Resource Eligibility Prior to the DRA

11-5.2.1.2 Available Resources

Resources that are not otherwise exempt or unavailable considered available for the purposes of the MA eligibility determination. This includes resources in which the applicant has only a partial ownership interest.

An individual applicant may have available resources valued at no more than $2,000, $2,400, or $8,000, depending upon the specific Medicaid eligibility pathway. For those individuals with less than 300 percent of the SSI benefit rate of monthly income, $8,000 may be retained.

In general, all resources of the applicant and the applicant’s spouse are considered available, subject to certain exclusions. Resources include cash and any other liquid or non-liquid assets, and any real or personal property that an individual owns and could convert to cash.

Examples of available resources (unless otherwise excluded or unavailable) include:

• Real property other than the applicant’s principal place of residence

• Investment accounts, such as bank accounts, stocks, bonds, mutual funds, and certificates of deposit

• IRAs, Koegh accounts, or other pension and retirement plans exclusive of early withdrawal penalty

• Motor vehicles, boats, and other vehicles

• Cash surrender value of life insurance policies in excess of certain limits

• Elective share rights of a surviving spouse

• All other real or personal property that the applicant has or can make available for partial or total support, including equitable interests and partial interest.

11-5.2.1.3 Exempt or Excluded Resources

An individual is entitled to retain certain resources that are considered exempt or excluded for purposes of MA eligibility. These assets include the following:

Burial Expenses. Prepaid burial accounts for the applicant and the applicant’s spouse are excluded, as are irrevocable funeral accounts. Cemetery plots are also excluded.

Automobiles. One automobile is excluded, regardless of value. Other motor vehicles are counted as their equity value.

Life Insurance. Life insurance policies having no cash surrender value, such as term insurance, are excluded; policies having a face value of $1,500 or less are also excluded, regardless of cash value; if the total face value of all policies exceeds $1,500, the total cash surrender value above $1,000 is included.

Primary Residence. Prior to the DRA, Medicaid disregarded the full value of an applicant’s primary residence, as long as the homeowner evidenced an intent to return home. The DRA makes a fundamental change in this treatment.

Under the DRA, substantial home equity may, in some circumstances, make the home owner ineligible for Medicaid benefits for nursing facility and other long-term care services. In Pennsylvania, an individual is ineligible for such Medicaid assistance if the individual’s equity interest in the individual’s home exceeds $500,000.

The $500,000 limitation does not apply if the applicant has a spouse, a child under age 21, or a child who is blind or disabled, who lawfully resides in the home. The limitation is also to be waived in the case of a demonstrated hardship.

The residence includes all of the surrounding contiguous land, and any buildings on that land. The actual home shelter can be real or personal property, fixed or mobile, and located on land or water. There is no acreage limitation.

Even if the home is not occupied by a spouse or a dependent relative, it can be exempt if the property was used as the institutionalized person’s principal place of residence before institutionalization and the institutionalized applicant (or representative) states the intent to return to the home.

If the applicant does not intend to return to the residence, the property is not excluded. However, it will be excluded for six months while the applicant makes a good-faith effort to sell it. Proceeds from the sale of an excluded residence are also excluded if the applicant intends to purchase another excluded residence within three months.

Personal Effects and Household Furnishings. Items of tangible personal property customarily found in the home and used in connection with the maintenance, use, and occupancy of the home are excluded. Personal effects, such as clothing or jewelry, are also excluded.

Trusts. Trusts containing assets of disabled individuals that are established in accordance with statutory special needs trust rules are excluded. Bank accounts, certificates of deposit, or other similar accounts with an “in trust for” designation are treated as revocable trusts and fully available. See the further discussion of trusts below.

Property Used in Trade or Business. Property used in a trade or business that is essential to the self-support of an applicant, an applicant’s spouse, or dependents is excluded, regardless of value.

Nonbusiness Property Essential to Self-Support. Property used exclusively to produce items for home consumption and tools, equipment, uniforms, and similar items required by the applicant’s employer are excluded.

Retirement Accounts of Community Spouse. Pension funds, such as IRAs, 401(k)s, and other deferred compensation funds, owned by a spouse of the applicant who remains in the community, are excluded in Pennsylvania.

Community Spouse Resource Allowance. Assets can be set aside for the community spouse to avoid spousal impoverishment. See the discussion below.

For a complete copy of this 45 page article on Changes in the Medicaid Law, please click the link below.

Changes in the Medicaid Law (PDF)

Adobe Acrobat Reader Required

Return to Top