Introduction

Some seniors and their families might believe the only way they can pay for long-term care is by selling the senior’s home, but they would probably be wrong. Since most homes are exempt from Medicaid’s asset limit, most homeowners can qualify for Medicaid, which will pay for long-term care. However, there is no simple answer to this complex topic, and there are times when selling the home to help pay for care might be the best option.

When is a Home Exempt from Medicaid’s Asset Limit?

A primary home can be exempt from Medicaid’s asset limit in the following circumstances:

• The Medicaid applicant lives in the home and meets the state’s home equity interest limit.
• The Medicaid applicant has filed an intent to return home statement and meets the state’s home equity interest limit.
• The Medicaid applicant’s spouse, child under age 21 or blind or disabled child of any age lives in the home.
• The home has been placed in a Medicaid Asset Protection Trust.
• The homeowner has used the Child Caregiver Exemption or the Sibling Exemption.

Home equity interest is the home’s value minus any outstanding debt, such as a mortgage. The home equity interest limit in most states in 2025 is $730,000, and in states with higher average home prices it’s $1,097,000. An intent to return home statement is a document filed with the state Medicaid office declaring that an individual will return to their home if and when they are able to do so.

Given these rules and limits, most senior homeowners can qualify for Medicaid, which will pay for their long-term care. They might have to manage other assets or their income in order to qualify, but they won’t have to sell their home.

When Should a Home Be Sold to Pay for Long-Term Care?

Every situation is unique, and this type of financial transaction can get complicated, but there are some general guidelines for seniors when it comes to selling their home to pay for long-term care. The options are significantly different for single and married homeowners, so we’ve organized the guidelines into those two categories.

Single Homeowners

– If their home is not exempt from Medicaid’s asset limit and they have no other resources to pay for long-term care, single senior homeowners may have to sell their home to pay for the care they need. If they want in-home long-term care, and the home is conducive to aging in place, they could also consider taking out a reverse mortgage loan to help pay for care rather than selling the home. However, reverse mortgages may present additional challenges when applying for Medicaid.

– Even if the home is exempt, and a single homeowner has already enrolled in Nursing Home Medicaid and moved to a nursing home, they may still have to sell if they a) can’t afford to maintain the home or b) if their intent to return home statement (discussed above) expires.

Maintaining a home includes paying the mortgage, property tax, utilities, and keeping up with general home maintenance. Since Nursing Home Medicaid beneficiaries are required to give most of their income to the state to help pay for care, it may be difficult for them to cover all those home expenses, in which case they will likely need to sell. They can then use the proceeds from the sale to pay for their long-term care until they meet Medicaid’s asset limit, at which point they can re-apply. It’s important to note seniors in this situation can’t just give away the home or the home sale proceeds, or spend them on anyone else, without violating the Look-Back Period, which would lead to a penalty period of Medicaid ineligibility.

Intent to return rules vary by state, but many states place a time limit (six months is common) on how long they are viable. If the intent return is no longer viable for any reason, and no one lives in the home, the home will no longer be exempt and the homeowner will likely lose their Medicaid eligibility and coverage. They will need to sell the home to pay for their care until they meet their asset limit.

-If the home is exempt and the single homeowner wants to move to assisted living to receive long-term care, they will likely need to sell their home to pay for the assisted living expenses. Medicaid will cover long-term care in assisted living in most states, but it won’t cover room and board costs. These assisted living rules also apply to memory care residences for Alzheimer’s disease and other dementias.

-If the home is exempt and the single homeowner wants to receive long-term care at home, they clearly will not be selling the home. If they are eligible, they can receive long-term care benefits at home via a Medicaid Home and Community Based Services (HCBS) Waiver or Aged, Blind and Disabled (ABD) Medicaid.

Married Homeowners

– In most cases, married couples don’t need long-term care at the same time. And most homeowners in this situation will not need to sell their home to pay for long-term care because as long as the non-applicant spouse (also known as the community spouse) lives in the home, it will be exempt from Medicaid’s asset limit.

