August 28, 2026
4:13 am

What Is a Countable Resource?

A countable resource is any asset that a benefit program counts against its resource limit when deciding whether someone is eligible, as opposed to an exempt resource, which does not count no matter how much it is worth. For Supplemental Security Income and for long-term care Medicaid in most states, the limit for an individual is $2,000, a figure that has not changed since 1989.

The definition is simple. The decision it produces is not, and it usually arrives at a bad moment: a parent is being admitted somewhere, the family is filling out an application, and a modest old life insurance policy turns out to be the thing standing in the way.

This page frames the term as the choice it forces, lays out the four realistic options with their trade-offs, and is specific about which option is wrong in which circumstance. Pine Lake Legacy provides education and a free policy review only; we do not give Medicaid eligibility advice.

In This Article

The Line You Are Standing On, and the Numbers That Set It
What Counts and What Does Not
The Decision: Four Options and What Each One Costs
The Option That Is Not on the List
Terms This Gets Confused With
When Selling the Policy Is the Wrong Answer
Frequently Asked Questions

The Line You Are Standing On, and the Numbers That Set It

Start with what the applicant is measured against, because everything downstream depends on it.

For SSI, the resource limit is $2,000 for an individual and $3,000 for a couple. Most states apply the same $2,000 figure to long-term care Medicaid, though a small number set materially higher limits and a few use their own more restrictive methodology. One state removed its asset test for non-modified-adjusted-gross-income Medi-Cal entirely effective January 1, 2024, which is a good illustration of why no national figure should be trusted without checking: confirm your state’s current limit with the state Medicaid agency before doing any arithmetic.

Where a married couple is involved and one spouse is entering care, the spousal impoverishment rules protect a share of the couple’s resources for the spouse remaining at home, called the community spouse resource allowance. That allowance has a federal minimum and maximum that the Centers for Medicare and Medicaid Services updates annually; for 2025 the maximum was $157,920 and the minimum $31,584. Confirm the current year’s figures with CMS or your state agency rather than relying on last year’s. See how the community spouse resource allowance works.

Resources are generally measured as of the first moment of the first day of a month, and for couples there is a separate snapshot date tied to the start of institutionalization. Those dates decide which numbers matter.

What Counts and What Does Not

Countable resources generally include cash, checking and savings accounts, certificates of deposit, stocks, bonds and mutual funds, non-home real estate, a second vehicle, and the cash surrender value of life insurance where the policy is not excluded.

Exempt resources generally include the home up to an equity limit, which has a federal minimum and a higher maximum that states may elect and which CMS updates annually; one vehicle; household goods and personal effects; burial spaces for the applicant, spouse and immediate family, with no dollar cap; up to $1,500 designated as a burial fund, reduced by any excluded life insurance face value; and irrevocable burial contracts up to state limits.

Life insurance has its own rule and it is the one that catches people. If the total face value of all policies on a person’s life is $1,500 or less, the policies are excluded and their cash value does not count. If total face value exceeds $1,500, none is excluded and the entire cash surrender value counts. Term insurance with no cash value has nothing to count in the first place.

Note the mismatch: the test looks at face value, the count uses cash value. See what makes a resource exempt for the other half of this pair.

The Decision: Four Options and What Each One Costs

Assume the policy is what puts the applicant over. Four routes exist and they are not interchangeable.

Surrender it. The carrier pays the cash surrender value, coverage ends, and the cash is now countable until it is spent on care or converted to something exempt. Fastest and simplest. Also usually the lowest value, since surrender value is typically a fraction of face amount, and it may create taxable income where the value exceeds the premiums paid.

Irrevocably assign it to a licensed funeral establishment. In most states this converts a countable policy into an excluded burial arrangement, and states commonly cap the amount. For small and mid-sized policies this is frequently the best value in the room and it is the option families most often never hear about. Confirm the cap and requirements with the state Medicaid agency.

Sell it in the secondary market. Can pay materially more than surrender for an older or unhealthy insured, but the proceeds are cash and cash is countable, so the money still has to be spent down or converted. It also takes time, commonly 60 to 120 days, which an urgent admission may not allow. Compare at surrender versus sell.

Do nothing. Legitimate when the policy is term with no cash value, when total face value is under $1,500, or when the applicant is not close to the limit anyway.

Asset	Countable?	Note
Checking, savings, CDs, brokerage accounts	Yes	Measured at the first moment of the first day of the month
The home	Generally no, up to an equity limit	Limit is federally set with a state option; confirm with CMS
One vehicle	No	A second vehicle generally counts
Term life insurance	No	No cash value, so nothing to count
Cash-value life insurance, total face over $1,500	Yes, the full cash surrender value	The test uses face value; the count uses cash value
Cash-value life insurance, total face $1,500 or less	No	Reduces the $1,500 burial fund allowance
Burial spaces for the applicant, spouse and immediate family	No	No dollar cap
Designated burial fund	No, up to $1,500	Reduced by excluded life insurance face value

The Decision: Four Options and What Each One Costs

The Option That Is Not on the List

Giving the policy away is the route families reach for first and it is the one that causes the most damage.

