House Purchased for Future Use Is a Countable Resource

Elder Law Answers case summary.The Supreme Court of Texas holds that a home is excluded from the Medicaid eligibility calculation when it is a recent principal place of residence to which the applicant intends to return. A property purchased for future use is a countable resource. In Texas Health and Human Services Commission v. Estate of Burt (Tex. No. 22-0437, May 3, 2024).

Clyde and Dorothy Burt sold their house in Cleburne, Texas, to their daughter and son-in-law. They lived in a rental house for seven years before moving into a skilled nursing facility. At that time, they had cash assets and cash value in a life insurance policy, which would disqualify them from Medicaid. They used their assets to buy a one-half interest in the house their daughter and son-in-law now owned. This reserved a life estate, with the house reverting back to the daughter and son-in-law upon their death. The transaction left them with less than $3,000, the maximum resource threshold for Medicaid, in cash.

As part of their Medicaid application, Mr. Burt executed a Form H1245. It stated he considered the Cleburne house to be his home and principal place of residence and intended to return there. While the Burts’ Medicaid application was pending, they passed away, having incurred more than $20,000 in care costs. Under 42 U.S.C. § 1382b, a home is not a countable resource.

The Commissioner rejected the Medicaid application because the Cleburne house had not been their residence in the years preceding their transition to a nursing home. The trial court reversed, and the appellate court affirmed because the Burts intended to reside at the Cleburne house.

As one’s home is exempt from Medicaid eligibility calculations, the Supreme Court of Texas reviews the meaning of home. The highest court of Texas reviews whether the Cleburne house counts as a home. While the Burts intended to make it their residence, they had lived elsewhere during the seven years before they transitioned to a nursing home.

Since federal law does not define home, the court looks to its plain and ordinary meaning to interpret it within the statute’s context. According to dictionary definitions, a home is a principal place of residence. Having a partial ownership stake in a property is insufficient to make it a home. Because the Burts did not reside in the Cleburne house when they applied for Medicaid, and it was not their principal place of residence in the preceding seven years, it was not their home under the statute’s plain language.

The statute does not permit an applicant to change their residence by converting assets that would otherwise pay for care, even though every discharged person needs somewhere to live. Congress enacted the look-back period to prevent improper asset transfers such as these.

Although looking beyond the plain meaning is unnecessary, the Code of Federal Regulations (CFR) similarly defines a home as an owned principal place of residence. This refers to a current, not future, residence. Under the CFR, moving out of a property without intent to return renders it a countable resource. The Burts moved out of the Cleburne house and only later developed an intent to return. They did not intend to return when they first moved, and the property was not their residence before they entered long-term care.

Intent to live there is necessary to establish a home. But intent alone is not enough. They also needed to have lived there immediately before having a claim for assistance.

The Texas Supreme Court holds that a home is not a countable resource when it is the principal place of residence before the claim to which the applicant intends to return. A property purchased for future use after a need for care arises is a countable resource.

Read the full opinion.