Which Assets Are Exempt from Medicaid? A Plain-English Guide

The primary home is generally exempt from Medicaid's asset calculation — but with important conditions. The home is exempt if the applicant intends to return home, if a spouse lives there, if a minor or disabled child lives there, or if a caregiver child who meets specific criteria lives there.

The home equity exemption has a cap in most states. In 2026, the federal minimum equity exemption is $713,000, though states may set a higher limit (up to $1,071,000). Equity above the state's cap may be counted as a resource.

Even when the home is exempt during the applicant's lifetime, it may be subject to Medicaid estate recovery after death. States are required to seek reimbursement from the estates of deceased Medicaid recipients for the cost of care provided. Planning strategies such as life estate deeds and certain trust arrangements can protect the home from estate recovery.

One vehicle is exempt from Medicaid's asset calculation, regardless of its value. This exemption applies whether the vehicle is used by the applicant or the community spouse. A second vehicle is generally countable.

In some states, the vehicle exemption is limited to vehicles used for medical transportation or employment. Families should verify their state's specific rules.

Personal belongings — clothing, jewelry, and household furnishings — are generally exempt. There is typically no dollar limit on these items, though states may apply a reasonableness standard to jewelry and other valuables.

Wedding and engagement rings are universally exempt. Other jewelry may be subject to a value limit in some states.

Prepaid funeral and burial arrangements are generally exempt, up to a reasonable amount. This includes burial plots, funeral contracts, and burial funds. Many states allow an irrevocable prepaid funeral contract of any amount.

Establishing prepaid funeral arrangements is one of the most straightforward spend-down strategies available. Converting countable cash into an exempt prepaid funeral contract reduces countable assets while ensuring that funeral expenses are covered.

Term life insurance — which has no cash value — is always exempt. Whole life and other cash-value policies are exempt if the total face value of all policies does not exceed $1,500 in most states. If the face value exceeds this threshold, the cash surrender value of the policies is counted as a resource.

Families with significant life insurance cash values may need to address these policies as part of their Medicaid planning. Options include surrendering the policy, converting it to an exempt asset, or using the cash value in an allowable spend-down.

Property that is essential to the applicant's self-support — such as a small business or income-producing real estate — may be exempt if it meets certain criteria. The rules vary significantly by state and asset type.

Retirement accounts present a complex picture. In some states, IRAs and 401(k)s in payout status are treated as income rather than assets. In other states, they are counted as resources. This is one of the most state-specific areas of Medicaid planning and requires careful analysis.