A nursing home cannot reach into your accounts and take your assets the way a creditor with a judgment can. What actually happens is quieter and, for most families, more damaging: the cost of care itself, roughly $10,000 a month on average, consumes savings in a few years, and when you apply for Medicaid to cover the rest, the program requires you to spend down nearly everything you own first. So the honest answer to what assets can a nursing home take from you is that the facility takes payment, Medicaid rules decide which of your assets you must exhaust before it will pay, and after your death the state can recover what it spent from your estate, including the home that was protected while you lived.
How the Cost Alone Drains Your Assets
The national median for a semi-private nursing home room ran about $315 per day in 2025, or roughly $115,000 a year. Private rooms cost more. Regional variation is significant, but even at the median, a few years of care will empty most retirement savings.
Medicare is not a backstop for long-term care. It covers up to 100 days of skilled nursing after a qualifying hospital stay, not the custodial care most nursing home residents need. Long-term care insurance helps if you bought a policy years earlier. Everyone else pays privately until the money is gone, then applies for Medicaid. That transition is where the asset rules start to bite.
Assets Medicaid Expects You to Spend First
Medicaid treats most of what people think of as savings as countable. Checking and savings accounts, CDs, stocks, bonds, mutual funds, and cash all count. So do investment properties, vacation homes, and rentals. If you can turn it into cash, you’re expected to use it for care before the program pays.
Retirement accounts sit in a grayer zone. In most states, an IRA or 401(k) already paying regular distributions (“pay status”) is not counted as a lump sum, though the monthly payments count as income. An account not in pay status is usually countable at its full balance. State rules differ enough here that a wrong assumption can cost tens of thousands.
Life insurance depends on the type. Term policies with no cash surrender value don’t count. For whole-life or other permanent policies, if the combined face value exceeds $1,500, the cash surrender value becomes countable. Below that face-value threshold, the policy is exempt whatever the cash value.
Annuities get their own scrutiny. Buying one can be treated as giving assets away unless the annuity is irrevocable, non-assignable, actuarially sound for your life expectancy, paid in equal monthly installments with no balloon, and names the state Medicaid agency as remainder beneficiary up to the amount of benefits paid.1CMS. Transfer of Assets in the Medicaid Program – Important Facts for State Policymakers Miss any one requirement and the purchase can trigger a penalty.
Assets That Are Protected While You’re Alive
A short list of assets is exempt from the countable-asset calculation. You don’t have to sell or spend them to qualify.
- Your primary home, if you express an intent to return or a qualifying person still lives there (a spouse, a child under 21, or a blind or disabled child of any age). The exemption carries an equity cap set within a federal range; for 2025 that range was $730,000 to $1,097,000, chosen by each state and adjusted yearly. Equity above the state’s limit becomes countable.2Centers for Medicare & Medicaid Services. CMCS Informational Bulletin – 2025 SSI, Spousal Impoverishment, and Medicare Savings Program Resource Standards
- One vehicle, regardless of its value.
- Household goods and personal belongings.
- Up to $1,500 in a designated burial fund kept separate from other assets, plus irrevocable prepaid funeral contracts (often $10,000 to $15,000 or more, depending on the state). The irrevocability is what makes them exempt: once locked in, the money is no longer available to you.3Social Security Administration. Code of Federal Regulations 416-1231
- Burial plots and headstones for you and immediate family, separate from the burial fund limit.
The home exemption is the one families most often misread. It keeps the house out of the asset count during your lifetime. It does not protect the house from estate recovery after your death, which is a separate mechanism covered below.
The $2,000 Line and How to Get Below It
To qualify for Medicaid nursing home coverage in most states, your countable assets must be below $2,000 for an individual. A few states set the limit higher, but $2,000 tied to federal SSI rules is the standard. Anything above that has to be spent down before benefits begin.
Spending down doesn’t mean throwing money away. Allowable uses include paying off a mortgage on the exempt home, home repairs, buying an exempt vehicle, prepaying an irrevocable funeral arrangement, and paying legitimate debts. The rule is that each dollar must buy something of fair value. Giving assets to family instead is where the look-back rules come in.
