Ways to Qualify When You Are Over the Limits

Many families are told, or assume, that a parent “makes too much” or “has too much” for Long-Term Care Medicaid. Often that is not the end of the story. Federal law and state rules provide several legitimate ways for people over the income or asset limits to qualify, sometimes right away and sometimes after a period of planning. This guide outlines the main options. Each involves rules that must be followed carefully, which is where a Certified Medicaid Planner (CMP) can help.

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

First, check whether you are really over

Before planning around a limit, make sure the count is right:

Only countable assets count. The home (within limits), one car, personal belongings, a qualifying burial fund and certain life insurance are usually exempt. See Exempt assets.
Married couples have higher allowances. The spouse at home can keep part of the couple’s assets, between $32,532 and $162,660 in 2026 depending on the state. See The CSRA.
Income limits use gross income, but some states allow deductions, and the medically needy pathway lets medical bills count. See Income limits by state.
Some accounts may be exempt or treated differently, such as retirement accounts in payout status in some states. See Retirement accounts.

If income is over the limit

Qualified Income Trust (Miller trust)

In states that use the special income limit ($2,982 a month in 2026), people with higher income can set up a Qualified Income Trust. Income above the limit is deposited into the trust each month and used for the person’s care. The state is the remainder beneficiary at death. See The medically needy pathway for how it works.

Medically needy spend-down

In states with a medically needy program for long-term care, a person qualifies when medical bills use up income above the state’s medically needy income level. For nursing home residents, this is usually met every month. See Income spend-down.

Income allowances for a spouse

For married couples, part of the applicant’s income can be paid to the spouse at home under the MMMNA rules. This does not change eligibility, but it protects the spouse. See The MMMNA.

If assets are over the limit

Spend down on allowed purchases

The most common approach is to spend excess assets on things that benefit the applicant and are paid for at fair market value, such as:

paying for care until eligible;
prepaying funeral and burial costs within the rules;
home repairs and modifications;
replacing an old car with a reliable one;
paying off debts, such as a mortgage or credit cards;
buying needed items like hearing aids, dentures, a wheelchair or clothing.

See How the spend-down works and Allowed spend-down purchases.

Exempt transfers

Some transfers are not penalized under federal law, such as:

any transfer to a spouse;
transfers to a blind or disabled child, or to a trust for that child’s sole benefit;
transfers to a trust for the sole benefit of a disabled person under 65;
transferring the home to a spouse, a child under 21, a blind or disabled child, a sibling with an equity interest who lived there a year before the person entered care, or a caregiver child who lived there two years and provided care.

See Exempt transfers and The child caregiver exemption.

Converting countable assets into income

A Medicaid-compliant annuity can turn countable assets into a stream of income. Federal law sets the conditions: the annuity must be irrevocable and non-assignable, actuarially sound, pay in equal amounts with no deferral or balloon payments, and name the state as remainder beneficiary for the Medicaid paid (in first position, or second after a spouse or minor or disabled child). For married couples, this is often used to turn excess assets into income for the spouse at home. It must be done carefully, because a non-compliant annuity is treated as a gift.

Promissory notes

A loan to someone else, documented by a note, can avoid being treated as a gift if it is actuarially sound, pays in equal amounts with no balloon payment, and cannot be cancelled at the lender’s death. Otherwise, the outstanding balance counts. This is a technical area best handled with professional help.

Increasing the spouse’s allowance

If the spouse at home’s income is below the MMMNA, a fair hearing can raise the CSRA so more assets are protected to produce income. See Raising the spousal allowances.

Planning with the look-back

Gifts made more than five years before applying are not reviewed. Families who plan well ahead can use trusts or gifts outside the look-back window. Gifts within the window cause a penalty, but in some situations a planned gift combined with other strategies can reduce the total cost of care. This kind of planning depends on state rules and the person’s health and must be done with expert help. See The five-year look-back and The penalty period.

If home equity is over the limit

If no spouse or protected child lives there and equity is above the state’s limit (between $752,000 and $1,130,000 in 2026), options include:

a home equity loan or reverse mortgage to reduce equity;
selling the home and using the proceeds within the rules;
transferring the home under an exemption.

See Home equity limits and Over the home equity limit.

What does not work

Hiding assets. Applications require statements, and states check bank records and other databases. Hiding assets can lead to denial, repayment demands and fraud charges. See Why hiding assets does not work.
Last-minute gifts to family. These are penalized if made within five years, and the penalty usually starts only when the person is otherwise eligible.
Putting money in a child’s name “for safekeeping.” It is a transfer, and the child’s own creditors or divorce can put it at risk.
Ignoring the rules for couples. Moving all assets into the healthy spouse’s name does not hide them; both spouses’ assets are counted at the snapshot.

A worked example

Rose, 84, is single and entering a nursing home. She has $3,400 a month in income and $95,000 in savings. She lives in an income cap state with a $2,000 asset limit.

Income: She is over the $2,982 cap. Her family sets up a Qualified Income Trust and deposits the excess income each month.
Assets: She spends part of her savings on a prepaid funeral, a new wheelchair, hearing aids and dental work, and pays the nursing home privately for a few months. With help from a CMP, she considers whether other strategies fit her state’s rules.
Application: Once her countable assets are under $2,000 and the trust is in place, she applies.

Common questions

Is it legal to plan for Medicaid? Yes. Using the rules Congress and the states have written, such as exempt transfers and spousal allowances, is lawful. Hiding or misrepresenting assets is not.

Is it ever too late to plan? Even after a person is in a nursing home, there are often options, especially for married couples.

Do these strategies work in every state? No. Details vary widely. Check the state guide and get advice.

What does a planner cost? Fees vary. See How to apply for typical published ranges.

A sensible order of steps

When someone is over the limits, the order in which steps are taken can matter as much as the steps themselves:

Get an accurate inventory of income and assets, with current statements.
Identify exempt assets and make sure they are documented, such as the home, car and burial arrangements.
Handle income first. If a Qualified Income Trust is needed, set it up before the month you want coverage to start.
For couples, figure the CSRA as of the snapshot date, and see whether the spouse at home’s income is below the MMMNA.
Plan the spend-down, putting purchases that benefit the applicant ahead of anything else.
Review the look-back for any past gifts that need to be explained or cured.
Choose the application month so that every test is met in the same month.

Other sources of help while planning

While working toward eligibility, a family may be paying for care privately. Other sources can ease the cost:

Veterans’ benefits. Wartime veterans and surviving spouses with limited means may qualify for a VA pension with an additional amount for care needs. The VA has its own look-back and net worth rules, so coordinate it with Medicaid planning.
Long-term care insurance, if a policy is in place.
Life insurance with an accelerated death benefit or a cash value that can be used.
State-funded programs for home care, which in some states have more flexible rules than Medicaid.

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