Maryland Medicaid Long-Term Care: Eligibility, Asset Limits, and Planning

Nursing home care in Maryland averages over $10,000 per month. Medicaid covers it — but only if you meet strict financial eligibility requirements that most middle-class families won't qualify for without planning.

Understanding Maryland's specific Medicaid rules is critical because the state has features that differ significantly from other states, including probate-only estate recovery that creates real planning opportunities.

Eligibility Requirements

Maryland Medicaid long-term care eligibility has two components:

Income limit. For Home and Community-Based Services (HCBS) waivers, the income limit is $2,982 per month (2026). For nursing facility care, Maryland uses the "income cap" — income above the limit must be diverted to a Qualifying Income Trust (Miller Trust) to maintain eligibility.

Asset limit. The individual applying for Medicaid can have no more than $2,500 in countable assets. Countable assets include bank accounts, investments, cash value life insurance above $1,500, and additional vehicles beyond one.

Exempt assets that don't count toward the $2,500 limit:

• Primary residence (while living there, or with intent to return, up to $713,000 in equity for 2026)
• One vehicle
• Personal belongings and household goods
• Prepaid funeral and burial plans
• Term life insurance (no cash value)

Spousal protections. The Community Spouse Resource Allowance (CSRA) lets the non-applicant spouse keep a portion of the couple's combined assets — up to $154,140 (2026) — plus a Monthly Maintenance Needs Allowance from the applicant spouse's income.

The 60-Month Look-Back Period

Maryland enforces a strict 60-month look-back on asset transfers. When you apply for Medicaid, the state reviews all financial transactions from the previous five years. Any gifts, below-market sales, or asset transfers during that window create a penalty period — a stretch of time during which Medicaid will not pay for your care.

The penalty period is calculated by dividing the total transferred amount by the average monthly cost of nursing home care. A $100,000 gift made three years before a Medicaid application could create roughly 10 months of ineligibility.

This applies to transfers of all types: giving money to children, transferring property to family members, adding children to bank accounts, and funding irrevocable trusts.

Estate Recovery: Maryland's Probate-Only Rule

After a Medicaid recipient dies, the Maryland Department of Health (MDH) recovers long-term care costs it paid. The critical detail: Maryland limits estate recovery strictly to probate assets.

Assets that pass outside probate are currently protected from Medicaid recovery:

• Property held in joint tenancy with right of survivorship
• Property in a revocable or irrevocable trust
• Bank accounts with Payable-on-Death designations
• Real estate with Transfer-on-Death deeds
• Life insurance with named beneficiaries
• Retirement accounts with named beneficiaries

This is a significant planning advantage compared to states that expanded estate recovery to include non-probate assets. In Maryland, a comprehensive probate-avoidance strategy also functions as Medicaid estate recovery protection.

Recovery is deferred if the recipient is survived by a spouse, a minor child under 21, or a blind or disabled child of any age.

Planning Strategies

TOD deeds on real property. The Maryland Transfer-on-Death Deed Act (effective October 2026) lets homeowners designate beneficiaries who inherit outside probate. Since Medicaid recovery only reaches probate assets, a TOD deed on the family home removes it from recovery exposure entirely.

Irrevocable trusts outside the look-back. Transferring assets to an irrevocable trust more than 60 months before a Medicaid application removes them from both the countable asset calculation and the probate estate. The trade-off: you permanently give up control of those assets.

Payable-on-Death designations. Converting bank accounts to POD costs nothing and takes them outside probate — and therefore outside Medicaid recovery. The account owner retains full control during their lifetime.

Spousal transfers. Transfers between spouses are exempt from the look-back penalty. The community spouse can receive unlimited assets from the applicant spouse without triggering a penalty period. However, what happens to those assets after the community spouse dies still requires planning.

Personal Needs Allowance. Medicaid recipients in nursing facilities keep $106 per month for personal needs. Everything else goes toward the cost of care. Planning the personal needs budget — haircuts, phone, clothing, subscriptions — matters more than families expect.

Common Mistakes

Transferring the house within five years. The family home is exempt while you live there, but transferring it to children within the look-back period creates a penalty. A better approach: record a TOD deed now (keeping the home in your name and exempt) and let it transfer outside probate at death.

Relying on the revocable trust alone. A revocable trust avoids probate (protecting from estate recovery) but does not shelter assets for eligibility purposes. Medicaid counts revocable trust assets as yours. You need the trust for recovery protection, but an irrevocable trust or spend-down strategy for eligibility.

Waiting until the crisis. The 60-month look-back means Medicaid planning must start years before you need care. Starting at diagnosis is often too late for significant asset transfers.

The Maryland Estate Planning Kit includes a Medicaid protection planner that walks through asset classification, look-back timing, and the probate-avoidance mechanisms that double as estate recovery shields.

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