To get a parent or spouse onto long-term care Medicaid, a single applicant generally needs countable assets at or below $2,000 and monthly income under the limit their state publishes for 2026. Federal matching rules are built around $2,982 a month (300% of the SSI benefit rate), but the state's own figure is the one that applies, and it can differ. Those numbers can be reached through deliberate, lawful steps, not by giving money away or going broke first. That is Medicaid planning: the moves that qualify you without wasting savings on care Medicaid would have covered. This guide explains the strategies that work, the ones that need a specialist, and the mistakes that create penalties worse than paying out of pocket.

In This Guide

Why Families Turn to Medicaid Planning

Medicaid planning can begin in a hard moment, when a diagnosis or a fall means a parent can no longer manage at home, and that is when a family learns what long-term care costs. The national median cost of a semi-private nursing home room was $315 a day, or $114,975 a year, in the CareScout 2025 Cost of Care Survey; assisted living ran a median $6,200 a month and a non-medical home caregiver $35 an hour. Medicare covers at most 100 days of skilled-nursing care per benefit period and no long-term custodial care, so without long-term care insurance or VA benefits, families pay from savings until Medicaid steps in.

Medicaid will not pay while a family still has the resources to pay privately. Planning is the set of lawful steps that convert countable assets into exempt ones, or transfer them far enough in advance that they no longer count. Done well, it protects a surviving spouse, preserves the home for a qualifying child, and qualifies the applicant without wasting savings on care Medicaid would have covered. Done poorly, it creates a penalty period during which Medicaid will not pay for long-term care.

The Key 2026 Numbers

These are the federal figures that govern long-term care Medicaid eligibility in 2026. States may set their own standard within a federal range where one applies.

Figure 2026 amount
Applicant countable asset limit (common state limit) $2,000
Special income limit, federal matching-funds level (300% of SSI FBR; state figures can differ) $2,982/month
SSI federal benefit rate (individual) $994/month
Community spouse resource standards (minimum to maximum) $32,532 to $162,660
Minimum Monthly Maintenance Needs Allowance (except Alaska and Hawaii) $2,705.00/month
Maximum Monthly Maintenance Needs Allowance $4,066.50/month
Home equity cap $752,000 to $1,130,000
Highest home equity cap a state may set for a non-agricultural home (from January 1, 2028) $1,000,000

The $2,000 asset limit is the SSI resource limit, which federal Medicaid rules carry over to aged and disabled applicants; some states have raised or eliminated it. The $2,982 figure is 300% of the 2026 SSI federal benefit rate of $994 a month: federal matching funds are available for people in institutions whose income, before deductions, does not exceed that amount. Each state sets its own level, though, and its published figure is the one that applies: Washington's is $2,982, while Idaho lists $3,002 for 2026. The spousal figures are set under the spousal-impoverishment provisions of 42 U.S.C. 1396r-5. The home equity range and the 2028 change are set under 42 U.S.C. 1396p(f) and the 2025 amendment described below.,

Which Assets Can You Keep?

Medicaid divides everything you own into countable and exempt assets, and only countable assets are measured against the applicant limit, commonly $2,000.

Countable assets are anything that can be converted to cash and used for care: checking and savings accounts, certificates of deposit, stocks, bonds, second homes, investment property, and cash-value life insurance. Individual retirement accounts and 401(k)s are not on the excluded list below, so treat yours as an open question until you have your state's rule in writing.

Exempt assets are not counted. Federal Medicaid rules for older and disabled applicants point to SSI's resource rules, which exclude:

  • The home you live in and its land, subject to the equity cap below.
  • One vehicle, regardless of value, used for transportation of the applicant or a household member.
  • Personal effects and household goods: furniture, clothing, appliances, and personal-use jewelry.
  • Burial spaces for you or your immediate family, and burial funds of $1,500 or less each for you and your spouse.
  • Life insurance whose combined face value is $1,500 or less.
  • Property used in a trade or business by you or your spouse.

A household with a significant IRA or 401(k) should confirm its own state's rule before assuming the account is safe.

How Much Home Equity Is Too Much?

The primary residence is exempt up to a home equity cap. For 2026, federal law sets that cap at $752,000 unless the state elects a higher amount, up to a maximum of $1,130,000, with both figures indexed annually to the Consumer Price Index under 42 U.S.C. 1396p(f).

