Transfer of Your Home and Medicaid Eligibility

When it comes to applying to Medicaid, there is a lot more to it than just filling out and submitting a form. Because Medicaid is a federal program operated at the state level, there are a number of standards and eligibility requirements that must be met in order to qualify. In addition, different planning strategies must be put in place in order to safeguard an applicant’s home and other assets. Failing to comply with the program’s eligibility standards and policies could result in being turned away from the program, leaving individuals without a plan for their care. This is why it is so important to meet with a qualified Medicaid planning attorney. They will be able to create a financial plan for eligibility and asset preservation as well as prepare the documentation needed to receive Medicaid.

There are a few assets that are not used in determining an individual’s eligibility for Medicaid. Among these is a person’s home. For many people, their home is their greatest and most important asset. As such, Medicaid does not include a home in determining an applicant’s asset limit, nor does the program call for the sale of a home to cover the cost long-term care. However, it is important to understand that there are specific rules at both the federal and state level that must be adhered to in order to avoid penalties. In order for a home to be considered a noncountable asset, the applicant or their spouse must be living in the home, the home’s value must be less than the state’s total equity value limit (in New York this is set at $814,000), and lastly, the title of the house must under applicant’s name or their spouse’s name.

Medicaid is a federal program that is operated at the state level. As such, each state varies in the way it administers penalty periods for applicants who transfer or gift assets prior to applying for the program. In New York, for example, Medicaid reviews any transfers or gifts made five years prior to the date an application is submitted. Any asset transfers made during this time can result in an ineligibility period. The applicant will not be eligible for Medicaid during this time. This period is determined by a formula of dividing the total amount transferred during the look-back period by the average monthly cost of a nursing home in the applicant’s state. As an example, the average monthly cost of a nursing home in New York is approximately $13, 800. If an applicant were to make an asset transfer worth $46,000 during the look-back period, they would be ineligible for Medicaid for three months.

In order for a home to be exempt from Medicaid’s asset limit, an applicant or their spouse must currently be living in the home and must be named in the house’s title. As such, an applicant’s home cannot be transferred or gifted under most circumstances without the applicant being deemed ineligible for a certain interval. However, there are certain exceptions that allow for a home to be transferred without incurring a penalty period. If an applicant wishes to transfer ownership of their home to a spouse or a child who is under 21 years of age, they may do so. A transfer is also allowed in cases where the applicant has a child who is blind, or permanently disabled. Other individuals that the home can be transferred to include children who have lived in the home for at least two years prior to the start of an applicant’s long-term care and have been providing care for them or a sibling who has been living there for at least a year prior to the start of long-term care. Transferring or gifting a home to any one of these individuals is acceptable and will not result in any penalties.

Some states do allow for an applicant to arrange for the return of their gifts and transfers, thereby allowing them to at least partially reduce their penalty period. However, logistically speaking, this is not always possible for a number of reasons. Recipients of a monetary gift may have already spent the money or may refuse to return it. The same can apply to asset transfers. The matter is also complicated by the fact that even if the gifts are returned, the applicant may find themselves passing Medicaid’s asset limit and be disqualified anyways. However, the reacquired assets may allow them to fund their care short-term and give them time to make more suitable preparations for meeting Medicaid’s asset limit.