The Five-Year Look-Back on Gifts
Federal law requires a 60-month look-back on asset transfers before a Medicaid application.4Office of the Law Revision Counsel. 42 US Code 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets The state reviews five years of financial transactions and flags anything given away or sold below fair market value: gifts to children, transfers into some trusts, property sold cheap to a relative.
Uncompensated transfers produce a penalty period. The state divides the total transferred value by the average monthly cost of nursing home care in that state to get the number of months of ineligibility. Transfer $120,000 in a state averaging $10,000 per month and the penalty is 12 months. The trap: the penalty clock doesn’t start until you would otherwise be Medicaid-eligible, meaning you’re already in a facility and already below the asset limit. The money you gave away is gone, Medicaid won’t pay, and the nursing home bill still arrives every month.
Enforcement varies. California has effectively eliminated the look-back for certain Medi-Cal applicants. Most states apply the full five years.
Transfers the Look-Back Doesn’t Penalize
Federal law names specific transfers that carry no penalty, regardless of when they happen:4Office of the Law Revision Counsel. 42 US Code 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
- Any transfer to your spouse, or to a trust established solely for your spouse’s benefit.
- Transfers of any asset to a child of any age who is blind or permanently disabled.
- Transfer of the home to an adult child who lived there for at least two years immediately before your admission and whose care delayed your move to a facility. States require detailed proof of the caregiving; a vague claim that a child “helped” won’t qualify.
- Transfer of the home to a sibling who has an equity interest in it and lived there for at least a year before your admission.
- Transfers to a child under 21.
Loans within a family get treated as gifts unless the loan has an actuarially sound repayment term, requires equal payments with no balloon, and forbids cancellation of the debt at the lender’s death.1CMS. Transfer of Assets in the Medicaid Program – Important Facts for State Policymakers An informal loan to a grandchild will almost certainly be counted as a transfer and penalized.
What a Spouse at Home Gets to Keep
When one spouse enters a nursing home, the other doesn’t have to spend down to nothing. Federal spousal impoverishment rules let the community spouse keep a share of the couple’s combined assets, called the Community Spouse Resource Allowance. For 2026, that allowance runs from about $32,500 at the minimum to about $162,700 at the maximum, adjusted each January.5Centers for Medicare & Medicaid Services. 2026 SSI and Spousal Impoverishment Standards States choose their own calculation method within that range, so the same couple can protect different amounts depending on where they live.
The community spouse also has an income floor. For 2026, the Minimum Monthly Maintenance Needs Allowance is $2,643.75 in most states.5Centers for Medicare & Medicaid Services. 2026 SSI and Spousal Impoverishment Standards If the at-home spouse’s income falls short, part of the nursing home spouse’s income is diverted to close the gap before the rest goes to the facility. A fair hearing can push the amount higher when there’s real hardship.
Estate Recovery After Death
The rules above govern what happens while you’re alive. After death, the analysis changes. Federal law requires every state to seek recovery from the estate of a deceased Medicaid enrollee aged 55 or older for the cost of nursing facility services, home and community-based services, and related hospital and prescription drug costs.4Office of the Law Revision Counsel. 42 US Code 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets This is the Medicaid Estate Recovery Program, and it’s how the home that was exempt during your life can be claimed after it.
The home is the usual target. States can also pursue other probate assets. Recovery is blocked, though, as long as any of these people is alive or a minor:6Medicaid.gov. Estate Recovery
- A surviving spouse
- A child under 21
- A child who is blind or disabled, at any age
These conditions defer recovery. When they end (the spouse dies, the child turns 21 or is no longer disabled), the state can move on the claim.
Federal law also requires states to waive recovery for undue hardship, though each state defines what that means.6Medicaid.gov. Estate Recovery Some waive recovery when the property is an heir’s sole source of income or when the home is of modest value. Families are often surprised by an estate recovery claim because they assumed the lifetime home exemption was permanent. It isn’t. Keeping the home in the family usually requires transferring it during the recipient’s lifetime under one of the look-back exceptions rather than waiting for probate. That’s a decision worth making with a professional well before nursing home care becomes urgent.