Under the current Medicaid laws in most states, even after a senior enters a nursing home, their personal residence will not be counted as an asset in determining their financial eligibility for Medicaid coverage of long-term care costs.
However, if a senior is single and their equity interest (fair market value minus mortgage) in their primary residence exceeds $572,000, then the house will be counted as an asset, almost certainly causing them to be disqualified from Medicaid coverage. Keep in mind that some states with higher property values may use an increased limit of up to $858,000.
There are several conditions that can impact whether Medicaid “counts” an elder’s home as an asset. Get the facts straight to ensure an aging loved one's primary residence is exempt for Medicaid eligibility purposes.
Medicaid-Exempt Home Transfers
The Medicaid rules are different for seniors who are married where only one spouse is applying for Medicaid coverage of nursing home costs. If one spouse, known as the “community spouse,” continues to reside in the primary residence, then the home will continue to be exempt regardless of its value.
Another home exemption occurs if a senior’s minor dependent child or disabled child lives in the home. Again, in this case there is no home value limitation.
Lastly, there is a child-caregiver exception. If an adult child lived in the Medicaid applicant’s home and cared for them for at least two consecutive years prior to the parent’s placement in a nursing home, then the home can be transferred to the caregiving child for a nominal value. This transaction is not subject to Medicaid penalties.
Medicaid Coverage and the Intent to Return Home
What if a senior is single, moves from their home to an assisted living facility, and then later on their condition requires them to move into a nursing home? Will Medicaid still pay for their skilled nursing care and consider their former home exempt?
Unfortunately, no. Once a person moves out of their home of many years, it is no longer considered their “principal residence.” Making a permanent move to an assisted living facility is a clear statement that a senior does not plan to live in their community home again. At that point, it is considered a house rather than a home, so the exemption no longer applies. However, in some states the exemption can be continued for up to six or 12 months as long as the senior maintains a reasonable “intent to return” home.
Indeed, even if a senior moves directly to a nursing home (and for these purposes a short transitional stay in a hospital does not count), their home may not be exempt unless they maintain the “intent to return.” Under federal law, if a senior cannot express this intent themselves, then their spouse or another relative may express it for them. It is always a good idea to put one’s intent to return home in writing as soon as possible after entering a nursing home. Should it become necessary to document a senior’s intentions, there will already be written proof.
Home Ownership and Medicaid Planning
In summary, there are specific triggers that cause a home to lose its protected status. A previously exempt primary residence becomes a countable asset when the owner has no spouse, dependent or eligible adult caregiver living in the community home and:
- Moves into a nursing home or other medical institution permanently with no expressed intent to return to the community home; or
- Transfers the home for less than fair market value; or
The moral of the story is, if a senior moves from their home to an apartment, independent living community or assisted living facility, it’s important to consider selling their former principal residence and dealing with the proceeds in a manner that will best provide for their care long into the future.
Part of this plan may be to prepare for the eventuality of moving into a nursing home and the expenses this high level of care entails. If so, contacting an elder law attorney with plenty of Medicaid planning experience is crucial so that there will be ample time to put a solid plan in place and execute it before skilled nursing care is needed. The sooner planning begins, the more likely it is that an elder will be able to receive the care they need, whether it is paid for privately, by Medicaid or through some combination of the two.