Nursing home residents do not automatically have to sell their homes to qualify for Medicaid. However, that does not necessarily mean the house is completely safe from estate recovery. The state will likely put a lien on the house while the resident is living and then attempt to recover the property after the resident has passed away.
Your Home and Qualifying for Medicaid
Medicaid will not count a nursing home resident's home as an asset when determining whether they are eligible for Medicaid if 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 $1,071,000 in 2024. The federal government adjusts these figures for inflation on an annual basis.
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 lives in the home; or
- a child who is under 21 lives in the home; or
- a child who is blind or has a disability lives in the home.
Medicaid Estate Recovery
While the house may not need to be sold to qualify a Medicaid applicant for benefits, state Medicaid agencies will likely place a lien on any real estate owned by a Medicaid recipient during their lifetime. The state can't 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 there is a lien on the property, if the property sells while the Medicaid recipient is living, they cease to be eligible for Medicaid because of the cash from the sale. In addition, they would have to satisfy the lien by paying back the state for its coverage of care to date.
In some states, the Medicaid agency may remove the lien when the Medicaid enrollee dies. In other states, the state can collect on the lien after the Medicaid recipient dies. Check with a qualified estate planning or elder law attorney to see how your local Medicaid agency handles this.
Even if the state did not place a lien on the home during the Medicaid recipient's life, the home may still be subject to estate recovery after their Medicaid recipient’s death. Again, this can depend on the state where the recipient lived.
Get the Help of an Elder Law Attorney
You can take steps to protect your home. Contact an elder law attorney near you to learn more.
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