Impact of Home Ownership on Medicaid Eligibility Considering Marital Status & Medicaid Type

Many seniors worry that owning a home will make them ineligible for Medicaid, but they’re probably worrying too much. Most Medicaid applicants who are homeowners can keep their home and qualify for Medicaid Long Term Care. However, Medicaid’s rules governing home ownership are complicated, and they can vary depending on the type of Medicaid Long Term Care you’re applying for, the state where you live, your marital status and your home’s value.

When Your Home is Exempt from Medicaid’s Asset Limit

To qualify for Medicaid Long Term Care, you have to meet certain financial requirements to qualify for Medicaid Long Term Care, including an asset limit. In most states in 2024, the individual asset limit is $2,000, which means you must have $2,000 or less in countable assets. Most assets are countable – bank accounts, retirement accounts, stocks, bonds, cash and anything that can be easily turned into cash or liquidated. These asset limits can vary by state. California, for example, has no asset limit as of 2024. In Illinois, the asset limit is $17,500.

However, some assets are exempt from the asset limit, meaning they are not counted. The applicant’s primary home will be exempt from the asset limit under the following conditions:

• The Medicaid applicant lives in the home, will continue to live in the home when they are a Medicaid recipient and meets the state’s home equity interest limit.
• The Medicaid applicant/recipient has filed an intent to return home statement and meets the state’s home equity interest/limit.
• The Medicaid applicant/recipient’s spouse, child under 21 or blind or disabled child of any age lives in the home.
• The home is in a Medicaid Asset Protection Trust.
• The Medicaid applicant/recipient has used the Child Caregiver Exemption.
• The Medicaid applicant/recipient has used the Sibling Exemption.

The rest of this article will explain the details of these conditions and how they might apply to your situation, starting with home equity interest in the next section. Before we get there, it’s important to know that a “home” can be a single family house, multi-family building, condominium, co-op apartment, mobile home or even a boat, if that is your primary residence. These rules and exemptions do not apply to second homes or vacation homes, which will be considered assets by Medicaid.

Understanding Home Equity Interest

Home equity value is the fair market value of the home minus any outstanding mortgage or debt. Home equity interest is the percentage of that home equity value owned by the applicant. For example, if an applicant’s home is worth $500,000 and there is still $100,000 owed on the home mortgage, the home equity value would be $400,000. If the applicant owns the house on their own, their home equity value is $400,000. If the applicant co-owns the house with their sibling with a 50/50 split, the applicant’s home equity interest would be $200,000.

Each state sets a home equity interest limit that helps in determining if the home will be counted or exempt from the asset limit. As we mentioned in the previous section, the home will be exempt from the asset limit if the Medicaid applicant lives in the home, will continue to live in the home once they become a Medicaid recipient and meets their state’s home equity interest limit. Or if the Medicaid applicant/recipient has filed an intent to return home and they meet their state’s home equity interest limit, the home will be exempt from the asset limit.

The table below shows the home equity interest in all 50 states and Washington, D.C.

Home Ownership and the 3 Types of Medicaid Long Term Care

There are three types of Medicaid Long Term Care relevant to seniors – Nursing Home Medicaid, Home and Community Based Services (HCBS) Waivers and Aged, Blind and Disabled (ABD) Medicaid. These three programs provide different benefits and have different eligibility criteria, which you can learn about by clicking here.

For the purpose of this article, you need to know about the three types of Medicaid Long Term Care for a few reasons. First, home equity interest does not apply to ABD Medicaid. So, for ABD Medicaid applicants, their home is exempt if they live there regardless of their home equity interest. Home equity interest is only relevant for Nursing Home Medicaid and HCBS Waivers applicants/recipients.

Knowing there are different types of Medicaid Long Term Care is also relevant to this discussion because most homeowners who are applying for HCBS Waivers or ABD Medicaid will continue to live in their home. So, their home will be exempt from the asset limit, as long as the HCBS Waivers homeowners are under their state’s home equity interest limit. The ABD Medicaid homeowners, remember, don’t need to worry about home equity interest.

Nursing Home Medicaid applicants, however, will presumably be moving into a nursing home. But even if they leave their home empty when they go to the nursing home, their home can still be exempt from the asset limit if they file an intent to return home statement, which we’ll discuss next.

Using Intent to Return Home Statements

An intent to return statement declares, in writing, that even though you are not living in your home, or you will be leaving it soon, you still consider it your primary residence and you intend to live there again.

Even if it is unlikely you will return home, most states will still recognize your intent to return home statement as valid. However, some states do require that you provide proof that you will actually return home (like a physician’s note or an official discharge plan) to validate your intent to return statement. And most states put a time limit on intent to return statements, usually six months or a year.

To learn more about intent to return home statements and how the affect Medicaid Long Term Care eligibility, click here.

Qualifying Individuals: Spouses and Children

If certain people, sometimes called “qualifying individuals,” live in the home of the Medicaid applicant/recipient, the home will be exempt from the asset limit regardless of the home equity interest or intent to return home.

