Can You Own a Home and be on Medicaid?

If you own a home in New York but are unsure if you meet the income and asset requirements for Medicaid, rest assured that homeownership does not disqualify you from receiving benefits. The value of your primary residence is exempt from the calculation of assets when determining Medicaid eligibility. To qualify for this exemption, either you or your spouse must reside in the home or intend to return to it if you live in a nursing home. It's important to note that upon the death of a Medicaid recipient, the state may seek to recover the cost of care from their estate through the Medicaid estate asset recovery program, which could include the house.

Medicaid and Homeownership

In New York, owning a home does not automatically disqualify you from receiving Medicaid benefits. Medicaid eligibility is determined by income and asset limits, not by homeownership status. As long as you meet the income and asset requirements, you can own a home and still qualify for Medicaid. As of 2024, for a single person applying for institutional or nursing home Medicaid, the income limit is $1,732 per month, and the asset limit is $31,175. For a couple, the income limit is $2,351 per month, and the asset limit is $42,312. These limits may be adjusted annually based on changes in the federal poverty level.

Primary Residence Exemption - Home Equity Limit

The value of your primary residence in New York is exempt from the calculation of assets when determining Medicaid eligibility. This means that the equity in your home will not be counted towards the $31,175 asset limit for a single person or $42,312 for a couple. However, there is a home equity limit of $1,071,000 in 2024. Home equity is the value of the home minus any outstanding debt in it. If your home equity exceeds this limit, you may not qualify for Medicaid unless you take steps to reduce your equity, such as taking out a home equity loan or reverse mortgage. For example, if you own a home worth $200,000 and have $20,000 in savings, only the $20,000 will be considered when assessing your assets for Medicaid eligibility.

Primary Residence Exemption- Living or Intending to Return to It

To qualify for the exemption, you or your spouse must physically reside in the home. This means that the home must be your primary place of residence, where you typically live and sleep. If you are married and only one spouse is applying for Medicaid, the other spouse must live in the home for it to be exempt. If both spouses are applying for Medicaid and they live together in their home, it will also be exempt. However, if neither spouse lives in the home due to medical reasons or other circumstances, it may not qualify for the exemption unless you prove an intent to return. Because of the need to primarily live in the home, this exclusion from the Medicaid asset limit does not apply to second homes or investment properties.

If you are currently residing in a nursing home or other medical facility, you must intend to return to your home for it to be exempt from the asset calculation. This means that even if you are not physically living in your home at the time of your Medicaid application, it can still be exempt if you plan to return there once your health allows. To prove your intent to return home, you may need to provide documentation from your doctor or the nursing facility stating that your stay is temporary and that you plan to return to your residence.

Primary Residence Exemption - Family Member Resides in It

Similarly, your home can be exempt from asset calculation if a spouse, child under 21, certified blind or disabled child, or other dependent relative family member lives in the home. This provision allows for the primary residence exemption to apply when a Medicaid applicant or recipient is not physically living in the home, but a close relative is. The family member must be a spouse, minor child, or adult child who is blind or disabled. In some cases, a sibling with an equity interest in the home who has lived there for at least one year before the Medicaid applicant's institutionalization may also qualify.

It's important to note that while the primary residence exemption can help protect your home when applying for Medicaid, it does not necessarily shield it from estate recovery after your death. New York's Medicaid program may still seek to recover the cost of your care from your estate, including your home, unless certain exceptions apply.

Medicaid Estate Asset Recovery Program

After a Medicaid recipient passes away, the state has the right to pursue repayment for the services and benefits provided during their lifetime. This process is known as the Medicaid Estate Asset Recovery Program (MERP). MERP typically applies to Medicaid beneficiaries who were 55 years or older when they received services, or those who were permanently institutionalized regardless of age.

While a Medicaid recipient's primary residence is often exempt from asset calculations when determining eligibility, it may still be subject to MERP after their death. If the Medicaid recipient owned a home at the time of their death, the state may seek to recover Medicaid expenses from the value of the house. This means that even though the home was protected during the recipient's lifetime, it could be sold or used to repay Medicaid after they pass away. For example, if a Medicaid recipient owned a home worth $300,000 at the time of their death and the state paid $150,000 for their care, the state may place a lien on the house to recover the $150,000. If the house is sold, the state would be entitled to receive the $150,000 from the sale proceeds before any remaining funds are distributed to the recipient's heirs. In some cases, the state may not pursue recovery if certain exemptions apply, such as if a spouse, minor child, or disabled adult child is still living in the home. Additionally, some states may allow the use of a Medicaid Asset Protection Trust to shield a home from MERP, but this must be done well in advance of applying for Medicaid.

Strategies to Protect Your Home

Using trusts to shield assets is one potential strategy to protect your home from Medicaid Estate Asset Recovery. By transferring ownership of your home to a properly structured trust, you may be able to shield it from being considered part of your estate after your death. The most common type of trust used for this purpose is an irrevocable Medicaid Asset Protection Trust (MAPT). With an MAPT, you transfer ownership of your home to the trust, and the trust becomes the legal owner of the property. You can still retain the right to live in the home and maintain control over it during your lifetime, but it is no longer considered part of your estate. In order for the MAPT to not trigger the Medicaid lookback penalty period, it must be created and funded at least five years before applying for Medicaid. If you transfer your home to an MAPT less than five years before applying for Medicaid, it may still be counted as an asset and subject to recovery. It's important to note that creating an MAPT is a complex process with significant legal and financial implications, so it's crucial to consult with an experienced elder law attorney before proceeding.

Another option to protect your home from Medicaid Estate Asset Recovery is to transfer ownership to family members, such as your children or siblings. By gifting your home to your loved ones, you remove it from your estate and potentially shield it from recovery after your death. For example, if you transfer ownership of your $300,000 home to your adult daughter five years before applying for Medicaid, it will no longer be part of your estate and may not be subject to MERP. However, it's essential to understand that transferring ownership of your home can have significant tax and legal consequences for both you and the recipient. If you transfer your home less than five years before applying for Medicaid, it may be subject to the program's five-year lookback period and potentially disqualify you from receiving benefits for a particular period of time. Additionally, transferring your home to a family member means that you no longer have legal control over the property, which could lead to disputes or unintended consequences down the line. If the family member encounters financial problems, gets divorced, or passes away, your home could be at risk of being lost or sold. Before considering transferring ownership of your home to a family member, it's crucial to consult with an elder law attorney and carefully weigh the potential risks and benefits.

Medicaid and homeownership can have complex rules, given the requirements in order for the home's value to be exempt from asset calculation and the fact that a home can still be subject to Medicaid reimbursement after your death. If you own a home and still seek to apply for Medicaid, consulting with a Medicaid lawyer is crucial. Should you need assistance, we at the Law Offices of Albert Goodwin are here for you. You can call us at 212-233-1233 or send us an email at [email protected]. Our office is located in Midtown Manhattan.