QMC

How does Medicaid treat the Homestead Exemption and the Principal Residence?

How does Medicaid treat the Homestead Exemption and/or the Medicaid applicant’s primary residence? When senior enters a nursing home to receive care services, he or she often leaves real property owned by that person, and that home served as the A primary residence, defined by Medicaid as real property that is furnishing shelter to the individual, the applicant’s spouse or dependent child.

This property will be considered an exempt asset and not as a countable asset for eligibility purposes for Medicaid eligibility. Medicaid long term care regulations will therefore disregard the equity value of the home for purposes of determining whether or not the prospective Medicaid beneficiary is above the applicable asset limit and therefore not qualifying for Medicaid benefits. The value of the home will not create Medicaid ineligibility, and is not subject to spend down, as the Medicaid rules presume that the Medicaid applicant has an intent to return home and may need the home in the future if he or she no longer requires nursing home care in a nursing facility.

While the primary residence is exempt for initial qualification purposes, it is not exempt from the Medicaid estate recovery program. The state retains the right to either place a lien on the property to get repaid for any Medicaid benefits advanced, or seek payment from the Medicaid recipient’s estate within the probate court.

While the Medicaid recipient is receiving care from caregivers in a nursing home, it is possible for the community spouse, a loved one or family member to have accessibility to the home and live in the home while the care recipient is in care.

But the fact that the home is an exempt asset for Medicaid qualification purposes, that does not mean that transfers of the home are exempt from the Medicaid transfer rules. Any gift of the home within 5 years of the Medicaid application will violate the Medicaid lookback period rules. The house can be transferred to the community spouse (for married couples) or to a special needs child, but any transfer to other family members and or loved ones will create a penalty period, disqualifying the applicant from Medicaid eligibility.

On the plus side, like other assets, the home can be transferred to a Medicaid asset protection trust or other irrevocable trust 5 years prior to Medicaid application, thus taking the home out of the Medicaid equation completely and completely saving the value of the home. Like other areas of Medicaid qualification, Medicaid planning, estate planning, preplanning, proper legal advice from an elder law attorney or other qualified law firm, or guidance from professionals specializing in Medicaid can address all of these issues before they become an issue at the time the person requires a nursing home and begins incurring care costs.

From the Medicaid Manual: These are the regulations used by Medicaid caseworkers:

When determining eligibility for Vendor assistance the home of the Medicaid applicant or Medicaid recipient when the home is providing shelter to the Medicaid applicant or Medicaid recipient, or his community spouse or dependent child shall be disregarded.   A ‘home’ is defined as real property that is furnishing shelter to the individual, the applicant’s spouse or dependent child. A mobile home that is furnishing shelter is included in this definition regardless of whether the mobile home can be moved or who owns the land on which it is located.

 All the land on which the home is located is considered part of the home so long as the land is adjoining and there is no other home on the land. Land in a city or town must be in the same city block. Land in rural areas is considered adjoining even though a road may separate two tracts.

 Home equity and ownership are to be verified. Effective January 1, 2020 if a participant’s home equity interest (fair market value less secured indebtedness, mortgage, or reverse mortgage) in their primary home is over $595,000, they are not eligible for MO HealthNet under Vendor assistance programs.

Leave a Reply

Your email address will not be published. Required fields are marked *

Shopping cart close