How Do I Protect My Spouse's Assets in Medicaid Planning?

Full-time nursing home care is prohibitively expensive for many older Pennsylvanians. Medicaid can help pay for long-term care costs, but there are strings attached. Medicaid is a means-based healthcare program. Benefit eligibility is directly tied to the applicant’s income and asset levels.

For a single person, this may not be a problem. However, Medicaid planning is more complicated when the Medicaid applicant is part of a married couple, and the healthy spouse does not need Medicaid benefits. For legal questions about estate planning and asset protection, talk to a local elder law attorney.

Who Is Eligible for Medicaid in Pennsylvania?

Will the healthy spouse have to give up their home, monthly income, and other countable assets just to ensure their loved one is able to afford nursing home care?

“They certainly may,” acknowledges Garrett Gummer, an elder law attorney at Yorkway Law Group in Feasterville, Pennsylvania. “But there are ways to protect a lot of the couple’s assets.”

Pennsylvania Medicaid offers several programs to help eligible seniors defray the costs of nursing home care. Eligibility is largely based on the applicant’s income and total resources available. The first step for couples trying to qualify, Gummer says, is to identify which resources are exempt from consideration.

Examples of Exempt Assets in Pennsylvania

Some examples of exempt assets are:

• A single vehicle
• Burial plots
• Irrevocable prepaid funerals
• Term life insurance
• Retirement accounts for the community spouse (the spouse who is not in a nursing home)

“Some states count retirement accounts, but Pennsylvania doesn’t,” Gummer says. “Your house is exempt as long as the community spouse is living in it or a disabled child is in it,” he adds.

Medicaid Income Limits

With respect to income, only money earned by the applicant spouse counts towards their nursing home Medicaid limit.

If you apply for nursing home Medicaid but your spouse does not, their Social Security or other income will not count toward your monthly limit. (Spousal income may still count towards regular, non-nursing care Medicaid eligibility limits.)

Medicaid Limits on Non-Income Assets

What about non-income resources? For 2026, a spouse in a nursing home can keep up to $8,000 in assets if their monthly income is $2,982 or less. Over that income limit, the resource limit is $2,400.

The non-applicant spouse can retain half of any resources owned jointly with the applicant spouse up to a maximum limit of $162,660. After exemptions, any other resources count towards that limit. So what happens if the couple has, for example, $400,000 after exemptions? After reserving the maximum allowed for each spouse, they would need to spend down.

“One way to spend it down is to pay the nursing home, but that’s not usually a very popular way,” Gummer says. The better option is to look at each spouse’s needs. “Because as long as you can spend the money on the needs of one of the spouses, then you’re in good shape,” he says.

How Do I Spend Down To Qualify for Medicaid?

Examples of legitimate purchases include replacing a vehicle, planning a funeral, home repairs, or paying off debt.

If all qualifying purchases have been made and the resource limit still hasn’t been met, Gummer says the next step is to purchase a Medicaid-qualified spousal annuity — one that can’t pay out for more than the community spouse’s life expectancy. The annuity counts as part of the community spouse’s income, which is exempt.

“So with a spousal case, for the most part, they don’t have to spend much money at all on the nursing home. We can pretty much save the lion’s share of the couple’s resources,” Gummer says. “Now, I’m not saying that they wouldn’t have to pay a month or two because it takes time to get all this in place.”

Pennsylvania Medicaid law also provides for the Community Spouse Resource Allowance (CSRA). Under this rule, for 2026, the minimum (CSRA) is $32,532. However, the community spouse can keep half of the couple’s combined countable resources, up to the $162,660 maximum.

Again, this is to ensure the non-applicant spouse is not left impoverished and unable to provide for themselves just because the applicant spouse needs help paying for nursing home care.

What Is the Medicaid Look-Back Period?

One final thing to keep in mind: The federal government imposes a five-year look-back period when assessing Medicaid eligibility.

This means that if you and your spouse gave away or sold assets below fair-market value in the five years preceding your Medicaid application, officials can still count those assets against you.

“Then the person applying for Medicaid is going to be subject to a penalty,” Gummer says. “And the penalty is based on the amount of money or other assets that you gave away.” The kicker, he adds, is that penalties won’t apply until after you’ve spent down to qualifying levels. Once again, a Pennsylvania elder law attorney can provide you with additional guidance on this subject.

Medicaid Asset Protection Trusts

Another option for Pennsylvania residents is an asset protection trust. An asset protection trust is a type of irrevocable trust that keeps certain assets, real estate, and resources outside of Medicaid’s countable assets.

The Medicaid couple can continue to receive income from the trust and remain in their primary residence. When the couple passes away, the trust transfers the assets to beneficiaries without going through probate.

An Attorney Is an Important Piece of the Medicaid Puzzle

Medicaid rules are incredibly complex, which is why it’s important to consult with an experienced attorney for legal advice. “In my opinion, this is the most confusing issue facing senior citizens and their caregivers that can ever come up,” Gummer says.

“It is a complex process, and it’s a process that people are going through when they’re not at their best… And I find that, for the average layperson, without a lawyer, many times they’re not going to be able to take advantage of the laws that could benefit them.”

And while some nursing homes may have staff to help with a Medicaid application, they may not be up to date on effective planning strategies and may also be unable to provide certain types of advice due to conflicts of interest. An attorney can provide counsel regarding your specific situation. “That’s why I think it’s essential that people see elder law attorneys,” Gummer says.

Finding an Elder Law Attorney

Eligibility for Medicaid long-term care is something most people don’t want to think about. However, planning ahead can ensure you qualify for state Medicaid benefits and provide for your family. An elder law attorney can help you through the process and offer peace of mind so you can get the care you need. Contact a local Pennsylvania elder law attorney.