Paul Sanchez
Many people believe that owning a home will make them ineligible for Medicaid, but this is not necessarily the case. Medicaid's rules on home ownership are complicated and vary depending on the type of Medicaid Long Term Care, the state, and the applicant's marital status and home value. Generally, a home is exempt from Medicaid's asset limit of $2,000 if the applicant lives in it and their home equity interest is under a specified value. Home equity is the home's value minus any debt against it, and each state sets a limit on home equity interest to determine if the home is counted or exempt from the asset limit. There are also various exemptions that can apply, such as the Sibling Exemption or having a spouse or dependent child living in the home.
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What You'll Learn
- Medicaid rules regarding home ownership vary by state, marital status, and type of long-term care
- Medicaid applicants can own a home and other assets and still qualify for long-term care
- Medicaid applicants must declare all properties, including forgotten or jointly-owned properties
- Medicaid applicants can exclude their home from their assets if a spouse or dependent child still lives there
- Medicaid applicants can protect their home with a Long-Term Care Partnership Program or a trust
Medicaid rules regarding home ownership vary by state, marital status, and type of long-term care
Medicaid rules regarding home ownership vary across states, with each state having the flexibility to determine its own policies and procedures within broad Federal guidelines. While an individual's primary home is generally exempt from the asset limit, this exemption is subject to specific conditions that may differ by state. For instance, some states, like Virginia, have a time limit for the "Intent to Return" condition, after which the home becomes a countable asset.
Marital status also influences the treatment of home ownership in Medicaid eligibility. The home of a married Medicaid recipient is considered an exempt asset if their spouse continues to live there or if they intend to return and can be protected through various means, such as Medicaid Asset Protection Trusts. However, for unmarried recipients, the likelihood of their home becoming a countable asset depends on their state's policies regarding their intent to return.
Additionally, the type of long-term care needed can impact the treatment of home ownership. Long-Term Care Partnership Programs, for example, protect a portion of an applicant's assets from Medicaid's asset limit and Estate Recovery. These programs involve collaboration between a private insurance company and a state's Medicaid program, allowing individuals to retain a certain level of assets while still qualifying for Medicaid.
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Medicaid applicants can own a home and other assets and still qualify for long-term care
Many seniors worry that owning a home will make them ineligible for Medicaid. However, this is not necessarily the case. While Medicaid's rules governing home ownership are complicated and 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, it is still possible for Medicaid applicants who are homeowners to keep their home and qualify for Medicaid Long-Term Care.
The home is typically considered exempt from Medicaid's asset limit of $2,000 (in most states) as long as the applicant lives in it and their home equity interest is under a specified value. Home equity is the home's value after subtracting any debt against it, and equity interest is the home equity amount in which the individual owns. In 2025, the equity interest limit is expected to be $730,000 or $1,097,000, depending on the state.
Additionally, there are certain circumstances under which the home can be exempt from the asset limit regardless of the home equity interest or intent to return. For instance, if the applicant has a spouse or a child under 21 living in the home, it will typically be exempt. In the case of a married couple, the income of the spouse not in the nursing home is exempt, and certain strategies can be employed to protect assets. For example, excess resources can be used to pay down the mortgage on the applicant's primary home, effectively converting non-exempt cash to exempt assets.
Furthermore, Long-Term Care Partnership Programs can help protect a portion of a Medicaid applicant's assets from Medicaid's asset limit and Estate Recovery. These programs involve collaborations between private insurance companies and state Medicaid programs, allowing applicants to retain a certain amount of assets while still qualifying for Medicaid.
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Medicaid applicants must declare all properties, including forgotten or jointly-owned properties
The Medicaid application process requires applicants to declare all properties, including their primary residence, vacation homes, timeshares, and even forgotten or jointly-owned properties. This comprehensive declaration of assets is necessary for determining eligibility and calculating benefits. While an applicant's primary residence is typically excluded from Medicaid's asset limit, additional properties are considered "countable assets" and can impact eligibility.
Medicaid applicants must be thorough in disclosing all properties they own, even those that may have been overlooked or forgotten over time. This includes any real estate or deeds to properties that the applicant may have accumulated throughout their lifetime. The Medicaid agency conducts its own checks to identify any obscure or unknown properties owned by the applicant, ensuring that no property is intentionally or unintentionally omitted.
Jointly-owned properties, whether with a spouse, sibling, or other family member, must also be disclosed during the application process. The treatment of these properties can vary depending on the specific circumstances. For example, if an applicant's sibling has lived in the home for at least a year prior to the applicant's relocation to a nursing home, it may qualify for the Sibling Exemption, excluding it from the asset limit. On the other hand, jointly-owned personal property, such as bank accounts, may be attributed to the applicant and subject to spend-down requirements.
