Connecticut Medicaid Exempt Assets: What You Can Keep and Still Qualify

Connecticut's $1,600 countable asset limit for nursing home Medicaid is one of the lowest in the nation. But "countable" is the operative word — several categories of assets are completely exempt from the eligibility calculation, and understanding these exemptions is the foundation of every asset protection strategy.

The Primary Residence

The family home is exempt if any of the following applies:

• Your parent (the applicant) lives in the home
• Your parent is in a nursing home but has documented "intent to return"
• A spouse lives in the home
• A child under 21 lives in the home
• A blind or disabled child of any age lives in the home

The exemption is subject to a home equity cap of $1,130,000 in 2026 (adjusted annually by CPI). Home equity is calculated as fair market value minus any outstanding mortgage. If equity exceeds this cap, the home becomes a countable asset.

For nursing home residents, maintaining the "intent to return" documentation is essential even when return is unlikely. This keeps the home exempt during your parent's lifetime. After death, estate recovery may apply depending on who survives.

One Vehicle

One automobile of any value is fully exempt, provided it is used for the transportation of either spouse. There is no value cap — a $50,000 vehicle is exempt just as a $5,000 one is.

If the family has two vehicles, the higher-value vehicle should be designated as the exempt one, and the second may need to be sold as part of the spend-down.

Burial and Funeral Provisions

Connecticut allows several burial-related exemptions:

• Irrevocable prepaid funeral contract: Up to $10,000 with a licensed Connecticut funeral home. Once irrevocable, these funds are fully exempt and cannot be reclaimed.
• Revocable burial fund: Up to $1,800 set aside specifically for burial expenses.
• Burial plot/grave site: A burial space is separately exempt regardless of value.

The irrevocable funeral contract is one of the most commonly used spend-down tools. Purchasing a $10,000 prepaid funeral arrangement converts countable cash into a fully exempt asset immediately.

Life Insurance

• Term life insurance (no cash surrender value): Fully exempt regardless of face value.
• Whole life insurance: Exempt only if the total combined face value of all whole life policies is $1,500 or less. If the face value exceeds $1,500, the entire cash surrender value becomes a countable asset.

If your parent has a whole life policy with a face value over $1,500 and significant cash value, this is a countable asset that may need to be addressed during spend-down — either by surrendering the policy, converting it to term, or using the cash value for compliant purposes.

Personal Property and Household Goods

Furniture, clothing, household appliances, and personal effects are exempt. These items are not inventoried as countable assets.

What's NOT Exempt

These are the assets families most commonly assume are protected but are not:

• The non-applicant spouse's retirement accounts. Connecticut counts both spouses' IRAs and 401(k)s in the spousal resource assessment. Unlike many states, the community spouse's retirement funds are not automatically exempt.
• Second properties. Vacation homes, rental properties, and land holdings are countable.
• Cash value life insurance above $1,500 face value. See above.
• Cryptocurrency. Treated as any other financial asset — fully countable.
• CDs and money market accounts. Countable, even if earmarked for a specific purpose.

Annuity Rules in Connecticut

Deficit Reduction Act (DRA)-compliant annuities can convert excess countable assets into an income stream for the community spouse. For an annuity to be compliant, it must be irrevocable, non-assignable, actuarially sound (payable within the annuitant's life expectancy), and must name the State of Connecticut as the primary beneficiary up to the amount of Medicaid benefits paid.

Compliant annuities are a powerful planning tool for married couples whose combined assets exceed the CSRA ceiling, but they must be structured precisely — a non-compliant annuity is treated as a countable asset or a disqualifying transfer.

A Practical Exemption Checklist

Before filing a Medicaid application, walk through every asset your parent owns and classify it:

1. Primary residence — Is it under the $1,130,000 equity cap? Does a qualifying person live there (spouse, minor child, disabled child)? If your parent is in a nursing home, is "intent to return" documented?
2. Vehicles — Designate one as the exempt vehicle. Plan to sell or transfer any additional vehicles as part of the spend-down.
3. Burial provisions — Has an irrevocable prepaid funeral contract been purchased (up to $10,000)? Is a $1,800 revocable burial fund set aside?
4. Life insurance — Are all policies term (fully exempt)? If whole life, does total face value exceed $1,500? If yes, the cash surrender value is countable.
5. Retirement accounts — Both spouses' IRAs and 401(k)s are countable. For married couples, these are included in the spousal resource assessment.
6. Bank accounts — All checking, savings, CDs, and money market accounts are countable. Joint accounts are presumed 100% owned by the applicant.
7. Investments — Stocks, bonds, mutual funds, and brokerage accounts are fully countable.
8. Real estate — Any property beyond the primary residence is countable at fair market value.

This classification determines your spend-down target: total countable assets minus $1,600 equals the amount that must be converted into exempt form or spent on compliant purchases.

Building Your Asset Protection Strategy

Asset protection in Connecticut isn't about hiding money — it's about understanding which assets are inherently exempt, which can be converted into exempt forms, and which must be spent on compliant purchases to reach the $1,600 threshold.

Our Connecticut Medicaid Long-Term Care & Asset Protection Guide includes an asset inventory worksheet, step-by-step spend-down calculator, and detailed guidance on every exemption — helping you build a compliant strategy before filing your parent's Medicaid application.

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