Who Qualifies for Medicaid?

By Rick Law, founder of the Estate Planning Center at Law Elder Law in West Suburban Aurora, IL

Medicaid imposes some strict qualification criteria, but in general, it will cover long-term care in a skilled nursing facility when the patient meets two conditions:

  • The patient’s personal income and asset holdings are under strict limits
  • The patient meets medical criteria that are established by his or her state

Medicaid divides individuals’ assets into three classes. These are:

  • Countable assets (also referred to as non-exempt or available assets in some states)
  • Non-countable assets (also called exempt assets)
  • Inaccessible assets

Countable assets include any personal financial resources that are owned or controlled by the applicant for Medicaid benefits.

These resources must be spent on the patient’s care. Countable assets typically include:

  • Cash
  • Stocks
  • Bonds
  • All general investments
  • All tax-qualified pension plans if the applicant is retired
  • Deferred annuities if they are not annuitized
  • A primary residence (if the net value of the residence exceeds a cap that is set by the individual state). Note that this rule does not apply if there is a spouse living in the home.
  • All life insurance with cash surrender value, if the death benefit exceeds $1,500
  • Vacation property
  • Investment property

Non-countable assets are acknowledged by Medicaid, however, they are not used in determining eligibility. These assets typically include:

  • A small sum of money, called a cash allowance, that is normally under $2,000. (This amount differs from state to state).
  • A primary residence (if it does not exceed a certain cap amount)
  • A prepaid funeral plan (there are limitations to these plans)
  • Term life insurance
  • Business assets (if the applicant derives their livelihood from them)
  • A car for personal use
  • Personal items

Inaccessible assets are resources that would have had to be spent on the Medicaid applicant’s care, or in the case of a primary residence, have been subject to a lien for recovery of benefits.

However, there particular assets can be considered inaccessible if they have been transferred to another individual or have been placed in a certain type of trust.

Medicaid also has the right to review an individual’s financial records at the time that an application for benefits has been received. State Medicaid programs evaluate each applicant’s financial situation prior to granting access. And, they look for transfers of countable assets within certain time periods, referred to as a look-back period.  Currently in Illinois, that look-back period is 60 months.  Among other things, they look to see if the applicant has given away money or an asset, or sold an asset for less then fair market value in the 5 year period prior to applying for Medicaid assistance. Penalties apply if non-allowable transfers are found.

Too many families needlessly lose everything they have.  Don’t let that be you.  If you need help paying the overwhelming cost of long term care, give our office a call at 800-310-3100.  Your first consultation is absolutely free.  We’ll let you know what steps you need to take, right now, to protect yourself and your family.  Call now, because when you’re out of money, you’re out of options!


Rick L. Law, Attorney, Estate Planner for Retirees.

Rick was named the #1 Illinois elder law estate planning attorney by Leading Lawyer Magazine. He has been quoted in the Wall Street Journal, AARP Magazine, TheStreet.com, and numerous newspapers and articles. Rick is the lead attorney for Law Elder Law, LLP, focusing in Estate Planning, Guardianship, and Nursing Home Solutions. His goal is to give retirees an informed edge when it comes to dealing with an uncertain future.  Get flexible retirement strategies that work during good times and bad, plus information on how you can save your home and assets from being used to pay for long term care.

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