Rule Change: Protecting a Home and Medicaid Benefits

Many people who require in-home care, assisted living, or nursing home care rely on Medicaid programs to help pay for their care when they do not have enough funds to pay for it on their own.  Historically, the Medicaid applicant’s home (if not in a revocable living trust), has been a non-countable/exempt asset for Medicaid eligibility.  This means that a Medicaid applicant could reduce their other assets to the eligibility limit and keep their home. 

Medicaid policy says that a homestead is where a person lives that they either own, are buying, or have a life lease or life estate interest in.  As of February 1, 2019, the rule that directs how to treat a homestead has changed.  Prior to February, the rules said that a home that a person formerly lived in was excluded (a non-countable/exempt asset).  The new rule changes “formerly lived in” to “lived in prior to the time the individual left the property.”

This raises the question, how is “formerly lived in” different from “lived in prior”?  Arguably it means the same thing, but then there would no purpose behind the revision to the rules.  Therefore the revised language suggests that the Department of Health and Human Services (DHHS) is going to interpret it to mean, it was lived in immediately prior to leaving, and that furthermore, it will additionally add the requirement that “left the property” means that the person left the property to enter a facility, when determining whether the applicant lived in the home “prior to the time” they left the property. 

With this interpretation, a person who moves from their home to a care facility would be unaffected.  But for someone who moves out of their home to go live with a child or moves from their home to senior independent living may be viewed as not having lived in their home prior to the time they left the property.  If this is the result, the value of the home will be countable towards the $2,000 limit that a single person would have to spend down to for Medicaid eligibility.   

Because this change is so new, we have not seen whether the DHHS is expanding its inquiry when reviewing applications about the timing of leaving the home.  If you or your loved one no longer lives in their home and is concerned about keeping it when filing for Medicaid benefits, please contact us to discuss planning options.

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