Medicaid Planning in DC: A Detailed Guide to Protecting Assets and Accessing Care
Yes, you can keep your Thrift Savings Plan and still qualify for Medicaid long-term care benefits in Washington, DC. That surprises many people—and it’s just one example of how DC’s Medicaid rules differ from those in neighboring states like Maryland and Virginia.
This guide explains how Medicaid works in Washington, DC, including real-world examples, jurisdictional comparisons, and strategies for both crisis and non-crisis planning. It’s built around the actual rules and strategies that help individuals qualify while protecting what they’ve worked for.
Many people confuse Medicare and Medicaid. Medicare is health insurance for acute care after age 65—it does not cover long-term care. Medicaid, by contrast, is the only public benefit that pays for long-term care for those who qualify based on medical and financial need.
Summary:
Medicare covers short-term acute care, not long-term care.
Medicaid pays for long-term care for those who meet eligibility.
DC Medicaid is only available after strict criteria are met.
In DC, Medicare typically pays for up to 30 days of rehabilitation at a skilled nursing facility. After day 30, unless an appeal is successful, individuals are expected to pay privately—often around $15,000 per month. Medicaid becomes available only when strict eligibility criteria are met.
Certain health conditions tend to trigger the need for long-term care, especially as individuals age. These include stroke, Parkinson’s disease, osteoporosis, and most notably, Alzheimer’s disease. By age 85, one in three people will have Alzheimer’s. Often, a fall or hospitalization signals the transition from independent living to a need for skilled nursing care, from which many people do not return home.
Summary:
Common triggers: stroke, Parkinson’s, osteoporosis, Alzheimer’s.
1 in 3 people over 85 have Alzheimer’s.
Long-term care often follows a fall or hospitalization.
The cost of long-term care in DC is substantial. Nursing homes typically charge between $13,000 and $15,000 per month. Assisted living facilities often exceed $6,000 per month, and 24-hour home care can easily cost over $200,000 per year. Although prices briefly dropped during the COVID-19 pandemic, they have since rebounded. It’s also important to note that private-pay rates are significantly higher than Medicaid reimbursement rates, which are essentially the wholesale rates paid by the government.
Summary:
Nursing homes: $13,000–$15,000/month.
Assisted living: $6,000+/month.
24-hour home care: $200,000+/year.
Private-pay rates are much higher than Medicaid rates.
Consider the example of Penny, a DC resident used here as an example. She owns a $1 million home, has $54,000 in liquid assets, and $402,000 in a Thrift Savings Plan. Her Social Security benefit provides $1,200 per month. With nursing home care costing around $15,000 monthly, Penny would deplete her savings in fewer than 10 years if she were to pay privately. Her story illustrates how quickly long-term care expenses can erode even substantial resources.
Summary:
Penny has over $450,000 in savings and a $1M home.
At $15,000/month, her savings would last fewer than 10 years.
Her case shows how quickly assets are depleted without Medicaid.
Here’s where we get into some very DC-specific rules. Medicaid says you can only have $4,000 in countable assets. But what’s important to understand is what counts—and what doesn’t.
In DC, retirement accounts like your IRA, TSP, or 401(k)—the money you’re living on—do not count. That’s right. Your retirement nest egg is not going to disqualify you from Medicaid here, and that’s very different from how Maryland treats it.
To qualify for Medicaid long-term care benefits in DC, applicants must meet two types of criteria: medical and financial.
Applicants must need assistance with at least four activities of daily living (ADLs)—such as bathing, dressing, toileting, and eating—or have a diagnosis like dementia that impairs daily function.
Summary:
Must need help with 4 or more ADLs.
A dementia diagnosis can also qualify.
In DC, retirement accounts like your IRA, TSP, or 401(k)—the money you’re living on—do not count. That’s right. Your retirement nest egg is not going to disqualify you from Medicaid here, and that’s very different from how Maryland treats it.
What does count? Assets like checking and savings accounts, CDs, investment accounts, and any real property that is not your primary residence. These must be reduced to $4,000 or less to qualify. You have to get those down to $4,000 or less.
Here’s where we get into some very DC-specific rules. Medicaid says you can only have $4,000 in countable assets. But what’s important to understand is what counts—and what doesn’t.
In DC, retirement accounts like your IRA, TSP, or 401(k)—the money you’re living on—do not count. That’s right. Your retirement nest egg is not going to disqualify you from Medicaid here, and that’s very different from how Maryland treats it.
