Medicaid is a government-run healthcare program that provides medical assistance to individuals with limited income and resources.
In Texas, Medicaid is administered by the Texas Health and Human Services Commission (HHSC) and provides coverage for a wide range of medical services, including doctor visits, hospital care and prescription drugs.
However, Medicaid eligibility can be complex and subject to strict income and asset limits. In order to qualify for Medicaid in Texas, applicants must meet certain financial criteria, including having limited assets. This is where early Medicaid planning can be helpful. It’s also helpful to know that many assets are actually “non-countable” or exempt from consideration when eligibility is being determined.
What are some of the exempt or non-countable assets?
Generally speaking, monthly incomes, cash, money sitting in bank accounts and investments are all countable when it comes to determining if someone is under Medicaid’s asset limit. However, many other things are not, including:
- The applicant’s primary residence is exempt as long as its equity is less than $688,000 (in 2023) and the applicant intends to return home. If the applicant has a spouse living in the home, then the residence is exempt regardless of value or the applicant’s intent.
- Personal belongings such as clothing, furniture and jewelry are also generally exempt from consideration, as is one motor vehicle.
- Certain types of retirement accounts, such as IRAs and 401(k)s, are exempt when the owner is taking the Required Minimum Distributions (RMD).
- Irrevocable burial trusts, such as pre-paid funeral and cremation plans and funeral plots are also usually exempt.
It’s important to note that these exemptions are subject to certain limitations. For example, if the primary residence is sold, the proceeds may not be exempt – and the primary home can still be subject to Medicaid’s Estate Recovery Program after the applicant (and their spouse, if there is one) passes away. Additionally, if assets are transferred to someone else within five years of applying for Medicaid, they may be subject to a penalty period where Medicaid benefits are not available.
Because the rules on Medicaid exemptions are complicated, it’s wise to seek experienced legal guidance when you’re trying to determine the most proactive way to prepare for the future.