Exempt (Non-Countable) Assets

Long-Term Care Medicaid has a low asset limit, $2,000 for a single person in most states in 2026. But many of the things people own most, such as their home, their car and their belongings, usually do not count toward that limit. These are called exempt or non-countable assets. This guide explains the common exemptions and their conditions.

Figures change periodically. Double-check current amounts before relying on them.

Why exemptions matter

Exempt assets are ignored when the state decides whether someone qualifies. That means:

a person can own a home and a car and still qualify;
money spent on exempt items (at fair value) is a legitimate way to spend down, not a gift;
for married couples, exempt assets are not part of the total used to figure the spouse at home’s allowance.

Most states base their exemptions on the federal SSI rules, and some states are more generous. Each state guide lists that state’s rules.

The main exemptions at a glance

Asset	Usually exempt?	Main conditions
Home	Yes	The applicant lives there or intends to return, or a spouse or dependent relative lives there; equity under the state limit ($752,000 to $1,130,000 in 2026)
One vehicle	Yes	Used for transportation of the applicant or a household member
Household goods and personal belongings	Yes	Furniture, clothing, appliances, wedding and engagement rings, and similar items
Burial plots and spaces	Yes	For the applicant and immediate family
Irrevocable prepaid funeral contract	Yes	Within state rules; many states set a reasonable-cost limit
Burial fund	Up to $1,500	Set aside for burial expenses (reduced by certain life insurance)
Life insurance	If total face value is $1,500 or less	Above that, cash value counts
Property used in a trade or business, or for self-support	Often	Subject to state rules
Certain retirement accounts	Varies by state	Some states exempt accounts in payout status
ABLE accounts and some disability-related accounts	Often	Federal rules protect most of the balance
Assets in certain trusts	Varies	Some irrevocable and special needs trusts

The home

The home is usually the most valuable exempt asset. It is exempt when:

the applicant lives there, or intends to return home (see Intent to return home); or
the applicant’s spouse lives there; or
a dependent relative lives there (in many states, such as a child under 21 or a disabled child).

If no spouse lives in the home, the applicant’s equity must be below the state’s home equity limit: at least $752,000 and at most $1,130,000 in 2026, depending on the state. See Home equity limits by state.

The home exemption usually covers the house and the land it sits on, plus adjoining land. Being exempt while the applicant is alive does not mean the home is safe from estate recovery after death.

One vehicle

Under the federal SSI rule that most states follow, one vehicle used for transportation of the applicant or a household member is exempt regardless of its value. A second car usually counts. Some states set their own rules. See Cars and other vehicles.

Household goods and personal effects

Furniture, appliances, clothing, jewelry such as wedding and engagement rings, and items needed for medical care or daily living (such as a wheelchair or hearing aids) are generally exempt. Items held as investments, such as gold coins or collectibles, may count.

Burial and funeral arrangements

Burial spaces (plots, crypts, headstones, caskets, urns, opening and closing of the grave) for the applicant and immediate family are generally exempt.
Irrevocable prepaid funeral contracts are generally exempt, often up to a reasonable amount set by the state. Because the money is committed and cannot be refunded, it no longer counts.
Burial funds set aside in a separate, identified account are exempt up to $1,500 under the SSI rule. This amount is reduced by the face value of exempt life insurance and certain other burial arrangements.

Buying a prepaid funeral contract is one of the most common ways to spend down. See Irrevocable funeral trusts.

Life insurance

If the total face value of the policies a person owns on any one insured’s life is $1,500 or less (term and burial insurance are not added in), the policies are exempt. If it is more, the cash surrender value counts. Term life insurance has no cash value and does not count. See Life insurance.

Property used for self-support or business

Property needed to earn income, such as business equipment, tools, livestock or land used in a trade or business, may be exempt under SSI-based rules, sometimes with limits. Rental property is treated differently in different states. See Owning a business and Owning rental property.

