top of page

Medicaid Eligibility FAQs

Updated: Oct 6, 2022

By Barbara Boone McGinnis, CELA

Can Life Insurance affect your Medicaid eligibility?

In order to qualify for Medicaid, you cannot have more than $2,000 in assets (in most states). Many people forget about life insurance when calculating assets but, depending on the type of policy, life insurance can count as an asset. Whole life policies accumulate cash value and this cash value is a countable asset provided the face value is greater than $1,500.

What is the difference between a 401K and an IRA?

The terms 401K and individual retirement account (IRA) are used quite a bit when discussing retirement planning. What are the actual differences between the two? A 401K is an employer-based plan while an IRA is an individual plan. Another difference is the number of investment options available, you may have a broader range of investment opportunities, including stocks, bonds, and real estate. Beneficiary designations are another difference. In a 401K, your beneficiary is automatically your spouse. With an IRA you can designate whomever you want to be your beneficiary without spousal consent.

Can an IRA affect Medicaid eligibility?

Payout status is critical in determining whether or not your IRA is considered a countable asset or income.

How will a gift to charity affect my Medicaid application?

Medicaid, or in Tennessee TennCare, looks at all transfers made in the five years prior to application.  If you transferred assets for less than fair market value, made a gift, TennCare can impose a penalty period.  A penalty period is a period of time when you are ineligible for Medicaid benefits.  There is no exception for charitable giving but if you can show a pattern of charitable giving, you may be able to prove that the transfer was made for a reason other than to qualify for Medicaid.

Four years ago, my mother gave cash gifts to each of her children. Mom has passed away and now my father needs to go to a nursing home.  He may have to apply for Medicaid if he stays for very long.  Will the gifts made by my mom impact my father’s application?

For Medicaid purposes, the gifts of a spouse are treated exactly the same as gifts made by the applicant for benefits. However, given that the gift occurred four years ago, could you wait another year before applying for benefits? Then you would not have to report the transfer.

Should my parents give me their house?

Many people wonder if it is a good idea to give their home to their children.  While it is possible to do this, giving away a house can have major drawbacks.  Some of the drawbacks could be tax consequences, or from a Medicaid transfer of asset perspective, there could be a very lengthy penalty period.

Questions about Medicaid eligibility? Give Takacs McGinnis Elder Care Law at 615.824.2571.

Recent Posts

See All


bottom of page