Medicaid Countable vs. Exempt Assets: What They Count

When you apply for Pennsylvania Medicaid to pay for nursing home care, the state counts your assets to determine eligibility. Not all assets are treated equally. Some are "countable" (they disqualify you), while others are "exempt" (they don't count). Understanding the difference can mean the difference between qualifying for benefits or facing a years-long eligibility delay. This guide explains the rules under 55 Pa. Code § 178.

Exempt Assets: These Don't Count

Primary Home

Your principal residence is generally exempt, even if it has significant equity. Under 55 Pa. Code § 178.61, your primary home is excluded as a resource if a spouse, blind person, disabled person, or dependent relative is currently living there . The home can have up to $752,000 in equity (2026 limit) and still remain exempt. If equity exceeds $752,000, the excess becomes a countable resource unless one of the protected parties (spouse, child, sibling) remains in the home.

The home becomes countable immediately after the resident's death unless estate recovery exemptions apply (see our page on estate recovery ).

One Vehicle

You can own one motor vehicle of any value without it counting as a resource (55 Pa. Code § 178.67). This is true regardless of whether the vehicle is paid off or financed. Only one vehicle per applicant is exempt; a second or third car would be countable.

Personal Belongings & Household Furnishings

Clothing, jewelry, household goods, furniture, and personal effects are exempt (55 Pa. Code § 178.66). There is no dollar limit; these items do not count no matter how valuable. Antiques, artwork, and valuable collections are included here, they are exempt as long as they are for personal use, not held as investments.

Burial Space and Burial Funds

A burial space (grave, mausoleum, crypt, or urn) for each family member is exempt (55 Pa. Code § 178.71). Additionally, an irrevocable burial reserve up to $1,500 is exempt (55 Pa. Code § 178.72). An irrevocable burial reserve must be held in trust with a financial institution or funeral director and cannot be revoked by the applicant. A revocable burial reserve (one the applicant can take back) has different rules and is treated more strictly; only the interest is typically protected.

Life Insurance

Whole life or universal life insurance with a face value under $1,500 is exempt (55 Pa. Code § 178.69). If the face value exceeds $1,500, the cash surrender value in excess of $1,000 becomes a countable resource. For example, if you own a policy with a face value of $10,000 and a cash value of $5,000, only $4,000 ($5,000 minus the $1,000 disregard) counts against you.

Term life insurance that does not build cash value is always exempt, regardless of face value (55 Pa. Code § 178.70).

Retirement Accounts and Annuities

This area is nuanced and often misunderstood. IRAs and other retirement accounts are not automatically exempt. However, an annuity that meets Deficit Reduction Act (DRA) requirements may be protected. A DRA-compliant annuity must be irrevocable, non-assignable, and pay to the Medicaid agency a stream of income. Improperly structured annuities become countable resources.

If you are considering an annuity as part of Medicaid planning, consult with an attorney before purchase, one wrong decision can cost tens of thousands in eligibility loss.

Countable Assets: These Do Count

Bank and Investment Accounts

Cash, checking accounts, savings accounts, money market accounts, stocks, bonds, and mutual funds are all fully countable (55 Pa. Code § 178.4). The entire balance counts regardless of whether funds are earmarked for other purposes. If you have $50,000 in savings and the limit is $8,000, you are over the limit by $42,000.

Real Estate (Other Than Primary Home)

Vacation homes, rental properties, land held as investment, and any real estate not occupied by a protected family member are countable (55 Pa. Code § 178.2 defines "equity value" as fair market value less encumbrances). A beach house with $200,000 in equity counts fully toward your $8,000 limit.

Retirement Account Distributions

Once you receive a distribution from an IRA, 401(k), or pension, it becomes cash and is countable (55 Pa. Code § 178.4). Taking regular distributions to "spend down" assets is a common (though inefficient) Medicaid strategy; see our guide on the 5-year lookback period .

Community Spouse Resource Allowance (CSRA)

When one spouse is in a nursing home and the other is at home (the "community spouse"), Pennsylvania law protects the at-home spouse's assets. Under 55 Pa. Code § 178.121 to 178.123, the community spouse can retain 50% of the couple's combined resources, up to a maximum of $162,660 (2026) . If 50% is less than the minimum, the at-home spouse can keep up to $32,532 (2026) instead.

Example: A couple has $200,000 in countable assets. The nursing home resident's "share" for Medicaid purposes is $100,000 (50% of $200,000), but 50% does not exceed the maximum of $162,660, so the community spouse can keep the full 50%. The institutionalized spouse must spend down their $100,000 before Medicaid pays.

The CSRA is crucial in married-couple scenarios and often overlooked, understand it early in your planning.

The Resource Assessment Process

When you apply for Medicaid (55 Pa. Code § 178.3), you must report all resources and provide verification: bank statements, deeds, insurance policies, IRA statements, and more. The county assistance office will:

1. List all reported resources.
2. Classify each as countable or exempt under § 178.
3. Add up all countable resources.
4. Compare the total to the $8,000 limit (or $162,660 for a community spouse).
5. Determine eligibility. If you're over the limit, you are ineligible until resources are spent down or disposed of.

Verification is critical. Missing a statement or failing to report an asset can trigger a denial or, later, recovery of overpaid benefits.

Disposition of Excess Resources

If you have countable resources above the limit, you must dispose of them under the "fair consideration" rules (55 Pa. Code § 178.4). Fair consideration means you received approximately equal value in return. Selling a house for fair market value, paying off debts, or spending down cash on medical expenses all meet fair consideration. Gifting assets does not; gifts trigger a penalty period under the 5-year lookback rule .

Special Situations: Trusts and Irrevocable Agreements

Trust treatment is complex. Generally, if a trust is revocable by the applicant, its contents are countable (55 Pa. Code § 178.7). If the trust is irrevocable and the applicant has no ability to access principal, different rules apply, but the rules depend on when the trust was created, its specific language, and other factors. This is where an experienced Medicaid attorney is invaluable.

Statutory content on this page was last verified against Pennsylvania statutes (55 Pa. Code) and 62 P.S.: March 2026 . If you are reading this significantly after that date, confirm key provisions with current statute text or contact our office.