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What Assets Are Protected (and Not Protected) in Medicaid Planning?

Mar 5, 2026

When it comes to Medicaid planning, understanding which assets are protected and which are not is crucial for individuals in El Paso and Southern New Mexico. This knowledge not only impacts eligibility but also helps in strategizing effectively to preserve wealth. In this guide, we’ll explore the nuances of Medicaid asset protection and provide insights tailored to our community.

Understanding Medicaid Asset Protection

Medicaid is a state and federally funded program that assists individuals with limited income and resources in accessing healthcare services. To qualify, applicants must meet specific financial criteria, which often involves a close examination of their assets.

Protected Assets:

Protected assets are those that Medicaid does not count when determining eligibility. These typically include:

  1. Primary Residence: In many cases, the applicant’s primary home is excluded from asset calculations. However, this may be subject to equity limits and the intent to return home.
  2. Personal Belongings and Household Items: Items like clothing, furniture, and appliances are generally not counted.
  3. One Vehicle: A single automobile is often considered exempt, especially if it is used for transportation to medical appointments or employment.
  4. Irrevocable Funeral Trusts: Setting up a funeral trust can safeguard funds specifically earmarked for burial expenses.
  5. Life Insurance: Policies with a face value typically under $1,500 are often exempt.

Non-Protected Assets:

Assets that are counted towards Medicaid eligibility include:

  1. Cash and Checking/Savings Accounts: Liquid assets are closely scrutinized.
  2. Second Homes and Additional Real Estate: Properties other than the primary residence are usually not protected.
  3. Investments and Stocks: These count towards the financial resource limit.
  4. Retirement Accounts: Depending on how they are structured, these may or may not be considered.

Strategies for Asset Protection

To navigate Medicaid planning effectively, consider the following strategies:

  • Trusts: Establishing irrevocable trusts can help protect assets from being counted. These trusts must be set up in advance, as Medicaid has a look-back period of 60 months (5 years).
  • Spend Down Strategies: Carefully planned expenditures on exempt assets or medical expenses can help reduce countable assets.
  • Gifting: While gifting can reduce asset levels, it must be done well in advance due to the look-back period mentioned above.
  • Legal Advice: Consulting with a legal expert, such as Townsend Allala Coulter & Kludt, can provide personalized strategies tailored to your situation.

Local Considerations

For residents of El Paso and Southern New Mexico, understanding local Medicaid rules and regulations is essential. This region’s unique socio-economic landscape necessitates careful planning and strategy to maximize asset protection while ensuring eligibility.

Conclusion

Medicaid planning is a complex process that requires a strategic approach to protect assets effectively. Understanding what is protected and what is not can significantly affect your ability to qualify for Medicaid benefits. At Townsend Allala Coulter & Kludt, we specialize in guiding you through the intricacies of Medicaid planning. For personalized advice and support, contact us through our Contact Us page.

By taking proactive steps now, you can secure your financial future and ensure that you or your loved ones receive the necessary care without sacrificing hard-earned assets.

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