Impact of Home Ownership on Medicaid Eligibility Considering Marital Status & Medicaid Type
When applying for Medicaid long term care, many families are concerned they will not be eligible due to home ownership or will have to give up their home to qualify. For most Medicaid applicants, neither of these is true. The good news is most applicants can retain their home and qualify for Medicaid. The bad news is that home ownership as it relates to Medicaid eligibility is confusing and, if not managed properly, can result in a family losing their home. There are a variety of factors that determine whether a home will impact eligibility including marital status, the number of applicants, the type of Medicaid program, the home equity value and the state of residence.
How Medicaid Calculates Assets Including the Home
Before we dive into some of the specific factors that influence whether your home will impact your ability to qualify for Medicaid, it is vital to understand how things are categorized for qualification. One of the first things that you need to understand is Medicaid’s “asset test.” The asset test is a complicated set of rules designed to ensure that participants really need assistance and haven’t simply stored their wealth for personal gain.
There are two basic types of assets, countable and exempt. Bank accounts, investments, and even some vehicles count as “countable assets”. Your home, up to a certain value, is considered exempt. When determining your home value, it is essential to recognize that your value isn’t based on what you paid for your home. Nor is it based on the home’s current value. Instead, your ability to qualify is determined by the equity that you have in your home. This is calculated as the home’s current value minus any outstanding mortgages on the home.
The amount of equity that you are allowed to have in your home depends on several different factors; state of residence and whether the applicant or their spouse live in the home.
How Different States Value a Home for Medicaid Eligibility
Each state decides what programs Medicaid offers and the eligibility criteria and the value of one’s home equity is one of the eligibility criteria. This means that it is essential to understand the requirements as it pertains to where you live. Many people can get off track due to the wrong information that they find online. Unfortunately, these mistakes can have some drastic impacts such as being denied Medicaid or losing one’s home.
In addition to each state having different requirements, the rules regarding home equity can (and usually do) change every year. While this can mean that it is more difficult to find out if you qualify, there are some added benefits to routine changes. For example, as many homes increase in value, some Medicaid recipients would be disqualified from the program if lawmakers didn’t increase the amount of equity allowed for their constituents.
It is also important to be aware that they are three types of Medicaid long term care programs: Nursing Home Medicaid, HCBS Waivers and ABD Medicaid. As HCBS Waiver and ABD Medicaid are provided to the beneficiary while they are living in their home, their home is exempt. This is also true if they are applying for Nursing Home Medicaid and their spouse remains in the home.
|50 State Home Equity Exemption Limits for Medicaid Eligibility (Updated Feb. 2022)|
|State||Home Equity Limit in Dollars|
How Marital Status Impacts a Home’s Medicaid Exemption
When it comes to determining one’s Medicaid long term care eligibility, another factor that makes a difference in a home exemption is marital status. Medicaid eligibility has three different potential categories for applicants: Single, Married with one applicant, or Married with two applicants. Additionally, Medicaid has some stipulations based on the type of care that the beneficiary will receive. This depends on whether the beneficiary will receive care while still living at home or will need to move to a nursing home.
Single applicants that will continue to live in the house will not have the home counted against them if the equity is under the state’s equity valuation (as seen above). However, if a single recipient is moving to a nursing home, their home may need to be sold unless they file an “intent to return home.” In this case, individuals can retain the home if the house is valued under the equity valuation.
The home will likely need to be sold for individuals over the equity amount and who have not filed an intent to return. Selling the house would likely disqualify the individual until they spend down the proceeds on their care. Once their assets have been spent down sufficiently, they can apply or re-apply and qualify for Medicaid.
Married with 1 Applicant
For applicants who fall under the married with one applicant category, if the non-applicant spouse (also called a well spouse or community spouse) will remain in the home and does not require Medicaid, the house, regardless of equity or value, does not count against the applicant. However, under some circumstances, professionals recommend that the home ownership be titled over entirely to the individual who will not receive care. This action does not violate the look back period and can also help to prevent Medicaid from filing an estate recovery claim on the property. However, this general guidance can vary depending on where you live, so it is essential to understand your state’s specific rules and regulations. More on protecting a home from Medicaid.