What’s more, after the beneficiary spouse has been enrolled in Medicaid for a month, the couple can put the home in the community spouse’s name. This does not violate the Look-Back Period, and it means the home will no longer be considered an asset of the beneficiary because a community spouse’s assets are not counted during their beneficiary spouse’s annual Medicaid Renewals. So, the community spouse could, in theory, sell the home and it would not impact the beneficiary’s spouse’s Medicaid eligibility and coverage. And if/when the community spouse needs long-term care, they can follow the guidelines for single senior homeowners described above.

– If their home is not exempt from Medicaid’s asset limit and they have no other resources to pay for long-term care, married homeowners may have to sell their home to pay for the care they need. Yet another possibility is downsizing to a home that would be exempt.

– If the home is exempt and the married senior homeowners happen to both need long-term care at the same time, they will likey need to sell the home under the following conditions:
1) They are both in nursing homes and can’t afford the home maintenance,
2) Their intent to return statement expires,
3) They want to move to assisted living.

– If the home is exempt and the married homeowners want in-home long-term care, they will want to keep the home. If they are eligible, they can receive long-term care benefits at home through an HCBS Waiver or Aged, Blind and Disabled (ABD) Medicaid.

Managing the Proceeds from Selling a Home

While homes can be exempt from the asset limit, the proceeds from selling a home are not, as mentioned above. So, the proceeds will put the seller over the asset limit in most cases.

The senior can reduce their assets in several ways until they reach their asset limit and regain their eligibility. This will probably include paying for their own long-term care until they can re-apply for Medicaid.

It’s important for the senior to sell their house at fair market value. They can not give a discount to a family member, or take a below market price from a “We Buy Homes in Cash” type of company that makes low offers to homeowners who need to sell quickly. Doing so could be a violation of the Look-Back Period and may lead to a penalty period of Medicaid ineligibility.

It should also be noted that if the seller reinvests the proceeds into another Medicaid-exempt home within three months of selling, the proceeds used to buy the new home will be exempt from the asset limit. However, if there are proceeds left over from the sale after buying the new home, they will count toward the asset limit.

Medicaid Estate Recovery

Just because a home is exempt from Medicaid’s asset limit doesn’t mean it’s safe from Medicaid Estate Recovery. Every state is legally obligated to try and collect reimbursement for the long-term care expenses it covered for a Medicaid beneficiary after the beneficiary’s death, a process known as estate recovery. States can force the sale of a home to collect their reimbursement.

Home Sale Tips

– Creating a Power of Attorney (POA) before selling a senior’s home is recommended, especially if the senior is showing any signs of cognitive decline. The POA can name a trusted family member or friend to act as an agent for the senior in the event they can’t make decisions regarding the home sale (or anything else). This would allow the agent to help with the logistical steps in the sale, like signing paperwork, hiring a realtor or attorney, and managing finances. Without a POA, a family member or friend would have to petition the courts for guardianship (a time-consuming, complicated and expensive process) to help a senior who has dementia or can’t make decisions on their own for any reason.

– Be aware of any tax implications. If a home seller owns the home, it is their primary home and they have lived in the home for two of the last five years, the sale of the home can be tax free as long as it meets the profit requirements. Individuals are allowed to exclude up to $250,000 in profits from the sale of a primary residence, and married couples filing jointly are allowed to exclude up to $500,000. If the profits are greater than that, the seller will likely have to pay a capital gains tax.

– Be transparent with the senior and anyone else involved with the home sale or impacted by it, including family members who may be opposed to the sale. Being open about the process can help minimize confusion and manage difficult emotions.

– Be aware of the senior’s emotions. Many seniors in this situation will be selling a home they have lived in for decades and filled with memories, so selling will be emotional. If possible, sell the home after the senior moves to their new residence. This will allow them to enjoy their final days in the home and remember it as it was, as opposed to living through the cleaning out and staging processes that will leave their home looking, and feeling, different.