What assets can you keep when you go on Medicare?

When you become eligible for Medicare at age 65, you may wonder how your assets and finances will be impacted. Medicare does not have any asset limits, so you do not have to spend down your assets in order to qualify for coverage. However, if you have very limited income and assets, you may qualify for help from your state Medicaid program to pay for Medicare premiums and cost sharing. In that case, Medicaid does have asset limits that come into play.

Medicare has no asset test

One of the most important things to understand about Medicare is that there is no asset test to qualify for coverage. Medicare Part A (hospital insurance) is free for most people because they or their spouse paid Medicare taxes while working. Medicare Part B (medical insurance) does have a premium, but it does not matter how many assets you have – anyone at least 65 who is a U.S. citizen or permanent legal resident can enroll in Medicare Parts A and B.

When you first enroll in Medicare and each year during open enrollment (October 15 to December 7), you have the option to also enroll in a Medicare Advantage plan like an HMO or PPO as an alternative way to get your Medicare Part A and Part B coverage. There is no asset limitation for joining a Medicare Advantage plan either.

Medicaid does have asset limits

While original Medicare does not have any asset limits, your situation is different if you have very low income and limited assets and apply for help from your state Medicaid program through a Medicare Savings Program. These Medicaid programs help pay for some or all of your Medicare premiums, deductibles and coinsurance. To qualify, your assets must be under certain limits:

  • Qualified Medicare Beneficiary (QMB): $8,400 for an individual, $12,600 for a couple in 2023
  • Specified Low-Income Medicare Beneficiary (SLMB): $8,400 for an individual, $12,600 for a couple in 2023
  • Qualifying Individual (QI): $8,400 for an individual, $12,600 for a couple in 2023
  • Qualified Disabled and Working Individual (QDWI): $4,000 for an individual, $6,000 for a couple in 2023

These programs are administered by your state Medicaid office, which does look at both income and assets to determine if you qualify. The asset limits include savings and investments. Not everything counts as an asset though – your home, car, household goods and burial funds and life insurance policies are usually exempt. The limits also go up slightly each year.

What happens if you need long-term care?

Medicare does not cover long-term custodial care you may need in a nursing home or assisted living facility. If you have very limited income and assets and you qualify for your state Medicaid program, you may be able to get assistance with long-term care costs. Medicaid does have strict income and asset limits for long-term care – in 2023 an individual can have only $2,000 in countable assets.

There are some options to potentially qualify for long-term care Medicaid while still preserving more of your assets through things like setting up an irrevocable trust or participating in an asset protection program offered in some states. Those types of strategies should be considered long before you may need long-term care to make sure you establish them correctly.

Can you keep retirement accounts?

For Medicare, you do not have to tap into or spend down retirement savings like 401(k) plans or Individual Retirement Accounts (IRAs). Those funds can continue to grow tax-deferred. With Medicaid, some states do count those assets and may require you to draw down the accounts to qualify if you need help with long-term care costs. But in general, retirement plans are protected.

Is home equity counted?

Your primary residence is not counted as an asset for Medicaid eligibility purposes. Even if your home is completely paid off and you have a lot of equity built up, that does not matter for Medicaid qualification. The house is excluded. Your house could potentially impact your eligibility if you move into long-term care and do not intend to return home. In that case, the home would no longer be excluded after a certain period of time. But otherwise, your home equity will not prevent you from qualifying for Medicaid if you meet the income and asset limits.

Can you transfer assets?

Be very careful about transferring assets or gifting money to children or others to try to meet Medicaid eligibility limits. Medicaid has a five-year look-back that will penalize you if you transfer assets at below market value during that period. You could make yourself ineligible for Medicaid coverage for a period of time and the transfer could be reversed.

Some limited gifting is allowed each year without penalty – $15,000 in 2023 to any one person. Larger amounts could trigger penalties if you apply for Medicaid within five years.

Can you own other real estate?

Real estate other than your primary residence would generally count as an asset for Medicaid eligibility purposes. That could include:

  • Rental property
  • Vacation homes
  • Timeshares
  • Land
  • Other buildings

These types of properties would need to be sold and spent down within Medicaid asset limits to qualify for Medicaid coverage. There may be exceptions in some cases if the property generates income that you depend on for ongoing living expenses.