Suppose the individual living at home passes away while the other is still receiving Medicaid benefits in a nursing home. In that case, Medicaid may demand that the house be sold unless an intent to return home has been filed. If the home is sold, it would likely disqualify the individual receiving care from Medicaid because their countable assets would be too high. In this situation, proceeds from the home’s sale would be used to pay for care until they had “spent down” their assets to a level where they could be considered for Medicaid again. There are some potential circumstances in specific states that could influence the best way to proceed.
If the community spouse chooses or has to move from the home, and therefore neither spouse resides in the home and no intent to return has been filed, then the home becomes a countable asset. This is true even if an adult child lives in the home.
Married with 2 Applicants
When couples are applying for care and have equity above the allowable limits for their state, the home will likely need to be sold. This is true unless they have filed an intent to return home, or their child under 21 years old lives in the home, or an adult child who is blind or disabled still lives in the house. Healthy adult children living at home do not qualify to retain ownership of the home. Additionally, transferring the title to anybody other than your spouse would be reviewed by Medicaid under the look back rule. It would disqualify you from receiving Medicaid at that time (this period varies based on state).
|Home Ownership Impact on Medicaid Eligibility|
|Type of Medicaid Program|
|Marital / Applicant Status||Nursing Home Medicaid||HCBS Waivers||ABD Medicaid|
|Single||Home is exempt if the owner’s equity is below the state’s limit, and they intend to return to living in the home.
|Home is exempt if the owner’s equity is below the state’s limit, and they live in the home.
|Home is exempt regardless of its value|
|Married with 1 spouse applying||Home is exempt regardless of the owner’s equity value as long as the spouse lives in it.
|Home is exempt regardless of the owner’s equity value as long as the spouse lives in it.
|Home is exempt regardless of its value|
|Married with both spouses applying||Home is exempt if the owner’s equity is below the state’s limit, and either owner intends to return to living in the home.
|Home is exempt if the owner’s equity is below the state’s limit, and one spouses lives in the home.
|Home is exempt regardless of its value|
Selling a Home While Receiving Medicaid Benefits
Some individual circumstances may require that individuals sell their house while they are receiving care under Medicaid. These situations will likely disqualify the individual from Medicaid because the proceeds from the sale of the home are not exempt from Medicaid’s assets calculations. The money received from the sale of the house becomes a countable asset.
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. However, it is crucial to follow the spend-down rules and ensure that you do not do anything that would violate the look back rule. Generally, you can spend money on the cost of your long-term care.
How to Protect a Home from Medicaid Estate Recovery
Of course, many people want to avoid having to sell their homes if it is possible. As long as your home is under the equity limits, you are more likely to receive care and keep your home. However, there are a few other things that you should consider as you plan to apply for Medicaid.
The first is to ensure that you keep your home out of probate. You can do this by ensuring that the house is not solely owned by the individual who will receive care. That way, upon a Medicaid recipient’s death, the home’s ownership is then transferred to another person and stays out of probate. In many states, Medicaid can only seek estate recovery using the probate process.
Additionally, ensure that your will has been properly executed. When the validity of a living will needs to be checked, it will put the deceased’s entire estate into probate and potentially accessible by Medicaid.
If you’re planning further in advance for the possibility of needing Medicaid, other options may be available. One of these is an irrevocable trust. This allows for a trustee that is responsible for the management of the trust. It does mean that the individual who created the trust is no longer the owner of those assets. You can name a child or sibling as the beneficiaries of the trust. However, utilizing this approach will violate the look back rules and create a period of exemption for an individual, so it must be implemented well before your Medicaid application is submitted.
One option that some individuals can utilize without violating the look back rule is for the caregiver exemption. Under this exemption, a parent can transfer the title of the home to an adult child. There are two requirements to meet this exemption.
1. The child must have lived with the parent for at least two years before the parent moved to a nursing home AND
2. The child must have provided some level of care that allowed the parent to stay at home longer than they would have otherwise.
It is essential to appropriately document this relationship to ensure that you do not violate any of the Medicaid rules and inadvertently disqualify the applicant.
Another option that some individuals can use is transferring ownership of the home to a sibling who is part owner of the house. Additionally, the sibling must have lived in that home for at least 12 months before moving into a nursing home. Again, careful documentation is required to ensure that there is no violation of the look back period.
These topics and other ways Medicaid beneficiaries can protect their home are discussed in greater details on our Protecting the Home page.