Countable vs. Exempt Assets for NJ Medicaid Long-Term Care

The $2,000 Line

To qualify for Medicaid long-term care (MLTSS) in New Jersey, an individual applicant must have no more than $2,000 in countable assets on the first day of the month. The county welfare agency will audit everything — bank accounts, investment accounts, life insurance, and more — going back 60 months.

But not every asset counts. New Jersey divides resources into countable and exempt categories, and understanding the distinction is the first step toward a legitimate spend-down.

What Counts Against You

Countable assets include:

• Checking and savings accounts — accounts in the applicant's name and jointly held accounts, subject to ownership rules
• Certificates of deposit (CDs)
• Stocks, bonds, and mutual funds
• Traditional IRAs and 401(k)s — listed among countable assets for the applicant; treatment of distributions and principal should be evaluated under current rules
• Cash value of life insurance — cash-value policies must be classified under New Jersey's resource rules; do not assume a policy is exempt based only on its face value. Policies with no cash value (pure term life) are treated differently.
• Savings bonds
• Non-primary real estate — rental properties, vacation homes, vacant land
• Promissory notes and loans receivable
• Jointly held accounts — evaluate the applicant's ownership share under the applicable ownership and spousal-resource rules; do not assume a fixed percentage

What's Exempt

Exempt assets include:

• Primary residence — exempt up to $1,130,000 in equity (2026), as long as the applicant intends to return home or a spouse/dependent lives there.
• One vehicle — one automobile used for transportation of the applicant or household members
• Personal property and household goods — furniture, clothing, appliances, jewelry (within reason)
• Irrevocable funeral trust or prepaid burial plan — irrevocable funeral trusts are treated as exempt assets under New Jersey Medicaid rules; verify that the contract qualifies and check any applicable limits before relying on it.
• Life insurance without cash surrender value — ask the county how the policy is classified; face value alone does not determine treatment
• ABLE accounts — tax-advantaged savings accounts for individuals with disabilities; verify the applicable state limit and Medicaid treatment

The IRA Question

This is one of the most common questions, and the answer depends on whose IRA it is:

Applicant's IRA: IRAs are listed among countable assets for Medicaid. The account's value and distributions must be evaluated under current rules; do not assume an IRA is excluded because it has not started distributions.

Community spouse's IRA: Treat the account as part of the spousal resource assessment and confirm with the county how its principal and distributions are counted under current New Jersey rules.

The practical takeaway: don't change a spouse's IRA distributions solely to pursue Medicaid eligibility; have the county or an elder-law attorney evaluate the account first.

What About the Spouse's Assets?

When one spouse applies for Medicaid, the county welfare agency totals all assets held by both spouses (regardless of whose name is on the account) and then applies the Community Spouse Resource Allowance (CSRA). The community spouse can retain between $32,532 and $162,660 of the couple's combined countable assets. Everything above the CSRA must be spent down to $2,000 for the applicant.

Spend-Down Before Applying

If countable assets exceed $2,000, the applicant must spend them down — but only on exempt purposes. Legitimate spend-down purchases include prepaying funeral costs, making home repairs or modifications, paying off a mortgage, purchasing a vehicle, or paying existing debts. Gifts and transfers for less than fair market value trigger penalty periods under the 60-month lookback.

For a complete guide to New Jersey Medicaid's asset rules, spend-down strategies, and spousal protections, our New Jersey Medicaid Long-Term Care & Asset Protection Guide walks through the full process with 2026 thresholds and worksheets.

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