Arkansas Medicaid Countable Resources: What Counts as an Asset

The $2,000 asset limit for Arkansas Medicaid long-term care sounds clear until you start cataloging what a parent actually owns. Is the house counted? The car? A small IRA? A $10,000 whole life insurance policy? The answers are not always intuitive, and getting them wrong can lead families to either spend down assets unnecessarily or submit an application that gets denied because of an asset they assumed was exempt.

What Is Counted

Arkansas Medicaid counts any resource that is available to the applicant and can be converted to cash. The major categories:

Bank accounts — checking, savings, CDs, money market accounts. Balances on the date of application are reviewed, including joint accounts where the applicant is a co-owner. If the applicant is the only party eligible for Medicaid, Arkansas may presume a joint account is fully available; documented ownership can change the amount considered.

Retirement accounts (IRAs, 401(k)s, 403(b)s) — this is where many Arkansas families are surprised. Both the applicant's and the community spouse's retirement accounts are countable resources. Arkansas does not exempt retirement accounts from the Medicaid asset calculation the way some states do for the community spouse's IRA.

The full cash value of the account is counted, not just the contributions. If a parent has a $45,000 IRA and $5,000 in savings, their total countable assets are $50,000 — which exceeds the $2,000 limit by $48,000.

For married couples, the community spouse's retirement accounts are included in the total asset pool when calculating the Community Spouse Resource Allowance. The community spouse can keep their share up to the CSRA ceiling ($162,660 in 2026), but the retirement accounts are part of that calculation, not exempt from it.

Stocks, bonds, mutual funds, and brokerage accounts — the current market value on the application date.

Real property other than the primary residence — rental properties, vacation homes, undeveloped land. Assessed at fair market value.

Life insurance with cash surrender value — if the total face value of all life insurance policies exceeds $1,500, the cash surrender value of all policies is countable. Below $1,500 in total face value, the policies are exempt.

Vehicles beyond the first — one vehicle is exempt regardless of value. Additional vehicles are counted at fair market value.

Trusts — revocable trust assets are fully countable because the grantor retains access. Irrevocable trust assets are generally not countable, but the trust must meet specific criteria and may have been subject to lookback if funded within 60 months.

What Is Exempt

Primary residence — exempt if the applicant's spouse, a child under 21, or a blind/permanently disabled child lives there. If no qualifying relative resides in the home, it is still exempt if the applicant expresses intent to return home and the home equity does not exceed $752,000 (2026 limit). Above that equity threshold, the home becomes countable.

One vehicle — exempt regardless of value. This applies to one vehicle per household, not per person.

Personal belongings and household furnishings — clothing, furniture, appliances. These are not counted.

Burial spaces and plots — cemetery plots, crypts, and burial spaces for the applicant and immediate family members are exempt.

Irrevocable prepaid funeral contracts — properly structured funeral contracts are fully exempt. Revocable contracts are counted.

Term life insurance — policies with no cash surrender value are not counted regardless of face value.

The Retirement Account Problem

Because retirement accounts are countable in Arkansas, families face a difficult decision when a parent has a significant IRA or 401(k):

Option 1: Liquidate and spend down. Cash out the retirement account, pay the income tax and any early withdrawal penalty, then use the remaining funds for exempt conversions — paying off the mortgage, purchasing funeral contracts, making home modifications, or funding a caregiver agreement. The tax hit reduces the total value, but the remaining cash is converted to exempt forms.

Option 2: Take minimum distributions. If the account is already in required minimum distribution (RMD) status, the distributions count as income each month. If the distributions plus other countable income exceed $2,982, a Miller Trust is needed. The principal remaining in the account is still countable, so this only works if the account balance is low enough that the CSRA covers it.

Option 3: Annuitize. Converting a lump-sum retirement account into an annuity can transform the asset into an income stream. Contract terms must satisfy Arkansas Medicaid rules, so have an annuity reviewed before purchase; it can remove principal from the asset count but adds to monthly income.

Each approach has tax, income, and eligibility consequences that depend on the specific amounts involved. The right choice for a $15,000 IRA is different from the right choice for a $150,000 one.

How DHS Verifies Assets

DHS uses the electronic Asset Verification System (AVS), which cross-references the applicant's Social Security number with financial institutions to identify accounts. This system is automated and thorough — undisclosed accounts are routinely discovered.

The 60-month lookback audit also examines bank statements for large deposits, transfers, and withdrawals. Unexplained transactions require documentation, and unverifiable transfers are treated as gifts subject to penalty calculation.

The Arkansas Medicaid Long-Term Care Guide includes an asset inventory worksheet that maps every resource category against the countable/exempt rules, helping families get an accurate picture of where they stand before filing the application.

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