The cap is its own test, separate from the asset limit: in a state using the $752,000 minimum, an applicant with more equity than that is not eligible for long-term care assistance. The cap does not apply at all while a spouse, a child under 21, or a blind or disabled child lives in the home. A reverse mortgage or home equity loan can bring equity under the cap, and a hardship waiver process exists.

Starting January 1, 2028, H.R. 1, the One Big Beautiful Bill Act of 2025 (Public Law 119-21, signed July 4, 2025), at Section 71108, bars any state from setting a home equity limit above $1,000,000 for a home not on land zoned for agricultural use, and that ceiling does not rise with inflation; agricultural homes keep the indexed rules. Families in a state that has elected a higher cap should treat 2028 as a firm planning deadline, because from then no state can set a limit above $1,000,000 for a non-agricultural home; the spouse-or-child-in-the-home rule, the reverse-mortgage route and the hardship waiver described above still apply.

How Far Back Does Medicaid Look?

When someone applies for long-term care Medicaid, the state reviews the previous 60 months (5 years) of financial records for any transfer made for less than fair market value. Gifts, below-market sales, and money moved into a trust can all count. The authority is 42 U.S.C. 1396p(c), applied to transfers on or after February 8, 2006. California departs from the 60-month rule: effective January 1, 2026, Medi-Cal applies a 30-month look-back for nursing-facility care, counts only transfers made on or after January 1, 2026, and reinstated an asset limit of $130,000 for one person.

A transfer for fair market value is not penalized, nor is one for other valuable consideration when the family satisfies the state that it was. Only transfers for less than fair market value can create a penalty.

When Does the Penalty Period Start?

The penalty period does not necessarily begin on the date of the gift. For transfers on or after February 8, 2006, it begins on the later of the transfer date or the date the applicant is otherwise eligible for Medicaid and receiving institutional-level care. So a family that gave money away two years ago has not run out the clock the way they might assume.

The penalty length is the total uncompensated value of the transfers divided by the state's average monthly private-pay cost of nursing-facility care: the number of months Medicaid will not pay for long-term care. It is not a denial of Medicaid: it withholds nursing-facility and waiver home and community-based care, not the rest of the person's coverage. The state may excuse it under 42 U.S.C. 1396p(c)(2)(D) for undue hardship, such as losing medical care in a way that endangers health or life, or losing food, clothing, or shelter.

How Do You Protect the Healthy Spouse?

The federal spousal-impoverishment provisions at 42 U.S.C. 1396r-5 prevent a healthy spouse from being driven into poverty when the other spouse enters a nursing home. Two allowances do most of the work.

Community Spouse Resource Allowance (CSRA)

The community (healthy) spouse keeps a portion of the couple's combined countable assets. In 2026 the federal resource standards run from $32,532 to $162,660 under 42 U.S.C. 1396r-5, and each state elects its standard inside that range. A CSRA set at a fair hearing or by court order can exceed $162,660.

Monthly Maintenance Needs Allowance (MMNA)

While one spouse is in the facility, federal law deems none of the community spouse's income available to the spouse in the facility. If the community spouse's own monthly income is low, part of the institutionalized spouse's income can be shifted to them. The 2026 Minimum Monthly Maintenance Needs Allowance is $2,705.00 a month in every state except Alaska and Hawaii, effective July 1, 2026 through June 30, 2027, and the maximum Monthly Maintenance Needs Allowance is $4,066.50 a month, effective January 1, 2026. A fair hearing can set a higher amount for exceptional circumstances causing significant financial duress.

Getting a clear picture of what counts and what is exempt for your specific household is the first real step. If you are weighing whether to apply now or spend down first, talk to Brevy. Brevy's care navigator can walk through your state's rules and point you to a local elder-law attorney if the situation warrants one.

These approaches convert countable assets into exempt ones or into services the applicant would have bought anyway. They carry no transfer penalty because fair value is received.

Pay off debt. Paying existing legitimate debt, such as a mortgage, credit cards, medical bills, or a car loan, reduces countable assets dollar for dollar with no transfer penalty.

Make home modifications and repairs. A new roof, a wheelchair ramp, a walk-in shower, an HVAC replacement, or a stair lift converts cash into equity in the exempt primary residence. Document every dollar with receipts.

Set aside burial funds. Under the SSI resource rules Medicaid borrows, burial spaces and up to $1,500 in burial funds each for you and your spouse are not counted. A prepaid funeral contract is not on that list, so ask your state agency how it treats one before buying.

Purchase exempt items. Replacing an aging vehicle, buying medical equipment and mobility aids, or updating hearing aids and dentures all reduce countable assets. Keep the receipts.

