Medicaid Resource Requirements: Understanding the Limits

When applying for Medicaid, meeting the resource requirement is one of the most critical and misunderstood aspects of the process. This requirement ensures applicants don’t exceed allowable asset thresholds while providing protections for spouses in certain situations. Let’s break it down.

The Three Core Medicaid Requirements

Before diving into the resource limits, remember the three primary qualifications for Medicaid:

1. Medical Necessity: The applicant must demonstrate a need for long-term care.

2. Income Limit: Income must fall below a specified threshold (as discussed in a previous post).

3. Resource Limit: Applicants cannot have excessive "countable" resources, which we’ll cover in detail here.

What Are Medicaid Resource Limits?

Medicaid imposes strict limits on the value of "countable resources" an applicant can own to qualify for benefits. These limits vary depending on marital status and circumstances.

1. Single Applicants

   • A single individual can only have $2,000 in countable resources.

   • Non-countable resources, such as a primary home, may not be included in this calculation.

2. Institutionalized Spouse with a Community Spouse

   • If one spouse requires institutional care (the "institutionalized spouse") and the other remains in the community (the "community spouse"), the rules differ:

     • The institutionalized spouse can have up to $3,000 in resources.

     • The community spouse is entitled to retain additional resources through a rule called the Spousal Protected Resource Amount (SEPRA).

3. Spousal Protection Resource Amount (SEPRA)

   • SEPRA ensures the community spouse retains enough resources to avoid impoverishment.

   • In 2018, the minimum SEPRA was $24,720, meaning the community spouse could keep at least this amount, even if total resources are low.

   • The maximum SEPRA was $123,600, meaning any resources above this amount are subject to division.

How SEPRA Works

When a married couple’s resources fall between the minimum and maximum SEPRA limits, they must split the countable resources:

• 50% to the Institutionalized Spouse

• 50% to the Community Spouse

For example:

• If a couple has $50,000 in countable resources, $25,000 is allocated to each spouse.

• If the total resources exceed the maximum limit, any excess must be "spent down" before Medicaid eligibility is granted.

Countable vs. Non-Countable Resources

Understanding what qualifies as countable and non-countable resources is crucial:

1. Countable Resources

   • Cash

   • Bank accounts

   • Stocks, bonds, and investments

   • Real estate other than the primary residence

2. Non-Countable Resources

   • Primary home (with certain equity limits)

   • Personal belongings (e.g., clothing, furniture)

   • One vehicle

   • Prepaid funeral plans

Key Points to Remember

• Resource Limits Are Strict: Exceeding the limits—even by a small amount—can disqualify an applicant from Medicaid.

• Spousal Protections Exist: SEPRA ensures that the community spouse is not left financially vulnerable.

• Spend-Down Strategies May Be Needed: If resources exceed the limits, careful planning can help reduce assets in a way that complies with Medicaid rules.

Conclusion

The Medicaid resource requirement is a critical part of the application process, ensuring only those who truly need assistance qualify. However, protections like SEPRA provide vital safeguards for spouses, preventing financial devastation.

If you’re navigating Medicaid resource rules, consult with an elder law attorney to develop a personalized plan that protects your assets while meeting Medicaid eligibility requirements.