What does count? Assets like checking and savings accounts, CDs, investment accounts, and any real property that is not your primary residence. These must be reduced to $4,000 or less to qualify. You have to get those down to $4,000 or less.
Your home is also subject to a cap. If it has more than $1,033,000 in equity, it becomes a problem. This can be a problem, particularly in neighborhoods where home values have appreciated significantly. We always verify the current property assessment to determine whether the home remains under the equity cap.
When we’re applying for the EPD waiver—that’s the in-home care Medicaid benefit—there’s an income cap of $2,742 per month. However, DC allows applicants with higher incomes to qualify through the medically needy pathway, where your medical expenses are deducted from your income to determine eligibility. This means people with income above the cap may still qualify if their medical costs are high enough.
If you’re married, the spouse who stays in the home (the “community spouse”) can keep up to $148,620 in countable assets. That’s a federal number and it changes a little every year.
Summary:
It’s not just $4,000—it’s $4,000 in countable assets.
IRAs, TSPs, 401(k)s do not count in DC.
Bank accounts and brokerage accounts do count.
Home equity limit: $1,033,000.
Income limit for in-home care: $2,742/month, but higher income may qualify through the medically needy pathway.
Spouse at home can keep $148,620 in countable assets.
Summary:
Countable assets: $4,000 or less (excluding IRAs, TSPs).
Home equity limit: $1,033,000.
Monthly income limit: $2,742 (or $7,273 with medical deductions).
Community spouse can keep up to $148,620 in assets.
DC Medicaid applies a five-year look-back period to all asset transfers. If assets are given away for less than fair market value during this window, the agency will impose a penalty period during which Medicaid coverage is denied. For example, if Penny gave her son $50,000, Medicaid would divide that gift by the penalty divisor ($14,175), resulting in a 3.5-month period of ineligibility. Since the cost of private care during that period would exceed the value of the gift, such transfers can be financially devastating if not planned properly.
Even without advance planning, it is still possible to preserve a significant portion of assets through crisis planning. This includes legitimate spend-down strategies, such as paying off debts, prepaying for funerals, improving the home, or purchasing a car. Legal arrangements like family caregiver contracts allow family members to be compensated for providing advocacy or care services. Additionally, pooled special needs trusts are permitted in DC and Maryland for applicants over the age of 65, allowing funds to be set aside for personal use without affecting eligibility. Medicaid-compliant annuities and promissory notes can also be used to convert countable assets into an income stream that meets Medicaid rules.
For those who begin planning at least five years before needing care, it is often possible to protect all of their assets. One of the most effective tools is the irrevocable Medicaid trust, which allows individuals to remove assets from their estate while still preserving control as trustee and securing a step-up in basis for capital gains purposes. A well-drafted durable power of attorney is essential in this type of planning and must include provisions for gifting and creating or modifying trusts. Proper income and expense management can also help qualify for the EPD waiver, which provides in-home care as an alternative to nursing home placement.
When a Medicaid recipient dies, DC may seek recovery of benefits paid—but only from probate assets. This makes probate avoidance a critical goal of effective planning. Common tools for avoiding probate include revocable living trusts, transfer-on-death deeds, joint tenancy with survivorship rights, and life estate deeds with retained powers. Assets like retirement accounts that pass directly to named beneficiaries are also shielded from recovery, as are homes owned by trusts.
Compared to neighboring jurisdictions, DC is significantly more favorable for Medicaid planning. Maryland imposes a lower asset limit of $2,500, has a 10-year waitlist for home-based waiver care, and aggressively pursues estate recovery. Virginia restricts the use of pooled special needs trusts for applicants over 65. DC, on the other hand, exempts retirement accounts, allows pooled trusts regardless of age, and limits estate recovery to probate assets.
There are several key lessons to take away from this guide. First, it is never too early to plan. Starting five or more years in advance can enable you to protect all of your assets and ensure peace of mind. Second, even in urgent situations, it’s often possible to preserve 30–70% of what you’ve saved. Third, recovery avoidance strategies—if implemented correctly—can ensure that assets are passed on to loved ones rather than used to repay the government.
Importantly, these strategies are lawful, ethical, and explicitly permitted by federal Medicaid planning rules. Government agencies do not offer guidance on how to protect assets, which is why working with a qualified elder law attorney is so crucial. This guide reflects real-world legal counsel and planning approaches that have helped DC residents navigate Medicaid without losing everything they’ve worked for.