Many people know that Medicaid has very strict asset requirements, which must be in place in order to qualify for the Medicaid Institutional Care Program (the Medicaid program that pays for skilled nursing home and assisted-living facility care). As a Medicaid-planning attorney, one of the most frequently asked questions I get involves concern over what happens to my client’s house in the Medicaid application process?
The answer to this question involves a number of factors. I will start with the premise that we are discussing the Medicaid applicant’s primary residence, deemed their homestead property.
When the Home is a Non-Countable Asset
Generally, Medicaid deems the primary residence a non-countable asset as long as the following conditions are met:
1. The Medicaid applicant’s home equity interest limit is $560,000 (as of January 2017, the amount can change every year) or less.
· Equity is the fair market value of the home (can use property tax records or obtain an appraisal to determine fair market value) less any debts secured by the home (i.e. mortgages or home-equity loans). As an example, if the Medicaid-applicant’s house is worth $600,000, but they had an outstanding mortgage of $200,000, then the Medicaid-applicant’s home-equity value is $400,000, well below the $560,000 threshold.
· However, if the home equity value is determined to be $560,001 (as of 2017), then the entire home is deemed a countable asset.
But, this home-equity rule does not apply if:
2. The Medicaid applicant’s spouse is living in the home; OR
3. The Medicaid applicant’s child (under age of 21) is living in the home; OR
4. The Medicaid applicant has a disabled child or blind child, of any age, living in the home.
But we’re not done with our analysis as to whether or not we can protect the home and qualify for Medicaid. In order for Medicaid to deem the homestead property a non-countable asset for Medicaid’s highly restrictive asset requirements, we need one of 1, 2, 3 or 4, above AND
The Medicaid applicant must have an “intent to return” to their home.
If the Medicaid applicant says they intend to return to their primary residence, generally Florida Medicaid application specialists will not challenge this.
· Even if returning home is not likely, the Medicaid application specialist will still not challenge the assertion.
· However, if the Medicaid-applicant, by their own actions, demonstrates that they really do not want to return home (i.e. placing home on the market to sell or rent), then the house will be deemed a countable asset. This can get tricky when an older adult chooses to live in an assisted-living facility (which can be very nice and provide a high level of independence).
In addition to the above, your Medicaid attorney can deploy a number of strategies to preserve and protect the home.
Related Elder Law Blog Posts
Adult Child Caregiving Exception to Medicaid - allows you to gift home to child who lived in parent's home and provided substantial caregiving for two years prior to applying for Medicaid.