If I Sell My House Will I Lose My Medicare?

Medicare provides health insurance primarily for individuals aged 65 or older, younger people with certain disabilities, and those with End-Stage Renal Disease or Amyotrophic Lateral Sclerosis. A common question arises regarding how selling a home might affect Medicare eligibility. While the sale of a primary residence typically does not impact standard Medicare Parts A and B, it can significantly influence eligibility for certain programs designed to help with healthcare costs, such as Medicare Savings Programs and Medicaid, which have specific asset limitations. This distinction is important for individuals seeking to understand the financial implications of a home sale on their healthcare coverage.

Understanding Standard Medicare Eligibility

Eligibility for Original Medicare, Part A and Part B, is generally not tied to an individual’s financial assets, including whether they own or sell a home. The primary criteria for Medicare Parts A and B are based on age, U.S. citizenship or legal residency, and work history. Most individuals qualify for premium-free Part A if they are 65 or older and they, or their spouse, paid Medicare taxes through employment for a sufficient period, typically 10 years or 40 quarters.

Individuals under 65 may also become eligible for Medicare Part A and B if they have received Social Security Disability Insurance (SSDI) benefits for 24 months, or if they have End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS). Selling a home generally does not affect an individual’s qualification for Medicare Parts A and B, as eligibility is based on age, citizenship, or work history, not wealth.

How Selling Your Home Affects Medicare Savings Programs and Medicaid

While Original Medicare is not asset-tested, certain programs that offer financial assistance with Medicare costs, such as Medicare Savings Programs (MSPs) and Medicaid, are means-tested. These programs consider both income and asset levels to determine eligibility. A primary residence is typically considered a non-countable asset for Medicaid and MSP purposes, meaning its value does not count towards asset limits as long as it remains the individual’s home. However, once a home is sold, the cash proceeds from that sale transition from a non-countable asset to a countable asset.

Countable assets generally include cash, savings and checking accounts, certificates of deposit, stocks, bonds, and additional real estate. For most states, the countable asset limit for a single individual seeking Medicaid long-term care is around $2,000, although this can vary significantly by state. For MSPs, the asset limits in 2025 are typically $9,660 for an individual and $14,470 for a couple, though some states have higher limits or no asset limits at all. If the proceeds from a home sale cause an individual’s countable assets to exceed these limits, it can result in ineligibility for certain MSPs that help pay for premiums, deductibles, and co-payments, such as the Qualified Medicare Beneficiary (QMB), Specified Low-Income Medicare Beneficiary (SLMB), or Qualifying Individual (QI) programs.

For Medicaid, especially for long-term care, the impact of home sale proceeds can be substantial. If the funds from a home sale push an individual over the state’s asset limit, they may become ineligible for Medicaid until their assets are reduced below the threshold. Medicaid also has a “look-back” period, generally 60 months (five years) in most states, during which asset transfers for less than fair market value are reviewed. If assets, including home sale proceeds, are transferred for less than their value during this period, a penalty period of Medicaid ineligibility may be imposed.

Strategies for Managing Home Sale Proceeds

Individuals who sell their home and are concerned about the impact on their eligibility for means-tested programs like MSPs or Medicaid have several strategies to consider for managing the proceeds. One common approach is “spending down” assets on exempt items or services. Allowable spend-down expenses can include paying off debt such as credit card bills or mortgages, purchasing medical equipment or services not covered by Medicare, or making home modifications like wheelchair ramps. Other exempt assets that can be purchased include a new primary residence, one vehicle, household goods, and personal items.

Another strategy involves establishing certain financial instruments or trusts. For instance, funds can be used to purchase an irrevocable funeral trust, which allows individuals to pre-pay for funeral and burial expenses. These trusts are generally non-countable assets for Medicaid eligibility, helping reduce countable assets without violating look-back rules. Additionally, a Medicaid-compliant annuity can convert a lump sum of countable assets into a regular income stream. This strategy helps meet asset limits while providing income, especially for a spouse not receiving long-term care.

For individuals with disabilities, a special needs trust (SNT) can be established to hold assets for their benefit without affecting eligibility for needs-based government programs like Medicaid. These trusts are designed to supplement, not replace, government benefits, covering expenses such as recreation or personal care. Given the complexities of asset rules and look-back periods, consulting with an elder law attorney or financial advisor specializing in Medicaid and MSP planning is often beneficial to ensure compliance and optimize eligibility.