Can you own real estate and qualify for Medicaid? The short answer is yes, but there are a lot of qualifiers that go with that answer.
When determining whether or not a person meets the requirements for nursing home Medicaid eligibility, the first step is to assess the full range of the prospective Medicaid applicant’s assets, and then determine which assets are countable assets and which assets which contain an exemption from the Medicaid rules. Any assets which are considered countable assets must be under Medicaid asset limit $5,800 in Missouri before Medicaid coverage will begin. If the person requiring long-term care has more assets than the Medicaid asset limit, but insufficient assets in bank accounts, etc. to pay for the full term of long-term care, the resident will spend down those assets on his or her care costs until the resident has spent down under the Medicaid asset limit, then the Medicaid application process will begin.
The exempt assets are typically, a prepaid funeral, a motor vehicle, personal property, and, yes, real estate, in the form of the primary home. The home equity interest of the primary home will not be considered when determining countable assets; this amount will be considered non-countable. The state will presume an intent to return home to the primary residence, and will allow the Medicaid applicant to keep the home while receiving Medicaid benefits. There is an upper limit on the fair market value of a primary, currently approximately $750,000. While the asset will be considered non-countable, the Medicaid program may place a lien on the house for estate recovery purposes.
With an asset limit of $5,800, it would be very difficult for a single Medicaid applicant to hold any other real estate and still meet the eligibility requirements and qualify for Medicaid benefits. However, for married couples, with the filing of a Division of Assets, the applicant’s spouse might be allowed to keep up to $150,000 in non-exempt assets. If the family holds real estate outside the primary home, this real estate could be included in the applicant’s spouse’s spousal share. And this real estate would not be subject to estate recovery.
If a prospective Medicaid applicant does hold real estate, the obvious best solution would be to plan very early (before the Medicaid look-back period) and transfer the real property to family members or loved ones, or to a trust for their benefit, at least five years prior to the need for Medicaid long-term care or nursing home care, creating full asset protection for the family. Of course, it takes anticipation to engage in this type of estate planning, and the awareness of elder law and the possibilities of preplanning. Some families simply do not get that type of early warning that long-term care will be necessary.
And it is always important to remember that a transfer to a trust for a disabled child is an exemption from the five-year look-back period. And the assets transferred to the trust on the disabled child’s behalf could include real estate, the equity value of the property would immediately be subtracted from the countable assets, with the Medicaid applicant potentially immediately qualifying for Medicaid coverage .
It always pays to get involved in the process of planning for long-term care. QMC can guide you to your best case scenario, and can guide to the proper elder law attorney if that type of legal advice, estate planning, and Medicaid planning is necessary. Medicaid eligibility is always more easily achievable the earlier one starts the process.