Medicaid provides healthcare coverage to individuals with limited income and resources, including long-term care services for the elderly and disabled. In Wisconsin, eligibility for the program is determined by strict income and asset limits.
What assets are exempt from Medicaid in Wisconsin? Knowing this can help you or a loved one get the care they need, such as nursing home or in-home care services. These exemptions do not count when determining eligibility. That means you can retain some level of financial security while still qualifying for benefits.
Why Asset Exemptions Are Important
The Medicaid program has both an income limit and an asset limit. For Wisconsin residents, the asset limit for Medicaid long-term care is $2,000 for an individual. However, certain assets are classified as “exempt” or “non-countable.” That means they are not included in determining eligibility.
The Primary Residence
One of the most important exemptions in Medicaid eligibility is the applicant’s primary residence. There are a few rules that you will want to know:
- The applicant’s primary residence is exempt if the equity in the home is $688,000 or less (as of 2024). Many times, this limit is adjusted annually based on federal guidelines.
- The applicant must show an intent to return home. This must be completed even if they are currently living in a nursing home or other care facility. This intent can be stated verbally or in writing.
- If the applicant’s spouse, who is known as the “community spouse,” continues to live in the home, it is fully exempt, no matter the value.
Keep in mind that the home may be exempt during the applicant’s lifetime. However, Medicaid’s estate recovery program may seek reimbursement for benefits paid after the applicant’s death. In turn, the program could place a lien on the property.
Personal Property
Some types of personal property are also exempt. They include:
- Furniture, appliances, and other household goods
- Clothing, jewelry, or other personal belongings
- One vehicle
Retirement Accounts
IRAs, 401(k)s, and pension plans may also be exempt in certain situations. For example, if the retirement account is in “payout status,” the account is often considered exempt. However, any income generated by the distributions counts toward Medicaid’s income limit. Also, community spouses are exempt from any asset limits.
Life Insurance Policies
These exemptions depend on the policy type and value. Term life insurance has no cash value. As a result, these policies are exempt. On the other hand, universal life or whole life can be exempt, but only if the total face value is $1,500 or less.
Community Spouse Assets
For married couples, Medicaid allows the community spouse to retain additional assets. Under the Community Spouse Asset Share (CSAS), the community spouse can retain up to $154,140 in countable assets.
Assets that generate income for the community spouse, such as rental property, may also be exempt. Some jointly held accounts may be partially exempt, depending on the couple’s total assets and the division of ownership.
Medicaid Eligibility Planning
Medicaid eligibility rules can be complicated, especially when you need to understand what are exempt and non-exempt assets.
Sometimes, you may need other strategies to protect your wealth and assets. Many people choose to establish an irrevocable trust or transfer ownership of assets.
But even then, a five-year lookback period may complicate these plans.
Remember that poor planning on your or a loved one’s part can result in penalties or delays in eligibility. Professional guidance is always recommended in these scenarios.
Find Out If Your Assets Are Exempt from Medicaid
What assets are exempt from Medicaid in Wisconsin? These can include everything from primary residences to community spouse assets. You will need to know the Medicaid rules to avoid any potential problems, including penalties and estate recovery.
At Collins Law Firm, we offer estate planning, administration, business, and elder law services.
Our experienced estate planning team helps individuals like you to build and protect your legacy. Schedule your free and confidential consultation today by contacting us or calling (414) 207-6292.