Am I allowed to keep anything?
If you are single, the state allows you to keep very little if you want them to pay for you at the nursing home.
You are allowed to have $1,600 in the bank, term life insurance of any amount, cash surrender value life insurance with a face amount of $1,500 or less, and a prepaid funeral contract.
Until you reduce your assets to these levels, Medicaid will not pay. The state interprets this rule very strictly and does not factor in your liabilities.
If all you own is a house, however, Medicaid will pay so long as you make reasonable efforts to sell it, but the state will place a lien on the house to reimburse itself at the time of sale for the money spent on your care. Once the house is sold, if there is any remaining money after reimbursing the State, you become a private pay resident and your Medicaid benefits end.
If you are married, the healthy spouse is allowed to keep a house and a car of any value and usually investment assets of not more than $109,560 (indexed annually for inflation). The healthy spouse is also allowed to keep his or her own pension and social security income regardless of amount. The State wants to ensure that the healthy spouse has a monthly income of at least $1,838.75/month (indexed annually for inflation), so, if the sum of the healthy spouse’s pension and social security income is less than $1,838.75 the State will divert some or all of the ill spouse’s income to the spouse to increase the spouse’s income (an “Income First” methodology). In certain limited situations, the State will allow the healthy spouse to keep more than$109,560, if necessary to generate additional income needed by the healthy spouse to remain in the principal residence.
Spousal refusal: In accordance with a 2005 federal court case, a spouse can flatly refuse to spend down any assets exceeding the protected amount for the healthy spouse. However, State regulations issued in 2007 have added additional criteria making it less likely that spousal refusal will be a useful planning tool, but there is presently a federal lawsuit pending against the State to fully revive spousal refusal as an asset protection strategy. Whether the State will exercise the support rights assigned to it by the ill spouse (remember that this assignment was a precondition of eligibility) and seek payment from the healthy spouse remains to be seen.