Pay for care privately during planning. Home care hours, adult day-care fees, in-home therapy, and medical expenses all legitimately reduce countable assets.

Use a written caregiver agreement. A family member can be paid to provide care under a formal, signed agreement that predates the services, specifies duties and rates, tracks hours, and pays at market rate. Without one, it is harder to show the state the payments bought care at fair value, and below-value payments can draw a penalty.

Spending Down in Medically-Needy States

Medically needy coverage is a state option: where offered, a person with income above the state's medically needy standard can qualify by incurring medical bills at least equal to the excess, though which adults it covers varies by state. In certain states, an applicant over the income limit can instead use a Miller Trust (Qualified Income Trust), a trust holding only the person's pension, Social Security, and other income, which federal law exempts from the ordinary trust-counting rules. Which route applies is a state-by-state question; our guide to nursing home Medicaid when income is too high lists each state's rule. See Medicaid spend-down explained for how the monthly calculation works.

Grey-Zone Strategies That Need an Attorney

These are legal in the right circumstances but easy to misuse. None should be attempted without an elder-law attorney.

Medicaid-compliant annuities. A single-premium immediate annuity structured to meet federal requirements converts a lump of countable assets into an income stream. Unless it is a retirement-type annuity, such as one bought with IRA funds, it must be irrevocable and nonassignable, actuarially sound, and pay equal amounts with no deferral or balloon payments. Separately, it must name the state as remainder beneficiary for at least the Medicaid paid, in first position or second behind a community spouse or a minor or disabled child; the state moves to first if that spouse or the child's representative gives the remainder away for less than fair value. States add their own rules. Done wrong, it can trigger a transfer penalty.

Promissory notes. Money used to buy a promissory note, loan, or mortgage is treated as a transfer unless the instrument has an actuarially sound repayment term, pays in equal amounts with no deferral or balloon payments, and bars cancelling the balance when the lender dies. The drafting details control whether it qualifies, so this is attorney territory.

Special needs trusts. A first-party special needs trust under 42 U.S.C. 1396p(d)(4)(A) shelters the assets of a disabled person under age 65, but only if the state is repaid from the trust at the person's death up to the total Medicaid it paid. A pooled trust under 42 U.S.C. 1396p(d)(4)(C), managed by a nonprofit, can hold a sub-account for a disabled person of any age, though the federal transfer-penalty exception for funding a trust is keyed to age under 65, so funding a pooled sub-account at or after age 65 can be treated as an uncompensated transfer.,

Irrevocable asset-protection trusts. Any part of an irrevocable trust that could ever be paid to the applicant counts as theirs; a part that never can is treated as a transfer on the date the trust was set up (or when payment to them was cut off). A revocable trust's whole corpus counts. So a properly drafted trust funded more than 60 months before applying falls outside the look-back. That is why this strategy only works with a long lead time.

What Crosses the Line

These moves are not planning.

Hiding assets. Failing to disclose accounts, property, or transfers is concealment, not planning.

Unreported transfers after applying. A below-value transfer made after you apply can still draw a penalty, and hiding one is concealment, not planning.

Backdated or sham caregiver agreements. An agreement dated last year but signed today, or one that pays a non-caregiving relative, can be treated as a transfer for less than fair market value.

Misusing the caregiver-child transfer. The caregiver-child exception lets a parent transfer the home, without a penalty, to a son or daughter who lived in the home for at least two years immediately before the parent was institutionalized and who, as determined by the state, provided care that permitted the parent to reside at home rather than in an institution. The exception is not automatic: the state decides whether the care met that standard. A transfer to a child who did not live there and provide that care can be penalized unless another exception applies, such as a child under 21 or a blind or disabled child.,

Estate Recovery: The Backside of Planning

Qualifying for Medicaid is not the end of the asset question. Under the federal Omnibus Budget Reconciliation Act of 1993, at 42 U.S.C. 1396p(b), every state must operate a Medicaid Estate Recovery Program (MERP) that recovers payments from the estate of a deceased enrollee who was 55 or older when they received nursing-facility services, home and community-based services (HCBS), and related hospital and prescription-drug services. Recovery is also mandatory, at any age, for someone permanently institutionalized. A state may also recover, at its option, for other state-plan services, except Medicare cost-sharing.

