Medicaid’s $162,660 Question: What the At-Home Spouse Keeps, What Gets Spent Down, and the One Move That Turns “Excess” Savings Into Untouchable Income

The number in the headline is the 2026 federal maximum Community Spouse Resource Allowance (CSRA) of $162,660, the ceiling on countable assets the at-home spouse can keep when the other spouse enters a nursing home on Medicaid. The floor is $32,532. Everything above the applicable state figure has to be “spent down,” and one legal move can convert that excess into an income stream the community spouse keeps for life.

These figures come from the CMS Center for Medicaid and CHIP Services Informational Bulletin on 2026 SSI and Spousal Impoverishment Standards, issued April 27, 2026. A quick vocabulary check before we dig in: Medicaid is the joint federal-state program that pays for long-term nursing home care after a spend-down. Medicare, the federal health program tied to age 65, pays for at most 100 days of skilled nursing after a qualifying hospital stay and never funds custodial long-term care. This article is about Medicaid.

Part One: What the At-Home Spouse Keeps

The CSRA is a range that varies by state, and this is where readers get tripped up. States pick a standard somewhere between the $32,532 minimum and the $162,660 maximum. “Maximum states” let the community spouse keep up to the full ceiling. “One-half states” let the spouse keep half of the couple’s countable assets, subject to that floor and ceiling. Two couples with identical savings in different states can end up in very different places.

The count is taken as a snapshot on the date the ill spouse enters institutional care, called the resource assessment. That date matters because it locks in the number both spouses will work from, even if care starts months before an application.

Certain assets sit outside the count entirely: the primary home (subject to a home equity limit between $752,000 and $1,130,000 in 2026, set by each state), one vehicle, personal belongings, household goods, and prepaid irrevocable funeral arrangements. Retirement accounts get state-specific treatment; some states exempt an IRA in payout status, others count every dollar.

Part Two: What “Spend-Down” Actually Means

Spend-down means reducing countable resources to the applicable limit by spending on legitimate expenses that benefit the couple, rather than writing checks to the nursing home or the state until the money is gone. Permitted categories include:

• Paying off a mortgage, credit card balance, or car loan
• Home repairs, a new roof, accessibility modifications
• Replacing an aging vehicle
• Prepaid irrevocable funeral and burial contracts
• Medical, dental, and vision care not covered by insurance

What spend-down is not: gifting money to the kids or transferring the deed to a child for a dollar. Medicaid applies a five-year lookback to uncompensated transfers and imposes a penalty period, calculated using the state’s monthly penalty divisor, during which Medicaid will not pay for care. The couple who paints the house, replaces the Buick, and prepays the funeral keeps the value. The couple who hands $60,000 to a grandchild triggers months of ineligibility.

Part Three: The Medicaid-Compliant Annuity

Here is the move that turns excess countable savings into untouchable income for the at-home spouse. A Medicaid-compliant annuity (MCA) takes a lump sum of countable assets and converts it into a stream of equal monthly payments to the community spouse. Because the payments belong to the well spouse, and Medicaid uses the “name on the check” rule for income, they do not disqualify the institutionalized spouse.

To qualify, the contract must be irrevocable, non-assignable, actuarially sound based on the community spouse’s life expectancy, pay equal installments with no balloon, and name the state Medicaid agency as primary remainder beneficiary up to the amount Medicaid pays for care.

Read that last requirement carefully. If the community spouse dies before the annuity pays out, the remaining payments reimburse the state, not the heirs. The MCA is a spousal impoverishment protection that keeps the healthy spouse fed and housed while the state’s long-run interest is preserved. Rate context matters too: MCAs are priced against Treasury yields, and the 5-year Treasury sat at 4.55% on September 1, 2026, well above the 1.71% national average 12-month CD rate as of August 1, 2026.

Fair Hearing Requests Most Families Miss

If the community spouse’s income falls below the Minimum Monthly Maintenance Needs Allowance of $2,705 (effective July 1, 2026; higher in Alaska and Hawaii), and the CSRA does not generate enough income to close the gap, the spouse can request a fair hearing to raise the resource allowance above the state standard. Underused, and genuinely useful.

A few important caveats. States administer Medicaid differently, and income treatment is not the same as resource treatment. Estate recovery is a separate exposure after the Medicaid recipient dies, regardless of what was protected during life. The core promise of federal law, though, holds: the at-home spouse is not required to end up destitute. Any household staring at a nursing home admission should sit down with an elder law attorney licensed in their state before writing the first check.

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