Transfers of assets for less than fair market value during the look-back period, generally 60 months in most states, are penalized. The penalty is a period of ineligibility calculated by dividing the value transferred by the state’s published average monthly private-pay cost of nursing facility care, a divisor states set and update. Critically, the penalty period does not begin when the transfer happened; it generally begins when the person is otherwise eligible and receiving institutional care, which means it bites at the worst possible moment, when there is no money left and no benefit coming.

Changing the owner of a policy to an adult child is a transfer. So is naming a child as owner while the parent keeps paying. So is surrendering a policy and handing the proceeds to a family member. Each of those has ended badly for families who did it in good faith.

There are statutory exceptions for certain transfers, including some involving a spouse, a disabled child, or a home transferred to a caregiver child who meets the requirements. Those are narrow, documented and best handled by an elder law attorney. Read how the look-back treats a policy before anyone signs anything.

Terms This Gets Confused With

Income. A completely separate test with its own limits. Money already counted as income in the month received generally becomes a resource in the following month if it is still held. Households routinely conflate the two and get the timing wrong.

Available versus countable. A resource generally has to be something the person can convert to cash and use for support. An asset that genuinely cannot be liquidated may be treated differently, but do not assume; caseworkers apply specific rules and inaccessibility has to be demonstrated.

The estate, for recovery purposes. What counts during life and what the state can reach after death are governed by different rules. See how estate recovery works.

The homestead exemption in bankruptcy or property tax. Same word, different systems, different limits. None of them transfer.

Countable for MAGI Medicaid. Medicaid for children, pregnant women and expansion adults uses modified adjusted gross income and generally has no asset test at all. That is a different program from long-term care Medicaid, and articles about one are frequently misread as applying to the other.

When Selling the Policy Is the Wrong Answer

This is where families are most often steered badly, so it is worth being direct.

Do not sell a term policy with no conversion right. It has no cash value, so it is not a countable resource, and it generally has no market value either. Selling is not on the table and letting it lapse costs nothing in eligibility terms.

Do not sell a small policy that can be irrevocably assigned to a funeral home. That route usually preserves more value and solves the eligibility problem at the same time.

Do not sell a policy a healthy insured owns. Offers in the secondary market depend on a shortened life expectancy, and a healthy 68-year-old will generally receive little or nothing.

Do not sell a policy a community spouse is relying on. Protecting the spouse who remains at home is usually the more important objective, and the spousal resource rules may already solve the problem without touching the policy.

Where a sale genuinely belongs in the conversation is a substantial face amount, an older or declining insured, coverage nobody needs, and time to complete the process. Even then, the proceeds are countable and the plan for them has to be worked out in advance with an elder law attorney.

Pine Lake Legacy will review a policy cover page at no cost and with no obligation and tell you plainly which of the situations above applies, including when the answer is to leave the policy alone. Call (732) 978-9575. We provide education and reviews only. For eligibility determinations contact your state Medicaid agency, for coverage questions your State Health Insurance Assistance Program, and for planning your own elder law attorney.

Frequently Asked Questions

What is the resource limit I am trying to get under?

For SSI it is $2,000 for an individual and $3,000 for a couple, unchanged since 1989, and most states apply the same $2,000 figure to long-term care Medicaid. Some states set higher limits, some use more restrictive methods, and at least one has removed its asset test entirely. Confirm the current figure with your state Medicaid agency.

Why does my parent’s small policy count when it is only $10,000?

Because the exclusion for life insurance applies only when the total face value of all policies on that person is $1,500 or less. Above that threshold, no policy is excluded and the entire cash surrender value counts as a resource. The test uses face value while the count uses cash value, which is why the result surprises families.

Can I just give the policy to my children?

That is a transfer for less than fair market value, and it generally triggers a penalty period under the look-back rules, typically 60 months in most states. Worse, the penalty usually begins when the person would otherwise be eligible and in care, not when the transfer happened. Speak to an elder law attorney before signing anything.

If I sell the policy, does the money still count?

Yes. Sale proceeds are cash, and cash is a countable resource in the month after receipt if it is still held. A sale can produce more value than a surrender, but it does not by itself solve eligibility. The plan for spending or converting the proceeds has to be worked out with an attorney before the money arrives.

What is the best option for a small whole life policy?

In many states an irrevocable assignment to a licensed funeral establishment converts the policy into an excluded burial arrangement, which often preserves more value than surrendering and resolves the eligibility problem at once. States cap the amount and require specific contract language, so confirm the current rules with the state Medicaid agency first.

Does my spouse’s money count too?

For a married couple with one spouse entering care, the spousal impoverishment rules count the couple’s combined resources at a snapshot date and then protect a share for the spouse at home, within a federal minimum and maximum updated annually. Ask your state agency for the current figures and the snapshot date that applies to you.

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