Qualifying for Medicaid to cover nursing home or other long-term custodial care costs doesn’t mean giving up everything you own.
Connecticut Medicaid distinguishes carefully between countable assets, which must be spent down before you can qualify, and exempt assets, which you’re allowed to keep. Understanding that distinction is the foundation of smart long-term care planning.
The numbers are strict. For a single applicant in Connecticut, the countable asset limit is $1,600 in 2026. That figure surprises most people, and it should. Planning well before you ever need care is the only reliable way to protect what you’ve built.
What Counts Against You
Countable assets are anything that can be converted to cash. Bank accounts, savings accounts, money market accounts, certificates of deposit, stocks, bonds, mutual funds, and cryptocurrency all count.
Real estate you don’t live in counts. Retirement accounts, including IRAs, are counted in Connecticut, which sets the state apart from some others.
Cash value in a life insurance policy is also countable if it exceeds certain thresholds. Most financial assets, in short, are fair game unless a specific exemption applies.
Assets Connecticut Medicaid Does Not Count
Several categories of assets are fully exempt from Medicaid’s asset calculation. Knowing what’s on that list matters as much as knowing what’s off it.
Your primary home is generally exempt, provided you live there or express an intent to return. Connecticut uses the maximum home equity interest limit allowed under federal law, which in 2026 is $1,130,000.
Homes with equity below that threshold remain protected as long as a qualifying family member lives there or you document your intent to return.
One automobile is exempt, regardless of its value. Personal belongings and household furnishings are exempt.
A burial plot is exempt. Term life insurance with no cash surrender value is exempt. Whole life insurance is exempt when the total face value of all policies is under $1,500.
Prepaid funeral arrangements also receive protection. An irrevocable prepaid funeral contract with a Connecticut funeral home is exempt up to $10,000 in 2026. A refundable contract is protected up to $1,800.
Spousal Protections Are Substantial
Connecticut’s rules change significantly when a married person applies for Medicaid while a spouse remains at home.
The healthy spouse, called the community spouse, is entitled to keep a portion of the couple’s combined assets under rules called the Community Spouse Resource Allowance.
In 2026, the community spouse can retain up to $162,660 in countable assets. That allowance exists specifically to prevent impoverishment of the spouse who remains in the community while the other receives nursing home care.
Income protections apply as well, with the community spouse entitled to a minimum monthly income to cover living expenses.
These protections are significant, but they don’t eliminate the need for planning. A couple with combined assets well above those thresholds still faces a spend-down requirement for the applicant spouse.
The Five-Year Look-Back Period
Connecticut enforces a strict five-year look-back period for nursing home Medicaid and Home and Community-Based Services waivers. Any asset transferred for less than fair market value during the 60 months before you apply creates a penalty period of Medicaid ineligibility.
The penalty is calculated by dividing the transferred amount by the average monthly cost of nursing home care in Connecticut, which stands at approximately $15,526 per month in 2026.
Transfer $155,260 improperly, and you face roughly ten months of ineligibility during which Medicaid will not pay, even if you’ve otherwise met every eligibility requirement.
Gifts to children, transfers to other family members, and below-market sales of property all trigger scrutiny.
The look-back period is one of the most consequential rules in long-term care planning, and it’s one of the strongest reasons to start planning years before you expect to need care.
The Medicaid Asset Protection Trust
Protecting assets from Medicaid’s spend-down requirement while respecting the look-back period requires an irrevocable Medicaid asset protection trust.
Assets transferred into this trust are no longer counted as yours for Medicaid purposes, but the transfer must occur at least five years before you apply for benefits.
Once established, the trust owns the assets. Transferred property, including your home, is shielded from Medicaid’s asset limit and, critically, from Connecticut’s estate recovery program after your death.
Without that protection, the state can seek reimbursement from your estate for care costs paid on your behalf.
A revocable living trust provides no protection here. Only an irrevocable trust, properly structured and funded well in advance, accomplishes the goal.
Connecticut’s Partnership Program
One additional protection is worth knowing. Connecticut participates in the Partnership for Long-Term Care, a program that links Medicaid asset protection to qualifying long-term care insurance policies.
Under this program, if you purchase a state-certified long-term care insurance policy and later apply for Medicaid, you can protect an amount of assets equal to the benefits your policy paid out.
A policy that paid $200,000 in benefits, for example, allows you to retain $200,000 in assets above the standard $1,600 limit when you apply.
Long-term care insurance carries real limitations and is not right for everyone, but the Partnership program adds a dimension worth discussing with your attorney if you’re evaluating your options.
Start Before the Clock Does
Connecticut’s five-year look-back period means the planning window that matters most opens well before any health crisis arrives. Families who wait until a parent is already in decline often find their options severely limited.
An elder law attorney can help you map your assets against current Medicaid rules, identify what’s already protected, and structure a plan that preserves as much as possible for your family.
Let’s Get Started!
If you act early, you can go forward with the knowledge that nursing home costs will not consume your legacy. You can send us a message or call us right now at 860-548-1000 to schedule a consultation at our Westport, CT elder law office.
We have another location in Glastonbury, and you can use the same number to set up an appointment there if you are in that area. Plus, if you would like to take an initial step first, join us at one of our complimentary monthly seminars.
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