For married couples with just one spouse applying for Medicaid Long Term Care, the home will be exempt as long as the non-applicant spouse lives in the home, regardless of home equity interest. The non-applicant spouse can also be called the “community spouse” or the “well spouse.”

If the Medicaid recipient/applicant has a child under age 21 living in the home, it will be exempt regardless of home equity interest or intent to return home. The same is true if the Medicaid recipient/applicant has a blind or disabled child of any age living in the home. Determining if someone is disabled or not will depend on the state.

These rules do not apply to adult children with no disabilities.

Medicaid Asset Protection Trusts and Home Ownership

Any assets placed in a Medicaid Asset Protection Trust (MAPT) will not be counted toward Medicaid’s asset limit, including your home. However, using a MAPT violates the Look-Back Period.

As mentioned above, the Look-Back Period prevents Medicaid Long Term Care applicants from simply giving away their assets or selling them at less than fair market value to get under the asset limit and become Medicaid eligible. In most states, the Look-Back Period is 60 months (which equals five years). This means the state officials reviewing your Medicaid application will back into the 60 months of your financial history just prior to your Medicaid application date to make sure you have not given away assets. The exceptions are California, where there is no Look-Back Period for HCBS Waivers and it’s 30 months for Nursing Home Medicaid (although that will be phased out by July 2026), and New York, where the Look-Back Period is 60 months for Nursing Home Medicaid and there is no look back for Community Medicaid (similar to HCBS Waivers in other states), although that may change in 2025. The other important exception to the Look-Back Period is that it does not apply to ABD Medicaid at all. However, ABD Medicaid recipients may eventually need Nursing Home Medicaid or HCBS Waivers, so they should be aware of Look-Back Period rules and consequences.

If you violate the Look-Back Period, your Medicaid application will be denied and you will be penalized with a period of Medicaid ineligibility that can last months or even years. To learn more about the Look-Back Period, click here.

So, in order to use a MAPT for Medicaid eligibility purposes, you need to plan well in advance. You would have create the trust while you are still healthy and know that, after creating it, you will not be able to apply for Medicaid for at least five years.

To learn more about Medicaid Asset Protection Trusts, click here.

The Child Caregiver Exemption and Home Ownership

The home can be exempt from Medicaid’s asset limit if an applicant uses the Child Caregiver Exemption to transfer their home to their qualified adult child. Your adult child will be qualified if they have lived in the home for at least two years prior to you moving out, and during that two years they provided you with care that enabled you to live at home and not move into a nursing home or another healthcare facility.

Using the Child Caregiver Exemption does not violate the Look-Back Period, which, as we mentioned earlier, prevents applicants from simply giving away their assets to become Medicaid eligible.

To learn more about the Child Caregiver Exemption, click here.

The Sibling Exemption and Home Ownership

The home can also be exempt from Medicaid’s asset limit if an applicant uses the Sibling Exemption to transfer the home to their qualified sibling. Your sibling (either biological or adopted, but not step or foster) is qualified if they have been living in the home for at least one year prior to your relocation to a nursing home or other facility and they have an equity interest (partial ownership) in the home.

Using the Sibling Exemption does not violate the Look-Back Period, just like the Child Caregiver Exemption. To learn more about the Sibling Exemption, click here.

Selling a Home While Receiving Medicaid Benefits

Some circumstances may require that you or your loved one need to sell your home while you are receiving care under Medicaid. These situations will likely disqualify you from Medicaid because the proceeds from the sale of the home will be a countable asset and therefore they will impact your asset limit and Medicaid eligibility.

Although you may be disqualified from Medicaid, this can be a temporary situation until you can “spend down” your assets and be reconsidered for Medicaid. Spending down assets is a common strategy to become Medicaid eligible, but it can be complicated and not following the spend down rules will result in your Medicaid application being denied and could lead to a period of ineligibility that could last months or years.

To learn more about Medicaid spend down, click here.

Protecting a Home from Medicaid Estate Recovery

Just because your home is exempt from Medicaid’s asset limit doesn’t mean it is exempt or protected from your state’s Medicaid Estate Recovery Program.

Every state is required to try and collect reimbursement for the cost of Medicaid Long Term Care coverage after the Medicaid recipient has passed away. States do this through their Medicaid Estate Recovery Program (MERP). In most cases, the home is the most valuable asset remaining in the estate of a deceased Medicaid recipient, so the state will often try to recover Medicaid expenses by forcing a sale of the home.

However, there are ways to protect the home from your state’s MERP, including some ways we’ve already discussed. If your home is in a Medicaid Asset Protection Trust, or if you’ve used the Child Caregiver Exemption or the Sibling Exemption, your home will be protected from your state’s MERP and will not be subject to recovery.

MERP rules vary greatly from state to state, so there are other ways that your home will be protected from estate recovery. To learn more about Medicaid Estate Recovery, click here.