Medicaid’s Treatment of the Home

Nursing home residents do not automatically have to sell their homes in order to qualify for Medicaid. In some states, the home will not be considered a countable asset for Medicaid eligibility purposes as long as the nursing home resident intends to return home; in other states, the nursing home resident must prove a likelihood of returning home.

But principal residences are not counted as assets by Medicaid only to the extent the applicant’s equity interest in the home is less than $560,000, with the states having the option of raising this limit to $840,000 (figures are adjusted annually for inflation; these are for 2017).

The equity value of the home is the fair market value minus any debts secured by the home, such as a mortgage or a home equity loan.  For example, if your home has a fair market value of $400,000 and an outstanding mortgage of $100,000, the equity value is $300,000.

But your equity interest depends on whether you own the home by yourself or with someone else.  If you own the home by yourself, your equity interest is the entire equity value.  If you own your home jointly with your spouse or someone else, your equity interest is only half of the home’s equity value.

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. But the home may be subject to estate recovery after the Medicaid recipient’s death, again depending on the state.

Posted on: October 28, 2015