My mom is on Medicaid and lives in a nursing home. My dad lives at home. I know Medicaid limits the value of the home and their home is now appraised at over their state’s home equity limit. How will this impact my Mom’s eligibility when it comes time for her Medicaid renewal? Will my Dad have to sell his home? Does he have any other options?
In this situation where your mom lives in a nursing home and your dad continues to live in their primary home, the value of your parent’s home should not impact your Mom’s eligibility for long term care Medicaid in any way, nor will your dad have to sell his home. (Further explanation follows). Please note that for the purposes of answering this question, we are assuming your dad in not also a Medicaid recipient.
To be clear, Medicaid does have a home equity interest limit in order for a Medicaid applicant / beneficiary’s home to be exempt from Medicaid’s asset limit. (Equity is a home’s fair market value minus any home debt, such as a mortgage, and equity interest is the amount of the equity owned by the Medicaid applicant / beneficiary). The equity interest limit varies by state, but is not relevant to the answer of the above question. (See state specific equity interest limits). This is because one exception to the equity interest limit is if a Medicaid applicant / beneficiary has a community spouse living in the home. (A community spouse is the non-applicant spouse of a nursing home Medicaid applicant / beneficiary or a home and community based services Medicaid waiver applicant / beneficiary).
Therefore, since your dad continues to live in the home and is not also a Medicaid recipient, there is no home equity interest limit. This means that regardless of the value of the home and your mom’s equity interest in it, it will not be counted towards Medicaid’s asset limit and cannot push your mom over the limit, resulting in Medicaid disqualification. Furthermore, since it has no impact on your mom’s eligibility, your dad will not be forced to sell the home.
That said, your parent’s home may not be safe from Medicaid’s estate recovery program (MERP). Via this program, Medicaid attempts to be reimbursed for long-term care expenses for which it paid for a Medicaid recipient following that individual’s death. Generally, one’s home is the last remaining asset of any value from which Medicaid can collect funds. According to federal law, if the deceased Medicaid beneficiary has a living spouse, estate recovery cannot take place until he / she passes away. However, not all states will attempt to recover costs following the death of the spouse, and even in those that do, some limit the amount of time in which estate recovery can take place.
There are Medicaid planning strategies that can protect one’s home from MERP, although one should exercise caution. This is because some techniques, such as Medicaid Asset Protection Trusts, violate Medicaid’s look back rule, which can result in a period of Medicaid disqualification. It is highly advised that persons contact a professional Medicaid planner when considering any such planning strategy, as they are well aware of the rules, including state specific rules, surrounding Medicaid and planning strategies. Find one here.