Summary
Medicaid considers the assets of married couples to be jointly owned, which can be a problem when only one spouse is applying for Medicaid long-term care. That’s because the applicant spouse needs limited finances to qualify for Medicaid while the non-applicant spouse needs resources to live comfortably. Medicaid does offer some basic protections in these situations, and there are planning strategies that can help the non-applicant spouse maintain their lifestyle.
One of the eligibility requirements for Medicaid long-term care applicants is meeting an asset limit. In most states in 2026, the asset limit for a married couple is $3,000 or $4,000. As mentioned above, all assets of a married couple are considered to be jointly owned by Medicaid. However, when just one spouse is applying, the Community Spouse Resource Allowance (CSRA) allows the non-applicant spouse (also known as the community spouse) to keep up to $162,660 in assets, as of 2026. The CSRA limit can change dramatically by state, with some states allowing just half that amount. It should be noted that asset limits, in addition to changing by state, can change with marital status and type of Medicaid. Also, not all assets count toward the limit, some are exempt, as we will discuss below.
The CSRA only applies to Nursing Home Medicaid and Home and Community Based Services (HCBS) Waivers. It does not apply to the third type of Medicaid that can be relevant to seniors, Aged, Blind, and Disabled (ABD) Medicaid. It should also be noted that applicants can’t simply give away their assets to become eligible, a rule that’s enforced by Medicaid’s Look-Back Period.
The state officials processing Medicaid applications should recognize situations where the CSRA is relevant and use it accordingly, but this doesn’t always happen. That’s why applicants, their families or their representatives should make their own CSRA calculations and make it clear they are using the CSRA on their application.
The CSRA is helpful, but it may not be enough to protect all assets or maintain the lifestyle of some clients. There are, however, other ways to preserve or maximize assets that can help the community spouse and are allowed by Medicaid. The rules governing these methods can be complicated and change depending on the state, which is why we recommend consulting with a Certified Medicaid Planner before attempting to implement them on your own. Also, homes are treated differently than other assets, and those differences are discussed in the final section of this article.
Couples who have assets beyond the Medicaid limit for eligibility, including the CSRA, can reduce those assets by spending on themselves. They can spend down on things like paying off debt, home improvements, vehicle repairs, medical expenses or even taking a vacation, as long as they only spend on themselves. Paying for someone else’s medical bills or education, or paying for them to go on vacation with you, would be considered a violation of the Look-Back Period. Buying expensive items like jewelry or art would not work as a spend down tactic because those items would be counted as assets by Medicaid.
Couples can reduce their assets to meet their eligibility limit, and provide the community spouse with a fixed source of income, by purchasing a Medicaid Compliant Annuity. The values of these annuities are not counted toward the asset limit. The monthly payouts are considered income by Medicaid, and there is also an income limit for eligibility, but the income of the community spouse is not counted toward the income limit of the applicant spouse. So, as long as the annuity is Medicaid compliant and purchased in the name of the community spouse, it will work as a tool to help one spouse qualify while preserving resources for the other spouse.
In order to be Medicaid compliant, an annuity must be fixed, immediate, irrevocable, non-transferable, actuarially sound and name the state as the beneficiary. Individual states may also have other, varying rules governing Medicaid Compliant Annuities.
Applicants can reduce their assets to meet the limit and potentially ease the financial stress of the community spouse by purchasing an Irrevocable Funeral Trust. The value of these trusts do not count toward the asset limit, although that value must be limited to $15,000 in most states. They cover the beneficiary’s final expenses, such as the burial plot, casket, cemetery fees, cremation, headstones, service, ceremony and any other similar expenses, which can be significant. Some states require a Goods & Services Agreement, which itemizes what expenses the trust will be used for, to be part of Irrevocable Funeral Trusts if they are used for Medicaid purposes.
Any asset placed in a Medicaid Asset Protection Trust (MAPT) is exempt from the asset limit and is protected from Medicaid Estate Recovery Programs, including the home. However, creating this type of trust violates the Look-Back Period. In most states, the Look-Back Period is five years (California and New York are the exceptions), so MAPTs must be created five years before a client applies for Medicaid in order for them to be useful as a planning strategy. These trusts are also expensive to create, and it’s recommended that only clients with $100,000 or more in assets utilize them.
MAPTs must be irrevocable and there are strict rules on what the funds in the trust can be used for while the Medicaid beneficiary is still alive. Also, the trustee can not be the Medicaid beneficiary or their spouse.
Homeowners would not be able to qualify for Medicaid if the value of their home was counted toward the asset limit, but in many cases the home is not counted. One of these cases is when a community spouse is still living there, regardless of the home’s value, whose name is on the deed or where the Medicaid beneficiary lives. So, for married couples who are homeowners, Medicaid will not prevent the community spouse from living in the home and it will not try to force the sale of the home to help pay for long-term care.
A few states might try to force the sale of the home after the death of the community spouse to help pay for the Medicaid expenses of the beneficiary spouse. All states are required by law to try and collect reimbursement for Medicaid expenses after the death of the beneficiary, a process known as estate recovery, but whether or not they would force the sale of a home in this situation depends on the state, which we will discuss next.
Some states, known as probate states, only attempt recovery through the beneficiary’s estate. These probate states will not attempt any recovery through a surviving spouse, including the sale of a home that was in the beneficiary’s name but the spouse lives in. However, some states, known as expanded recovery states, will attempt to collect via the spouse, but only after their death. So, surviving spouses in expanded recovery states can live in their home and freely use their assets while they are alive, but after their death they may not be able to leave the home or other assets to their family because the state may use them as reimbursement, which is sometimes called “clawback.”
