Nursing home residents do not automatically have to sell their homes in order to qualify for Medicaid, but that doesn’t mean the house is completely protected. The state will likely put a lien on the house while the resident is living and attempt to recover the property after the resident has passed away.
Medicaid (known as MassHealth in Massachusetts and Medi-Cal in California) will not count a nursing home resident’s home as an asset when determining eligibility for Medicaid as long as 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 $595,000, with states having the option of raising the limit to $893,000 (Figures are adjusted annually for inflation. These are for 2020.)
The equity value of a home is the fair market value minus any debts secured by the home, such as a mortgage or a home equity loan. Your equity interest depends on whether you own the home by yourself or with someone else.
The home equity rule does not apply if the Medicaid applicant’s spouse or a child who is under 21 or is blind or disabled lives in the home.
State Medicaid agencies will likely place a lien on any real estate owned by a Medicaid beneficiary during his or her life. The state cannot 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 there.
When a lien is placed on the property and the property is sold while the Medicaid beneficiary is living, not only will the beneficiary cease to be eligible for Medicaid due to the cash from the sale, but the beneficiary will have to satisfy the lien by paying back the state for its coverage of care to date.
Even if a state does not place a lien on a home during a Medicaid beneficiary’s life, the home may still be subject to estate recovery after the Medicaid recipient’s death, again depending on the state.
There are steps you can take to protect your home. Contact your attorney to learn more.