Owning a home can cause worry for Medicaid Long Term Care applicants. They might be concerned home ownership will make them ineligible for Medicaid, or maybe there’s fear about losing their home in the application process.
The truth is most long-term care candidates can keep their home and still qualify for Medicaid. However, there are multiple variables that determine the impact home ownership may or may not have on eligibility, such as home equity value, state of residence, marital status, the number of applicants and the type of Medicaid program. These factors will establish if one’s home can be counted as an asset or if it will be exempt when determining Medicaid eligibility. A Certified Medicaid Planner can help one start the process of sorting through these variables to see how home ownership might affect their Medicaid application process. To schedule a free consultation with a CMP, start here.
Assets and the Asset Limit
In order to qualify for Medicaid Long Term Care, an applicant must meet two financial criteria – the income limit and the asset limit.
The asset limit for 2022 for most states is $2,000, meaning that an applicant must have less than $2,000 in assets to be eligible for Medicaid. And the home is always considered an asset, it is just whether the home is a counted asset or an exempt asset that varies. Knowing this, it’s understandable why an applicant might be worried that their house would put them well above this limit since homes can be counted as assets along with other things like cash, bank accounts (savings, checking, money market), stocks, bonds, mutual funds and certificates of deposit. However, this does not happen in many cases because the home is considered exempt in certain situations, which are detailed below, and therefore not counted against the asset limit.
How The Type of Medicaid Long Term Care Impacts Exemption
One of the determining factors in a home’s status as a counted or exempt asset is which Medicaid Long Term Care program the candidate is applying for – Nursing Home Medicaid, Home and Community Based Services (HCBS) Waivers or Aged, Blind and Disabled (ABD) Medicaid, which is also known as Regular Medicaid. If one is applying for HCBS Waivers and plans to remain in their house and the home equity value (explained below) of the house meets the state’s guidelines, then that house is exempt from the asset limit. If one is applying for ABD Medicaid and plans to remain in their house then that house is exempt from the asset limit, regardless of the home equity value.
In the right situation or by using the right methods, an applicant’s house can also be exempt even if they are applying for Nursing Home Medicaid and will move out of the house and into a Medicaid-approved nursing home. The criteria for keeping a house exempt will be explained in greater detail below, but they include a non-applicant spouse living in the home, an “intent to return” statement, an adult child who is blind or disabled living in the home, a Child Caretaker Exemption, or a Sibling Exemption.
If an applicant doesn’t meet any of the exempting criteria and the home is countable, it will most likely put them over the state’s asset limit. Even if this happens, the applicant could sell the house and spend those profits on long-term care costs or other Medicaid-approved medical expenses to “spend down” the excess assets and become Medicaid asset eligible.
How Medicaid Values a Home
When determining exempt or countable status for a home, the figure Medicaid uses for value is home equity interest, which is the home’s current fair market value minus any debts (i.e. mortgages) on the home. This figure comes into play in multiple situations, including, as mentioned above, when one is applying for HCBS Waivers and plans to remain in the home, the home will be exempt if it is under the state’s home equity limit. The home equity limit also factors into a home’s exempt status if an applicant, or married applicants, are relocating to a nursing home but file an “intent to return” statement (more on that below). If the home is below the state’s home equity limit, the home can be considered exempt, if it’s above the limit, “intent to return” is likely not a viable option.
For 2022, the home equity limit is $636,000 in 42 states. It’s $955,000 in Connecticut, Hawaii, Idaho, Maine, Massachusetts, New Jersey, New York and Washington, D.C., and it’s $750,000 in Wisconsin. California has no home equity limit.
In addition to single-family houses, condominiums, mobile homes and houseboats are also considered a “primary home” by Medicaid. And the applicant does not have to own the property on which a mobile home sits for the mobile home to qualify as a primary home.
How Marital Status Affects Home Status as a Counted or Exempt Asset
There are three marital categories when it comes to applying for Medicaid – single, married with one applicant and married with two applicants. As stated earlier, single applicants who will continue to live in the home will not have that home counted against the asset limit as long as it is below the state’s home equity value limit, and single applicants who will relocate to a nursing home may also keep their home off their list of countable assets if the home is under the state’s home equity interest limit and they file an “intent to return” statement.
For married couples with just one spouse applying, the home will be exempt as long as the non-applicant spouse (also known as the community spouse or well spouse) lives in the home. This applies even if both spouses are named on the deed. However, in some cases, it’s a good idea to have the deed transferred solely to the community spouse. This kind of transfer will not violate Medicaid’s look-back period, and it will help protect the house from Medicaid’s Estate Recovery Program, which may seek reimbursement for long-term care expenses after the care recipient’s death. It’s also important to note that there is no home equity value limit in “married with one applicant” cases where the community spouse stays living in the home. Because of the complexities of this mixed-applicant situation, homeowners are advised to consult with a Medicaid Planner to ensure their residence is protected.
For married couples with both spouses applying, the home is exempt from the asset limit if either of the spouses is applying for HCBS Waivers or ABD Medicaid and plans to stay in the home. If both spouses are relocating to a nursing home, the house can still be exempt if an “intent to return” statement is filed or if the home is shared with certain individuals (more on these individuals below). If they don’t meet any of that criteria and the house puts the couple over the asset limit, they can still sell the house and “spend down” the profits on Medicaid-approved expenses to become asset eligible. Single applicants who lose exempt status on their home may also employ this “spend down” method, but consulting with a Certified Medicaid Planner before attempting this strategy is recommended.
Intent to Return Statement
There is no common form for all 50 states, so the actual “intent to return” statement looks different depending on state of residence, but they are all official documents declaring the same thing – the Medicaid Long Term Care applicant intends to return to their home from a nursing home if their condition improves enough to allow it. Submitting this statement declares the applicant’s intention to return to their home and therefore keeps the home exempt, as long as its value is below the state’s home equity value limit.
Some states restrict how long a nursing home resident who is receiving Medicaid benefits can maintain their “intent to return” status and keep their house exempt. Virginia is such a state and allows for only six month of intent to return home exemption. Hawaii also assumes that after six months of care in a nursing home without a discharge plan there is no intent to return and the home becomes a countable asset. Some states, like South Dakota, allow doctors and nursing home staff to overrule intent to return statements if they believe the patient’s health will keep them permanently in the nursing home. Again a Medicaid Planner will know the specific rules of each state and homeowners would do well to consult with an expert.
Who Else Lives In The Home Can Impact a Home’s Exemption
The home can also be exempt from the asset limit if any of the following relatives still lives in the house:
• Non-applicant spouse (as detailed above)
• Minor child (under 21 years of age) of the applicant
• Blind child (any age) of the applicant
• Disabled child (any age) of the applicant
• Adult-child caretaker
• Sibling of the applicant who has equity interest in the home
To put it simply, if the applicant has a spouse, minor child, or child of any age who is blind or disabled living in the home, then the home is exempt.
The home is also exempt if the applicant has transferred or sold the home to their adult child who has been providing care in the home to the applicant for at least two years prior to the applicant relocating to a nursing home. This type of transfer, known as the Child Caretaker Exemption, does not violate Medicaid’s “look-back” period and can help protect the home from Medicaid’s Estate Recovery Program.
The Sibling Exemption can keep the house exempt as long as the sibling of the applicant is part owner of the house and they have lived in the house for at least one year prior to the applicant, their sibling, relocating to a nursing home.