Does a House Count as an Asset for Medicaid?

Medicaid is a government program designed to assist individuals with healthcare costs, particularly those associated with long-term care services such as nursing home care or home and community-based services. Eligibility for Medicaid often involves financial criteria, including limits on an applicant’s income and countable assets. These asset limits are in place to ensure that the program primarily serves those with demonstrated financial need. Understanding how different types of assets, including one’s home, are considered in this eligibility assessment is important for individuals planning for future healthcare needs.

The Primary Residence Exemption

For many individuals seeking Medicaid assistance, their primary residence is generally not considered a countable asset when determining initial eligibility. This exemption is in place under specific conditions, allowing applicants to retain their home without jeopardizing their access to necessary long-term care. The intent is to prevent individuals from becoming homeless as a condition of receiving medical aid.

One common condition for the home to remain exempt is if the applicant expresses an “intent to return home,” even if they are currently residing in a nursing facility. This declaration indicates a desire to return to their residence if their health improves or circumstances allow. Another condition that can preserve the home’s exempt status is if certain individuals continue to live there. This includes a spouse, often referred to as the community spouse, who remains in the home.

The exemption also extends to situations where a minor child or a blind or disabled child of any age, resides in the home. Additionally, if a dependent relative lives in the residence, it may also be exempt. This primary residence exemption is specific to the dwelling where the applicant lives or intends to live; it does not apply to other properties like vacation homes, rental properties, or other investment assets. These additional properties are generally considered countable assets and their value would be included in the asset eligibility assessment.

Home Equity Limits for Exemption

While a primary residence is often exempt for Medicaid eligibility, this exemption is subject to specific financial limits based on the home’s equity value. Federal law establishes a range for home equity limits, and states can set their own specific caps within or sometimes above this federal guideline. These figures represent the maximum amount of equity in a primary residence that can be excluded from an applicant’s countable assets.

Home equity for Medicaid purposes is calculated by subtracting any outstanding mortgages, loans, or other liens from the home’s current market value. For example, if a home is valued at $800,000 and has a remaining mortgage of $150,000, the equity would be $650,000. If this equity falls within the state’s established limit, the home’s value does not affect eligibility. However, if the home’s equity exceeds the state-specific limit, the excess value may be considered a countable asset.

When a home’s equity surpasses the allowable limit, the applicant may be deemed ineligible for Medicaid until the excess value is “spent down” or otherwise reduced. This could involve selling the home, taking out a reverse mortgage, or using the excess funds for medical expenses. States have specific rules regarding how these situations are handled, and the exact limits can vary significantly by jurisdiction.

Medicaid Estate Recovery Rules

Even if a home is exempt during the initial Medicaid eligibility determination, it can become subject to recovery after the recipient passes away through the Medicaid Estate Recovery Program (MERP). States are required by federal law to seek repayment for the costs of Medicaid long-term care services from the estates of deceased recipients. The purpose of MERP is to recover funds spent on healthcare.

The home, even if it was exempt during the recipient’s lifetime, often represents the most significant asset in the estate and thus becomes a primary target for recovery. States can place a lien on the property to facilitate this recovery process, which typically prevents the sale or transfer of the property until the Medicaid claim is satisfied. This means that while the home may not affect initial eligibility, it may not be passed down to heirs without addressing the state’s claim.

There are specific circumstances under which Medicaid recovery may be deferred or waived. Recovery is typically deferred if a surviving spouse continues to live in the home, allowing them to remain in their residence. Similarly, recovery is deferred if a minor child or a blind or disabled child of any age resides in the home. States may also waive recovery in cases of undue hardship, which are determined based on specific state criteria. MERP applies to the deceased recipient’s “estate,” which can include assets that pass outside of probate.