Will I have to sell my house in order to become Medicaid eligible?
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 $595,000 (as of January 2020, the amount can change every year) or less.
- By "equity" we don't just mean the value of your house.
- 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 $595,000 threshold.
- However, if the home equity value is determined to be $595,001 (as of 2020), then the entire home is deemed a countable asset.
- What if the house has too much equity and is a countable asset? In that situation, if the goal remains to keep the house, you still don't have to sell the house in order to become eligible for Florida long term care Medicaid. Instead, we will talk about taking out a small mortgage on the house. In essence this is how we draw equity out of the house to bring it back under the Florida Medicaid's equity limits.
But, this home-equity rule does not apply if:
2. The Medicaid applicant’s spouse is living in the home (in other words, the house can be worth millions of dollars, so long as one spouse is not applying for medicaid, it will be an exempt asset for Florida medicaid eligibility purposes); 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 if the medicaid applicant is in an ALF or nursing home:
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).
Obviously, if the Medicaid applicant actually lives at home, this is not an issue. When someone qualifies for Medicaid and intends on remaining at home, I typically see the Medicaid plan approve between 20-40 hours per week of home health care. This may not provide 100% of your (or your love one's) home care needs, but it can provide family caregivers with much needed respite. In addition, being on a medicaid managed care plan (which all Medicaid recipients must choose), there are other cash benefits and lowered health care costs.
The home is a great place to look for Florida Medicaid spend down expenses
Keeping and protecting the house is normally on the forefront of my client's minds. As long as the above requirements are met it wont be an issue. But the house then also becomes another way we look to spend down excess assets. Our Medicaid planning lawyers have sophisticated trusts and other strategies that we utilize to assist those with excess assets, but sometimes its better to start simply. Those looking to apply for Medicaid are allowed to purchase anything they want (they just can't give away assets). So, if a Medicaid-planning client comes to me and we discover that they need a new roof, remodeled kitchen, need to make bathrooms more handicap accessible, etc... these are great places to start when we're coming up with a Medicaid plan.
You can have no more than $2,000.00 in all countable assets in order to qualify for Medicaid long-term care programs. So if someone comes to me with $10,000.00 in their bank account, they may not need to hire our elder care lawyers to create a complex plan for how you or your elder loved one can meet the Medicaid asset test. Instead, you might just want to purchase $8,000.00 worth of goods or services for the house. If your house is worth less than $585,000 (the 2019 equity limit), and you have a mortgage, you can also pay of the mortgage (or any other debt).
If your assets are significantly higher, then spending down on home repairs, etc.. is a start, but we'll likely have to review other Medicaid planning strategies as well.
What if I want to sell my home and obtain or keep Medicaid Long Term Care benefits in Florida?
I should also point out that, while many of my clients wish to keep their home, protect it from medicaid estate recovery, and pass their house to their intended heirs (all while receiving Medicaid long-term care benefits in Florida); we work with clients who have alternative goals as well with regard to the house. Some clients would prefer not to bear the expense of homeowners insurance, upkeep, taxes and maintenance that comes with home ownership.
Some clients, especially ALF or nursing home residents, want to sell their home.
We often get asked: "Can I sell my home and get Medicaid?" The fear is that if they sell their home, then they wont be eligible for medicaid in Florida, because they'll have much more by way of liquid assets (cash well over the $2,000.00 limit). Click on the link above to read more about that subject. But the short answer is: yes. There are medicaid-planning strategies we can use to protect the proceeds from the sale of a house as well.
Call and schedule a consultation with one of our Florida Medicaid lawyers to discuss Medicaid benefits and explain the multiple strategies we can utilize to preserve your home, protect your assets and attain Medicaid eligibility.
Related Elder Law Blog Posts
Adult Child Care Giver Exception to Medicaid - allows you to gift home to child who lived in parent's home and provided substantial care giving for two years prior to applying for Medicaid.