Medicaid’s Treatment of the Home
Nursing home residents do not automatically have to sell their homes in order to qualify for Medicaid, but that doesn't mean the house is completely protected. The state will likely put a lien on the house while the resident is living and attempt to recover the property after the resident has passed away.
Posted on December 3, 2019
Medicaid will not count a nursing home resident's home as an asset when determining eligibility for Medicaid as long as the resident intends to return home (in some states, the nursing home resident must prove a likelihood of returning home). In addition, the resident's equity interest in the home must be less than $585,000, with the states having the option of raising this limit to $878,000 (figures are adjusted annually for inflation; these are for 2019).
The equity value of the home is the fair market value minus any debts secured by the home, such as a mortgage or a home equity loan. For example, if your home has a fair market value of $400,000 and an outstanding mortgage of $100,000, the equity value is $300,000. Your equity interest depends on whether you own the home by yourself or with someone else. If you own the home by yourself, your equity interest is the entire equity value. If you own your home jointly with your spouse or someone else, your equity interest is only half of the home’s equity value.
The home equity rule does not apply if the Medicaid applicant's spouse or a child who is under 21 or is blind or disabled lives in the home.
While the house may not need to be sold in order to qualify for Medicaid, state Medicaid agencies will likely place a lien on any real estate owned by a Medicaid beneficiary during his or her life. The state cannot impose a lien if a spouse, a disabled or blind child, a child under age 21, or a sibling with an equity interest in the house is living in the house.
Once a lien is placed on the property, if the property is sold while the Medicaid beneficiary is living, not only will the beneficiary cease to be eligible for Medicaid due to the cash from the sale, but the beneficiary would have to satisfy the lien by paying back the state for its coverage of care to date. In some states, the lien may be removed upon the beneficiary's death. In other states, the state can collect on the lien after the Medicaid recipient dies. Check with your attorney to see how your local agency handles this.
Even if the state did not place a lien on the home during the Medicaid beneficiary's life, the home may still be subject to estate recovery after the Medicaid recipient’s death, again depending on the state.
There are steps you can take to protect your home. Contact your attorney to learn more.
More from our blog…
Could Medicaid Payback Rules Come to an End?
Amid recent reports from such prominent news outlets as The New York Times and Associated Press about the negative impact of Medicaid estate recovery on families, the idea of [...]
Seniors and Caregivers: Establish an Emergency Action Plan
For seniors and their caregivers, having a plan in place should an emergency strike can provide some peace of mind in a turbulent world. A [...]
5 Ways to Update Your Estate Plan After a “Gray” Divorce
Deciding to end a marriage as an older adult is increasingly common. If your marriage ended later in life, you could be part of the [...]
Survey Highlights High Costs of Long-Term Care in 2023
You may not foresee ever needing assistance with your day-to-day life. However, research shows that seven in 10 adults aged 65 and older will require [...]
Recent blog posts
FREE WEBINAR
5 Things to Know About
Estate Planning
When You Turn Sixty-Five