Selling a house while on Medicaid is possible, but must be done carefully to prevent loss of Medicaid benefits.
Selling a primary residence while on Medicaid may be necessary, but must be done carefully to protect the Medicaid recipient’s benefits. Medicaid considers the primary residence to be an exempt asset, but once the property is sold, the sale proceeds become a countable asset, and would put the beneficiary over Medicaid’s asset limit. However, there are allowable ways to use the excess assets without losing coverage for long-term care. If the sale proceeds are immediately used to purchase a new primary residence, the funds would not count against the asset limit. If the funds are used to spend down on debts like mortgages or home equity loans, they will not be counted. Finally, the funds could be used to purchase another exempt asset, like a car or a prepaid funeral contract.
It is important to note that the property must be sold for fair market value, and cannot be gifted away to an adult child or other family member. If there are any asset transfers for less than fair market value, Medicaid could impose a penalty period during which the Medicaid long-term care recipient is not eligible for benefits. Also important to note is that even if an asset transfer is done smoothly and without breaking any eligibility rules, Medicaid estate recovery could still apply.
Before selling a house while on Medicaid, it is important to consult an estate planning or elder law attorney for legal advice to ensure your loved one does not lose Medicaid eligibility. QMC, although not a law firm, is well versed in Medicaid rules and can assist your family with placement in a nursing home, Medicaid applications, Medicaid planning, and of course, selling a house while on Medicaid.