The declaration of all properties, regardless of their nature or ownership status, is crucial for ensuring compliance with Medicaid's complex rules and regulations. Applicants are advised to carefully complete the application process, seeking expert counsel if needed, to navigate the potential exemptions, exclusions, and limitations that may apply to their specific situation. By accurately disclosing all properties, applicants can make informed decisions about their financial and medical planning while ensuring they meet the eligibility requirements for Medicaid.
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Medicaid applicants can exclude their home from their assets if a spouse or dependent child still lives there
The home equity interest limit is $730,000 or $1,097,000, depending on the state. Home equity is the home's value after subtracting any debt against it. Equity interest is the home equity amount in which the individual owns. For example, if an applicant's home is worth $500,000 and they still owe $100,000 on their mortgage, the home equity value is $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, their home equity interest is the percentage of that home equity value they own.
It's important to note that Medicaid applicants cannot simply give their home away or sell it below market value to get under the asset limit and become eligible. This would violate the Look-Back Period, leading to application denial and a penalty period of ineligibility. Additionally, if there are no circumstances or exemptions that make a home exempt, individuals may have to sell the home to qualify for Medicaid long-term care coverage. However, they will still be ineligible after the sale because the proceeds will put them over the asset limit.
To address this, individuals can “spend down” the assets on the long-term care they need and then re-apply for Medicaid. This situation may also occur if a beneficiary's spouse, who was living in the home, passes away. The home will go from exempt to countable, likely pushing the Medicaid beneficiary over the asset limit. In such cases, they can file an intent to return statement, indicating that they plan to move back home if possible. This will protect their home from Medicaid while they are away.
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Medicaid applicants can protect their home with a Long-Term Care Partnership Program or a trust
Medicaid applicants can protect their homes in several ways, including Long-Term Care Partnership Programs and Medicaid Asset Protection Trusts (MAPT).
Long-Term Care Partnership Programs
Long-Term Care Partnership Programs are agreements between private insurance companies and state Medicaid programs. These programs allow applicants to keep their assets, including their homes, beyond the normal asset limit and still qualify for Medicaid. This eliminates the need to spend almost all of their assets to be eligible. The asset protection and increased asset limit benefits are available to those who buy private long-term care insurance in a state with a Partnership Program or a state with a reciprocal agreement with the state where they will receive Medicaid Long-Term Care benefits. As of December 2024, every state except Hawaii, Alaska, Utah, and Mississippi, as well as Washington, D.C., has a version of the Long-Term Care Partnership Program.
Partnership Programs protect assets in two ways. Firstly, they allow applicants to keep assets with a total value equal to the amount their long-term care insurance paid out. For example, if a policy paid out $350,000 for an applicant's care, they can retain up to $352,000 in assets ($350,000 + the $2,000 asset limit) and still qualify for Medicaid. Secondly, up to the same amount that was paid out by the insurance policy can be declared "protected" from Estate Recovery, which is the program through which Medicaid attempts reimbursement of long-term care costs following the death of a beneficiary.
Medicaid Asset Protection Trusts (MAPT)
MAPTs are a valuable planning strategy to meet Medicaid's asset limit when an applicant has excess assets. They enable someone who would otherwise be ineligible for Medicaid to become eligible and receive long-term care. Assets placed in a MAPT are no longer considered owned by the applicant and are therefore protected from being counted for eligibility purposes. Homes placed in MAPTs are also safe from Medicaid Estate Recovery Programs. However, creating and using a MAPT violates the Look-Back Period, which is generally five years in most states. During this period, Medicaid scrutinizes all asset transfers to ensure they were not gifted or sold for less than fair market value. To avoid violating the Look-Back Period, a MAPT must be created at least five years before the homeowner will need long-term care.
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Frequently asked questions
Yes, you can own a home and be on Medicaid. However, Medicaid has complicated rules regarding home ownership and they vary depending on the type of Medicaid, the state where you live, your marital status and your home's value.
No, giving your home away to get under the asset limit and become Medicaid-eligible is not allowed. This would violate the Look-Back Period and lead to your Medicaid application being denied and a penalty period of ineligibility.
Medicaid cannot take your home if you live in it and your home equity interest is under a specified value. The home equity interest limit is generally $730,000 or $1,097,000, depending on the state. If you move or pass away, Medicaid will attempt reimbursement of long-term care costs via Medicaid Estate Recovery.
