Do I Have to Sell or Liquidate All of My Assets to Qualify for Medicaid?

Most Medicaid programs have an asset or “resource” limit.  Many assets or resources, however, are “exempt,” meaning that they are not included in determining eligibility. These exempt assets and resources commonly include the following:

• Homestead.  Your homestead is exempt as a resource as long as you or your spouse use it as a principal residence.   Temporary absences, such as for trips, visits or hospitalization or nursing home stays, do not cause a loss of the exemption as long as you intend to return to your home.  Absences longer than six months, however, may not be considered temporary.  If you sell your home, the proceeds are exempt for up to three months as long as you intend to purchase another homestead.

• Vehicles.  One vehicle is exempt, regardless of value, if it is used for the transportation of the person receiving Medicaid or a member of the person’s household.

• Household Goods.  Household goods and personal effects are excluded as a resource. "Household goods" are items used to maintain the home as well as to accommodate, comfort and entertain the occupants. "Personal effects" are belongings of family members including clothing, books, and grooming aids. 

• Burial Accounts, Trusts, Contracts, or Insurance Policies. There are two ways to set aside funds for burial expenses for Medicaid eligibility purposes.  You can take advantage of one or the other of these options, but not both.  First, you can simply earmark funds for burial up to $1,500 in either a savings account or the cash value of a life insurance policy you own.  These funds must be in a separate account.   Second, you can establish a Burial Trust, Burial Contract or Burial Insurance Policy and deposit the actual amount it will cost to pay for funeral and burial expenses.  To do this, you must enter a contract with a specific funeral home or bank.  The contract, trust or insurance policy must be “irrevocable” meaning that you cannot access or withdraw the funds. You can use either of these options for both you and your spouse.

• Burial Spaces and Markers.  Burial spaces, including crypts, vaults, grave sites and headstones or markers, owned by you for your use or the use of any member of your immediate family, are exempt.

• Life Insurance.  If the face values of all your life insurance policies total less than $1,500, the cash surrender value of the policies is exempt; otherwise, the cash value is included as a resource.  Note that term life insurance has no cash value and is not included as a resource no matter what the amount.  Accumulated dividends are counted as a resource even if the face value of the policy is less than $1,500.  Consult your insurance agent for information about life insurance policies.  DHS will ask for copies of the policies if you apply for Medicaid. 

• Property Used for Employment and Self Employment.  Property used for employment and self-employment is exempt. This includes the real estate, inventory, and equipment used in a business.  For example, if you are a farmer, you may exclude your livestock, tractor, trucks and a portion of the farm bank account as long as all are necessary for running the farm. 

This is a partial list of exempt property.  In addition, there are exceptions to excluding some of the above resources.  For example, resources such as a home, a vehicle or property used for self-employment may not be excluded if you become a permanent resident of a nursing home or other care facility.   

The rules for qualifying for Medicaid are often complex and confusing. You may call the Legal Hotline for Older Iowans at 1-800-992-8161 if you have questions or would like more information about Medicaid eligibility.