To qualify for Medicaid, an individual must pass a means test in which his/her income and assets are reviewed. The income and asset thresholds vary from state to state. For Medicaid applicants with a surviving spouse, the spouse will be allowed to keep certain assets such as a house and automobile and continue to receive income up to a limit.
The practice of transferring assets to children or friends in order to qualify for Medicaid is illegal. States are required by Federal statute to look back 5 years from a Medicaid application date to determine if assets have been transferred.