Can You Buy a House While on Medicaid?

Table of Content

• Determine Your Medicaid Eligibility
• Will The State Take My Home If I Need Medicaid To Pay For My Care In New York
• Medicare vs. Medicaid Roles in Nursing Home Care
• Medicaid application strategies for homeowners
• Learn About the Children’s Health Insurance Program (CHIP)
• Medicaid Estate Recovery Programs: When Medicaid Can and Cannot Take One’s Home

Buying a house in cash would mean that you either lied about your income or your income now surpasses the limit for getting Medicaid. You would have to explain how you can afford the down payment or a new mortgage to keep your Medicaid. If the mortgage for the house is out of line with the income you claimed, then you might be audited for fraud. It is not legal advice, and it does not create any type of attorney-client relationship. Estate Planning and Elder Law are complex fields, and each case is unique.

After the death of a Medicaid recipient, the state will try to recover the cost of long-term care for which it paid through a home sale. The state cannot do this if the deceased has a child that is disabled, blind, or under 21 years of age. Eligibility status varies by age, financial status, family size, health, and citizenship status, and it depends on the state you are applying to. Children, moms, and babies, people with health issues can be eligible. If those situations don’t naturally occur, there are other ways to keep the home exempt.

Determine Your Medicaid Eligibility

Probate is a legal process that involves checking the validity of one’s will, determining the value of the deceased’s assets, and paying any remaining taxes and bills. Keeping the home out of probate keeps one’s home, and proceeds from selling it, safe from Medicaid. This is because only assets solely owned by the deceased go through probate, which means if the house is jointly owned, it will not be included in the probate estate. This is when the home is jointly owned and rather than the deceased’s share of the home automatically inherited by the other owner, the beneficiary is named in the will. When you relocate to a nursing home, you should provide a written statement of intent to return home.

But when an applicant gives away property within five years of applying for Medicaid coverage of long-term care, Medicaid presumes that the gifts was made to qualify for Medicaid. This will trigger a period of ineligibility for Medicaid long-term care benefits on the theory that those assets could have been used to pay for the individual’s care. The financial requirements for eligibility of Medicaid long-term care services are you to be either medically needy or fall under the special income level group.

Will The State Take My Home If I Need Medicaid To Pay For My Care In New York

The Deficit Reduction Act of 2005 made such maneuvers much harder to manage. Now, when you apply for Medicaid, there is a five-year “lookback” at all asset transfers. If Medicaid finds money was transferred within the past five years, a penalty period is imposed, delaying the onset of Medicaid coverage. A functional need threshold, also referred to as medical need, must also be met for one to be eligible for in-home care. For the state Medicaid plan , persons often must demonstrate the need for assistance with activities of daily living and / or instrumental activities of daily living. This includes requiring help with mobility, transferring from a bed to a chair, toiletry, eating, bathing, doing laundry, and meal preparation.

This is because the home will no longer be a part of your spouse’s estate upon their death. With an “intent to return home” statement, you will still need to pay your home expenses, such as property taxes, insurance, and mortgage. If friends and family do not help cover these costs, maintaining the home isn’t feasible. This is partly because of Medicaid’s small asset limit (generally $2,000). However, what really limits one from covering these expenses is that nearly all of a nursing home Medicaid beneficiary’s income must go towards their cost of care.

Medicare vs. Medicaid Roles in Nursing Home Care

As you can imagine, the costs of a skilled nursing facility add up quickly. And many families have had to deal with the double whammy of these unexpected costs along with the failing health of their loved ones. If a home is in a lady bird deed, a type of life estate deed, it will not go through probate. With a lady bird deed, a Medicaid recipient maintains ownership of their home while they are living.

If none of these circumstances apply to you or your home, you may need to sell your home and “spend down” the assets to become eligible for Medicaid long term care. It’s a complicated process, but essentially the Medicaid applicant would make a plan to spend the money from the home sale on long term care costs until they get below the asset limit and then they would re-apply. This same “spend down” method can be used for a Medicaid beneficiary whose house becomes a countable asset while they are receiving benefits.

Medicaid application strategies for homeowners

Essentially, the same dollar amount paid out by a long term care insurance policy for the policyholder is the same amount “protected” from Medicaid’s asset limit and from estate recovery. Once your home is sold, the state will likely collect all or some of the proceeds from the sale as reimbursement. There are some exceptions in which the state cannot attempt estate recovery. This includes having a child who is under 21 years old, disabled, or blind. If it’s done in advance of the look-back period, a home can be protected with a Medicaid Asset Protection Trust.

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Home is exempt if the owner’s equity is below the state’s limit, and they live in the home. Justin, My father recently suffered a bad fall and is now receiving rehab from a local in-patient nursing and rehabilitation facility. If my father ends up needing to stay in the nursing home long-term, and he later applies for Medicaid, will he be allowed to keep his home? Learn about grandparents’ visitation rights and how to avoid tax and public benefit issues when making gifts to grandchildren. Applying for Medicaid is a highly technical and complex process, and bad advice can actually make it more difficult to qualify for benefits.

If you are married, an allowance may be made for the spouse still living in the home. The income requirements for Medicaid are based on various resource levels for the state. For example, the income requirements for people who are over the age of 65, blind, or otherwise disabled are different than they are for people who are single or who are married but without any children. When it comes to getting around the Medicaid financial requirements, you can only have more money if you are over 65, a child, pregnant, blind, or otherwise disabled.

But Medicare benefits do not provide any coverage for long-term care facilities. For seniors who do not have long-term care insurance, they will either need to apply for Medicaid or pay for these expenses out of pocket. Both the face value and cash value of life insurance policies can impact Medicaid eligibility. Only the cash value of a life insurance policy owned by an applicant may be counted, therefore Medicaid ignores all term life insurance policies. Generally, Medicaid exempts whole life insurance policies that total up to $1,500 in face value for an individual applicant.

Elder law attorneys can discuss strategies, such as the use of a trust, to avoid such an outcome. New Yorks Community Medicaid eligibility rules are set to change April 1, 2021. The advance notice of these changes is affording clients an opportunity to employ strategies that will no longer be available after April. One can protect their home by establishing an irrevocable trust that holds the title of the home. Irrevocable means the terms of the trust cannot be changed or canceled. In an oversimplified explanation, a ”trustee” is named to manage the trust and the trust maker is no longer considered the owner of the assets.

Seek Help With Medicaid Application and Spend-Down

Examples include one’s home, household furnishings, vehicle, and engagement and wedding rings. Professional Medicaid planners can be of great assistance in this situation. While both income and assets are considered for Medicaid eligibility purposes, the limits vary based on the state in which one resides and the program for which one is applying. To be eligible for the regular state Medicaid program, one must meet the criteria set forth for their specific eligibility group.