Understanding Medicaid's Role in Long-Term Care
Medicaid is a joint federal and state program designed to provide health coverage to millions of Americans, including eligible low-income adults, children, pregnant women, and seniors. For many older adults, it is the primary source of payment for long-term care services, such as nursing home care. However, because it is a needs-based program, applicants must meet strict income and asset limitations to qualify. Navigating these financial requirements is a critical part of planning for long-term care in Maryland.
The Difference Between Countable and Exempt Assets
When you apply for long-term care Medicaid, the state categorizes your assets into two groups: countable and exempt.
- Countable Assets: These are resources that Medicaid considers available to pay for your care. If the total value of your countable assets exceeds the limit, you will be denied benefits until you "spend down" the excess. Examples include checking and savings accounts, stocks, bonds, second homes, and investment properties.
- Exempt Assets: These are resources that Medicaid does not count toward your asset limit. Proper planning often involves strategically converting countable assets into exempt ones.
For an individual in Maryland in 2025, the countable asset limit is generally $2,500. For a couple where both spouses are applying, the limit is typically $3,000 combined.
A Detailed Look at Exempt Assets in Maryland for 2025
Knowing which assets are protected is crucial. Here are the primary assets exempt under Maryland's Medicaid rules:
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Your Primary Residence: In most cases, your primary home is an exempt asset. This protection applies as long as you, your spouse, or a dependent child lives in the home. If you are in a nursing home, you can state an "intent to return home" to keep the home exempt, even if a return is unlikely. However, there is a home equity limit. For 2025, this limit is substantial, but it's important to verify the exact figure as it adjusts. It's also critical to understand that while the home may be exempt for eligibility, it could be subject to Medicaid Estate Recovery after the recipient's death.
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One Motor Vehicle: Your household is permitted to have one car or truck of any value, and it will not be counted as an asset. The vehicle is exempt if it is used for transportation for the applicant or a member of their household.
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Personal Belongings and Household Goods: Items like furniture, clothing, jewelry (such as a wedding and engagement ring), appliances, and other personal effects are considered exempt.
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Prepaid Funeral and Burial Arrangements: Maryland allows you to set aside funds for your final expenses. An irrevocable prepaid burial contract is a non-countable asset. You can also have a designated burial fund, though limits apply (typically up to $1,500).
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Life Insurance Policies: The treatment of life insurance depends on its type and value. If the total face value of all policies you own is $1,500 or less, the policies are exempt. If the total face value exceeds $1,500, then the combined cash surrender value of the policies becomes a countable asset.
Comparison of Countable vs. Exempt Assets
| Countable Assets (Generally Must Be Spent Down) | Exempt Assets (Generally Protected) |
|---|---|
| Checking & Savings Accounts | Primary Home (with equity limits) |
| Stocks, Bonds, Mutual Funds | One Vehicle |
| IRAs and 401(k)s (in most cases) | Household Goods & Personal Effects |
| Second Homes & Rental Properties | Irrevocable Prepaid Funeral Contract |
| Cash Value of Life Insurance (if face value > $1,500) | Burial Spaces |
| Cash | Term Life Insurance (no cash value) |
Special Considerations for Married Couples: Spousal Impoverishment Rules
When only one spouse needs Medicaid for long-term care, the "Spousal Impoverishment Rules" are designed to prevent the healthy spouse (the "community spouse") from becoming destitute. In 2025, the community spouse can keep a significant portion of the couple's joint assets. This is known as the Community Spouse Resource Allowance (CSRA).
- 2025 CSRA: The community spouse can retain a maximum of $157,920 in countable assets. The Medicaid applicant spouse is still limited to their $2,500 allowance.
This provision is one of the most powerful tools in Medicaid planning for married couples.
The Maryland Medicaid Look-Back Period
To prevent applicants from simply giving away assets to meet the low limit, Maryland employs a 60-month (5-year) "look-back period." When you apply for long-term care Medicaid, the state will scrutinize any asset transfers made within the previous five years.
If you gave away assets or sold them for less than fair market value during this window, you will incur a penalty period. This penalty is a length of time during which you will be ineligible for Medicaid benefits, even if you otherwise qualify. The length of the penalty is calculated by dividing the value of the transferred asset by the average monthly cost of private nursing home care in Maryland.
For more detailed information, you can visit the Maryland Department of Health.
Conclusion: The Importance of Proactive Planning
Understanding what assets are exempt from Medicaid in Maryland is the foundation of effective long-term care planning. The rules are complex and contain many nuances related to marital status, the type of asset, and the timing of transfers. Simply moving money is not a solution and can lead to harsh penalties. Because of the high stakes and complexity, consulting with a qualified Maryland elder law attorney is the most reliable way to protect your assets while ensuring eligibility for the care you need.
