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Paid off or not, your home is an asset. However, if one of you needs Medicaid, they won't make you sell the home if the spouse still lives there. However, they will put a lien against it. I'll qualify this by saying that every state has variances on Medicaid laws, but this is the general way it's done.
Take care,
Carol
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You can spend your $ on your needs, your care and your assets without an issue of Medicaid transfer penalty. Whether or not spending down your assets on a mortgage could be good or a bad idea.

If 1 of you are going into a NH and the other is healthy and wants to continue to live in the house for a long no mortgage is a good idea as the NH spouse monthly income might not be there at all for the still in the community spouse to have to use for the costs on the home. For community spouse situation (where 1 spouse is healthy & planning on staying at the home), where the couple's combined assets are more than the community spouse is allowed in their state, paying off a mortgage is a good single easy item to do and have their assets reduced. If this is your situation, you need to make sure you do this BEFORE you apply for Medicaid. For couple's, Medicaid does a "snapshot" day in which all the couples assets are fixed by. So you need to make sure the $ to pay off the mortgage (or anything else) is done and cleared through your bank accounts before the snapshot day. Also for a couple, you can have 1 car - 1 car not 2 cars - so often the couple will trade in both cars to get a single newer and more dependable car. Whatever you do, don't gift the other car to your kids as that will kick up a transfer penalty gifting issue. Good luck.
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