What counts as the estate varies by state. It must include everything within the individual's estate as defined for purposes of state probate law, and it may, at the state's option, also reach real and personal property the person held title or interest in at death, including assets conveyed through joint tenancy, tenancy in common, survivorship, life estate, or living trust. Ask your own state agency which definition it uses, because the answer decides whether a non-probate transfer is out of reach or not. Some states also protect a small estate: Georgia waives recovery against the first $25,000 of any estate for deaths on or after July 1, 2018, effectively exempting estates of $25,000 or less.

Recovery may be made only after the death of a surviving spouse, and only when there is no surviving child who is under age 21 or who is blind or permanently and totally disabled. That is a delay, not a permanent bar, and every state must waive recovery that would cause undue hardship. The planning implication is direct: sheltering assets into eligibility does not shelter them from MERP unless those assets also pass outside the state's recoverable-estate definition. See Medicaid estate recovery explained for the full federal framework.

When Do You Actually Need an Attorney?

A single applicant with modest assets, no home, and no gifts in the past five years may be able to apply without professional help, or can ask a local Area Agency on Aging what help is available. A simple case does not necessarily need a paid engagement.

Hire an elder-law attorney if any of the following apply:

  • Combined countable assets well above the applicant limit
  • A home with equity above the state cap
  • A married couple where one spouse needs care and the other does not
  • Gifts, transfers, or below-market property sales in the past five years
  • A retirement account your state counts
  • A family business, farm, or rental property
  • A complex second-marriage or blended-family situation
  • An irrevocable trust already in place

To find a specialist, start with the National Academy of Elder Law Attorneys (NAELA), and ask whether the attorney is a Certified Elder Law Attorney (CELA). For the lower-cost paths, find your Area Agency on Aging through the federal Eldercare Locator, funded by the Administration on Aging within the Administration for Community Living and reachable at 1-800-677-1116. Also ask about state bar lawyer-referral services and legal-aid organizations for seniors.

Frequently Asked Questions

How far in advance should I start Medicaid planning?

Ideally about five years before you expect to need nursing-home care, because the look-back is 60 months and transfers made more than five years before application fall outside it entirely. If you are starting later, an attorney works with the time available, for example with exempt-asset conversions or an annuity or promissory-note strategy.

Can I give my kids the annual tax-free gift amount without a Medicaid penalty?

No. The IRS annual gift-tax exclusion is a tax rule, not a Medicaid rule. Medicaid adds up every transfer for less than fair market value in the look-back period, so a gift that is fine for tax purposes can still be penalized, unless an exception applies, such as a gift to a blind or disabled child.

Does Medicaid take my house?

Not to decide eligibility: the home you live in is not countable, subject to the equity cap., After death, the Medicaid Estate Recovery Program may seek recovery from your estate, but not while a spouse survives or there is a child under 21 or a blind or disabled child.

What happens if I get a transfer penalty?

You pay privately for long-term care for a set number of months, and Medicaid starts paying for it once the penalty ends; your other Medicaid coverage continues. You can also ask for an undue-hardship waiver if the penalty would endanger your health or life or leave you without food, clothing, or shelter.

Can I just put my assets in my spouse's name?

Moving assets into a spouse's name does not trigger the transfer penalty. But the spousal-impoverishment allowances, not a name change, are what set how much a married couple keeps: in 2026 the CSRA standards run from $32,532 to $162,660.

Learn More

MedicaidMedicaid Estate Recovery ExplainedMedicaid estate recovery can claim a home after death, but not while a spouse or a child under 21, blind or disabled survives. See your state's rules. MedicaidMedicaid Spend-Down ExplainedMedicaid spend-down lets people whose income is over the limit qualify by applying medical bills to the excess. Here is how the medically needy path works. MedicaidMiller Trust / Qualified Income TrustA Miller Trust lets people with income above Medicaid's limit qualify for long-term care in income-cap states. Here's how it works and who needs one. MedicaidNursing Facility Level of Care (NFLOC)NFLOC is the clinical determination that someone needs nursing-home-level care. Medicaid waivers and PACE require it. Here's how the assessment works. MedicaidHCBS WaiverAn HCBS waiver lets Medicaid pay for home and community care instead of a nursing home. Here's how 1915(c) waivers work, what they cover, and the waitlist. MedicaidNursing Home Medicaid in TexasTexas Medicaid pays for nursing home care under regular Medicaid, not a capped waiver. See the 2026 income and asset limits and what the at-home spouse keeps. MedicaidNursing Home Medicaid in MichiganMichigan Medicaid nursing home coverage in 2026: income and asset limits, the medically-needy spend-down, the 5-year look-back, and estate recovery.

Find personalized help planning for Medicaid long-term care at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.

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