What Happens to your Home if you Need Nursing Home Care?

  • Clifford M. Cohen,
  •   Medicaid
  •   Comments Off on What Happens to your Home if you Need Nursing Home Care?

The basic rule for Medicaid Eligibility in the state of Maryland is that (except for married couples sharing a room and applying for medical assistance within 6 months of entry) , an applicant may have no more than $2,500 in countable assets in his or her own name.  But, in most instances the home will not be treated as a countable asset. Accordingly one does not automatically need to sell their home in order to pay for long-term care.  In most states, including Maryland and the District of Columbia, the home will not be considered a countable asset for Medicaid eligibility purposes as long as the nursing home resident intends to return home. In other states, including Virginia, the nursing home resident must prove a likelihood of returning home.

The home’s non-countable status, however, is only applicable to the extent that the equity in your home attributable to your ownership percentage is less than $552,000. States have the option to raise this limit to $828,000. These numbers are accurate for 2015 and adjusted annually for inflation. Currently the state of Maryland adheres to the $552,000 limitation but the District of Columbia has elected to raise its limit to $828,000.

The equity value of the home is the fair market value minus any debts secured by the home, such as a mortgage or a home equity loan.  For example, if your home has a fair market value of $600,000 and an outstanding mortgage of $100,000, the equity value is $500,000.

But your equity interest depends on whether you own the home by yourself or with someone else.  If you own the home by yourself, your equity interest is the entire equity value.  If you own your home jointly with your spouse or someone else, your equity interest is only half of the home’s equity value. This limitation on home equity does not apply if the Medicaid applicant’s spouse or a child who is under 21, or is blind or disabled, lives in the home.

Remember however, that upon the death of a Medicaid recipient (or the death of their spouse or disabled child, if any, whichever occurs last)  the state may place a lien on their probate estate, for recovery of all monies expended by Medicaid for nursing home services during the lifetime of the Medicaid recipient.

Planning Tip:  For those who plan ahead estate recovery may be avoided and the home may be passed on to children and future generations without any obligation to reimburse Medicaid.