Do I Have to Sell or Liquidate All of My Assets to Qualify for Medicaid?
There are a number of different Medicaid programs that can assist elderly or disabled Iowans pay medical bills, home health care expenses and nursing home expenses. Most programs require that your total assets or “resources” be below certain levels in order to qualify. A number of assets or resources, however, are “exempt” and are not included in determining whether you qualify. 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 needed for purposes such as employment or performing essential daily activities such as shopping, obtaining medical treatment, or picking up prescription medications. If a vehicle is not required for the above purposes, one vehicle in which you have equity up to $4,500 is still exempt.
- Household Goods. Household goods and personal effects are exempt up to an equity value of $2,000.
- Burial Accounts, Trusts, Contracts, or Insurance Policies. There are two ways for funds set aside for burial expenses to be exempt for Medicaid eligibility purposes. Note that you can take advantage of one or the other of these options, but not both. First, you can simply earmark 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 an account separate from other monies. Alternatively, you can establish a Burial Trust, Burial Contract or Burial Insurance Policy. To do this, you must typically set up a contractual relationship with a specific funeral home or bank. The funds in the contract, trust or insurance policy must be irrevocable and cannot be accessible by you.
- 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 insurance has no cash value and is not included as a resource no matter what the amount. Also, accumulated dividends are counted as a resource even if the face value is less than $1,500. Consult your insurance agent to help determine the type and details of your life insurance policies.
- 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, combine, trucks and even a portion of the farm bank account as long as all are necessary for running the farm business.
This is a partial list of exempt property. There may be other property or resources that you can exclude. Also, 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. In addition to financial eligibility for Medicaid, there are many rules regarding transferring assets and eligibility for Medicaid. The rules regarding eligibility 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 concerning Medicaid eligibility.
Iowa Legal Aid provides help to low-income Iowans.
To apply for help from Iowa Legal Aid:
- Call 800-532-1275.
- Iowans age 60 and over, call 800-992-8161.
- Apply online at iowalegalaid.org
If Iowa Legal Aid cannot help, look for an attorney on “Find A Lawyer.” A private attorney there can talk with you for a fee of $25 for 30 minutes of legal advice.
*As you read this information, remember this article is not a substitute for legal advice.