Retirement accounts

States treat retirement accounts in different ways. Some count the full balance. Some exempt an account that is in payout status (paying regular amounts), counting the payments as income instead. Many exempt the spouse at home’s retirement accounts. See Retirement accounts.

Long-term care partnership protection

In most states, people who bought a qualified long-term care partnership insurance policy can protect assets equal to the benefits the policy paid out. See Long-term care partnership policies.

Other exemptions

Depending on the state, other exempt items may include:

ABLE accounts for people whose disability began before a qualifying age (with limits);
retroactive SSI or Social Security payments, for a limited time after they are received (often 9 months);
reparations payments to certain groups under federal law;
funds set aside under a plan to achieve self-support (PASS);
certain disaster assistance and tax refunds for a limited time.

Changing countable assets into exempt ones

Because exempt assets do not count, spending countable money on exempt items is a common, legal way to reach the limit. Examples:

paying off the mortgage on the home or making repairs;
replacing an old car;
buying new furniture or appliances;
buying an irrevocable prepaid funeral contract;
buying hearing aids, dentures or other medical items.

These purchases must be for fair value and for the applicant’s (or couple’s) own use. Paying for items that will be used by someone else is a gift. The timing and choice of purchases can make a real difference, so many families work through them with a Certified Medicaid Planner (CMP).

Worked example

Robert, a widower in Texas, has $45,000 in savings, a paid-off home, and a 12-year-old car. The 2026 Texas limit is $2,000. His home and car are exempt. Before applying, he:

replaces the roof on his home ($14,000);
buys a newer, reliable car and trades in the old one ($16,000 net);
buys an irrevocable prepaid funeral contract ($9,000);
buys hearing aids ($4,000).

He has spent $43,000 at fair value on exempt items for his own use, leaving $2,000. None of this spending is a gift.

Common questions

Is my wedding ring exempt? Yes, wedding and engagement rings are generally exempt.

If my home is exempt, is it safe forever? No. It may be subject to estate recovery after death. See Estate recovery.

Can I own two homes? Only one home can be the exempt home. A second home generally counts unless another exemption applies.

Exemptions and married couples

For married couples, exemptions work alongside the spousal rules:

Exempt assets are set aside first. The home (while the spouse lives there), one car, household goods and burial arrangements are not part of the couple’s countable total.
The CSRA is figured from countable assets only. The spouse at home’s protected share, $32,532 to $162,660 under the 2026 federal standards, comes out of the countable total.
Spending on exempt items helps both ways. Buying a reliable car for the spouse at home, repairing the home, or prepaying funerals for both spouses can lower countable assets while improving the couple’s situation.

See Community Spouse Resource Allowance (CSRA).

Exemptions that need paperwork

Some exemptions apply only if the paperwork is right:

Burial funds must usually be in a separate account clearly labeled for burial.
Prepaid funeral contracts usually must be irrevocable, and some states require a statement of goods and services.
Retirement accounts in payout status may require proof of the payment schedule.
Property used for self-support may require proof that it produces income.
The home may require a signed statement of intent to return.

If the paperwork is missing, an asset that could have been exempt may be counted.

Timing matters

Exempt purchases should be made, and paid for, before the date the state checks assets. Buying a funeral contract the week after the application date may not help for the month already being reviewed. States differ on whether they check assets on the first day of the month, the day of application, or at any time in the month.

Questions to ask about your own situation

Is the home exempt now, and will it stay exempt if I move to a nursing home?
Does my state exempt my retirement account, or my spouse’s?
What is my state’s limit for prepaid funeral contracts?
Would replacing my car or repairing my home be a good use of savings?
Are there exemptions in my state that go beyond the federal rules?

A {L} can help answer these questions for your state and make sure each exemption is documented correctly.

Last updated for 2026. General information only, not legal or financial advice. Medicaid Answers is a free educational resource published by Medicaid Answers Foundation.