by a spouse, a child under 21, or a blind or disabled child of any age.9Medicaid.gov. Estate Recovery A lien placed on the home during a nursing home stay must be removed if you return home, and cannot be enforced while a spouse, minor child, disabled child, or a sibling with an equity interest lives there. Every state must also have a process to waive recovery when it would cause undue hardship to surviving family.