With Medicare, ownership of other real estate properties does not matter since there is no asset test.

Do vehicles count?

Medicaid exempts one car. If you have more than one vehicle, the additional car would count toward the asset limits to qualify for Medicaid. The exemption applies no matter the value of the vehicle – an expensive car would still be excluded as an asset as long as it is your primary mode of transportation.

For Medicare, you can own any number or value of vehicles. They do not count at all because Medicare does not have an asset test.

Can you keep cash savings?

Cash savings do count toward Medicaid asset limits, so those funds would need to be drawn down to get below the threshold for qualification if you need Medicaid to help with long-term care costs. Savings in checking and savings accounts, CDs, money market accounts and other cash equivalents are considered countable assets.

But for Medicare, cash savings are not counted or limited. You can keep any amount of savings in the bank without impacting your Medicare eligibility.

Will dividends and interest impact eligibility?

Dividends paid on stocks and interest paid on savings accounts or bonds do count as income when determining eligibility for Medicaid. The income limits can be as low as around $800 per month for an individual to qualify for Medicaid long-term care assistance in some states.

Investment earnings are not counted for Medicare eligibility since there is no income limit for Medicare. But higher income individuals do pay higher premiums for Medicare Part B and Part D prescription drug coverage. Investment income can increase those premium costs but does not prevent you from getting Medicare coverage.

Do pensions and annuities count?

Pensions, 401(k) or IRA required minimum distributions, and annuity payments are considered income when applying for help from Medicaid. They would need to be below state threshold amounts to meet income eligibility requirements.

For Medicare, these types of retirement income do not matter for eligibility, but can impact the amount you pay for Medicare Part B and Part D premiums. Higher retirement income results in higher premium costs for some beneficiaries based on modified adjusted gross income.

Can you own stocks and bonds?

Stocks, bonds, mutual funds and other securities do count toward the asset limit for Medicaid eligibility. They would need to be cashed in and spent down to qualify for Medicaid if necessary. Any dividends and interest paid out by investments also count as income.

For Medicare, the value of stocks, bonds and other securities are not counted and do not matter. You can keep any amount of investments intact when you go on Medicare.

Do life insurance cash values count?

The cash value built up in a permanent life insurance policy does count toward Medicaid asset limits in most cases. Term life insurance with no cash value typically would not impact eligibility. To qualify for Medicaid, permanent policies may need to be cashed in or converted to term insurance in some cases.

Medicare does not count life insurance policies at all toward any asset limits because there are no limits.

Is burial insurance allowed?

States do allow you to designate a portion of assets to be exempted for burial expenses. In 2023, Medicaid allows you to exempt $1,500 for burial funds. Some additional amounts may be exempted if held in an irrevocable burial trust or a pre-paid burial contract.

Burial assets do not impact Medicare eligibility and there is no limit.

Can you have a prepaid funeral contract?

Money you pay for a prepaid or pre-arranged funeral contract can be exempted as an asset for Medicaid purposes. Once paid, those funds are not countable toward the asset limits as long as the contract remains in effect.

Prepaid funeral contracts are allowed without limit for Medicare beneficiaries since Medicare does not have an asset test.

Are personal belongings exempt?

Medicaid does not count household goods and personal effects toward asset limits. Exempt personal property can include:

  • Furniture
  • Clothing
  • Jewelry
  • Tools
  • Dishes
  • Books
  • Appliances
  • Collectibles

Items like expensive jewelry or art may be flagged for further review. But in general, most personal property used in and around the home is not countable.

For Medicare, personal belongings are not counted toward any asset limits and there are no restrictions.


The main takeaway is that Medicare does not have any asset limits, so you do not have to spend down or reduce your savings and property to qualify when you turn 65. You can keep assets intact without any impact on Medicare enrollment. Medicaid does have strict asset limits that come into play if you have very low income and resources and qualify for assistance with premiums or long-term care costs. Understanding how assets are treated can help you evaluate your financial situation as you approach needing Medicare coverage.

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