A dementia caregiver's parent does not have to sell the primary home, one car, household goods, clothing, or burial arrangements to meet Medicaid spend-down. Exempt assets also include limited burial funds, irrevocable funeral contracts, small life insurance, and a share for a spouse at home. Spend-down means reducing countable assets to the eligibility limit by paying for care and real needs. LegalClarity reports that a single parent age 65 or older, blind, disabled, or seeking long-term-care Medicaid must typically hold no more than about $2,000 in countable assets.
Medical information disclaimer: This article is for general educational purposes only and does not provide medical advice, diagnosis, or treatment. Always consult a physician or other qualified health professional about symptoms, medications, tests, or treatment decisions.
Official resources:
- https://legalclarity.org/how-does-medicaid-verify-assets-for-eligibility/ — Use this page to check the study’s participation requirements.
- https://attorney.elderlawanswers.com/2025-spousal-impoverishment-home-equity-figures-released-20781 — Use this page to check the study’s participation requirements.
Table of Contents
- Will your parent keep the house?
- Which everyday belongings stay exempt?
- How do burial and small insurance rules work?
- What protection does a spouse at home have?
- How should you spend without creating a penalty?
Will your parent keep the house?
The primary home stays exempt while your parent lives there or declares intent to return. LegalClarity explains this protection continues after a move into a nursing facility in its Medicaid exemption guide. The protection has a dollar limit on equity.
ElderLawAnswers, reporting a 2025 CMS bulletin, places the state-selected home-equity cap from $730,000 to $1,097,000 in its 2025 spousal and home-equity figures. Equity above the state cap blocks long-term-care eligibility. For dementia care, keep intent-to-return papers, tax records, and mortgage statements together. A child caregiver should also track who pays insurance, taxes, and upkeep after placement.
Which everyday belongings stay exempt?
One vehicle used for transportation does not count as an asset. 603 Legal Aid states that furniture, household goods, clothing, and personal effects are also excluded in its Medicaid rules for nursing-home residents. That means a bed, table, dishes, coats, phone, and family keepsakes do not need to be sold.
A second car, boat, vacation property, stocks, and extra bank balances usually remain countable. Keep the protected car titled to the parent and used for medical visits or daily needs. Do not transfer it to a relative for less than fair value before applying.
How do burial and small insurance rules work?
Burial plots and burial spaces for the parent and close family stay excluded. LegalClarity also excludes up to $1,500 in designated burial funds and generally treats irrevocable prepaid funeral contracts as exempt. Life insurance follows a narrow rule.
LegalClarity places the exclusion at $1,500 or less in combined face value, while term insurance without cash value does not count. Ask the insurer for a letter showing face value and cash value for each policy. If cash value exceeds the limit, find out whether state rules permit converting or assigning the policy for burial.
What protection does a spouse at home have?
A community spouse who continues to live at home may keep part of the couple's countable resources. ElderLawAnswers, reporting the 2025 CMS bulletin, gives the 2025 range as $31,584 to $157,920, with the exact amount set by the state. This allowance matters when one parent has dementia and the other remains in the house.
It lets the at-home spouse keep savings for rent, utilities, food, and transport. Get the state figure before moving money between accounts. A local Medicaid office or elder-law attorney can confirm the current allowance and title rules.
How should you spend without creating a penalty?
Gifts or below-market transfers within the 60-month look-back trigger a period of Medicaid ineligibility. LegalClarity warns caregivers to spend countable funds on care, debts, or home needs rather than gifting in its asset-verification explainer.
Use extra funds for documented needs first: Save every receipt, invoice, bank statement, and transfer record for five years. Apply only after countable assets fall within the limit and paperwork matches the balances.
- Pay past-due medical bills, credit-card debt, rent, and utilities
- Fix the roof, furnace, plumbing, locks, or bathroom safety
- Buy eyeglasses, hearing aids, dentures, clothing, and care supplies
- Prepay the exempt funeral contract through an irrevocable agreement
