Disclaimer: With Medicaid, VA, and insurance regulations frequently changing, past blog posts may not be presently accurate or relevant. Please contact our office for information on current planning strategies, tips, and how-to's.
Since the primary home is considered an exempt asset for Medicaid purposes, it does not count toward the Individual Resource Allowance or Community Spouse Resource Allowance. But what if there is no spouse occupying the home? Here’s a breakdown of what happens to the home in cases where a single person is seeking Medicaid eligibility.
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Requirements for Primary Home Exemption
The home is automatically considered exempt if the healthy spouse or a dependent lives in it. If not, the Medicaid applicant must either reside in their home or have the intent to return home. Their equity in the home must also be below a state-specific limit, which is generally between $688,000 and $1,033,000 in 2023.
The healthy spouse or a dependent lives in the home. If the healthy spouse or a dependent lives in the home, it is automatically considered an exempt resource. Dependents typically include a child under the age of 21 or a child who is blind or disabled. In cases involving a dependent, the home equity limit does not apply.
The individual resides in the home. Some states engage in waiver programs that allow Medicaid beneficiaries to remain in their home and receive care there. In these cases, the home is considered exempt as long as the equity in the home is below their state’s limit.
The individual has the intent to return home. If the individual resides in a nursing home or other long-term care facility, their home is considered exempt as long as they have the intent to return home if their condition improves and they no longer require skilled nursing care. Although this scenario is unlikely for beneficiaries of Aged, Blind, and Disabled (ABD) Medicaid, some states allow the home to remain exempt for as long as 12 months if there is intent to return.
Learn More: How Does a Reverse Mortgage Affect Medicaid?
Medicaid Estate Recovery
Following the death of the individual, their primary home is subject to Medicaid estate recovery up to the amount of benefits expended on their behalf. Due to the high cost of skilled nursing care, this amount may likely equal or exceed the entire value of the home.
In many cases, the state Medicaid agency will place a lien on the home once the individual begins receiving benefits. This allows the state to stake its claim on the asset for the purposes of estate recovery while the Medicaid recipient is still living. The state Medicaid agency can typically only impose a lien on the home if the individual is unlikely to return home from the facility, and it must notify the individual that the lien is being imposed. If the Medicaid recipient recovers and is able to move home, the lien is dissolved.
Following the individual’s death, the home becomes part of their estate, and the state Medicaid agency has the right to collect against the lien. In cases where a lien was imposed and the home was sold during the individual’s lifetime, the state is still able to recover against it.
If you have questions about how the home will be treated for a specific case, please contact our office!