Federal law establishes the basic rules and regulations for the Medicaid program. States may modify those rules and regulations within certain limits. Consequently, Medicaid rules and regulations vary by state and you should always consult the specific rules and regulations of your state before acting on general guidelines. Medicaid allows a client on Medicaid to own one vehicle which might be exempt from the $2,000 limit on assets.
Exempt Categories One Through Four
A Medicaid client owning an automobile may have the vehicle exempt from being counted as an asset subject to the $2,000 limitation on the total value of assets if the vehicle meets one of four requirements. Among those requirements are: the vehicle must be needed for employment, the automobile is needed for transportation to and from medical appointments, the vehicle has been modified for use by the handicapped or the vehicle is needed for daily activities because the client lives in a remote area.
Exempt Category 5
A Medicaid client can avoid having an automobile counted toward his assets if the vehicle is transferred to a spouse. This is especially true where the person lives in a community property state. The value of the vehicle does not matter and more importantly, the transfer is not considered to be an unqualified transfer under Medicaid rules. An unqualified transfer means the asset could be counted as a disqualifying element if made within five years of the person going on Medicaid.
Automobile Not Exempt
When a Medicaid client owns a vehicle which does not fall into one of the five exemption categories listed above, the vehicle is considered an asset of the client's estate. Any value over $4,500 is counted toward the $2,000 total assets limitation. The effect of this rule is that the client may be required to sell the automobile and purchase one of lesser value or divest other assets until the client is at or below the $2,000. The first $4,500 of the automobile is not counted toward that limit.