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OK, I Can Keep My Home – But Can I Sell It?

A very common question I get from clients and prospects in the following situation.  We are working towards qualifying Betty’s husband, Joe, for nursing home Medicaid.  I explained to Betty that as long as she is living in the marital home she can keep it.  But she will lose some of Joe’s income which will go to the nursing home.  “But I can’t afford to keep the home so what happens if I sell it”, she asks. “ Will Joe lose his Medicaid eligibility?”

 The short answer is no — if Betty follows our instructions carefully.  First of all, she shouldn’t sell the home until Joe is approved for Medicaid.  Why?  Because we don’t want what is a non-countable asset to turn into a countable one.  If Betty’s house is worth $500,000, then she’ll have to spend down those assets until she has no more than a shade under $110,000 before Joe receives Medicaid.  That doesn’t leave her a whole lot to live on and is why I always tell clients that in long term care planning timing is everything.

 When Joe reaches Medicaid eligibility there is what is called a “division of assets”.  The State determines what Betty is entitled to keep.  The house is the biggie.  That means that as long as she lives she does not have to use any of those funds to pay for Joe’s care.  So, if she sells the house, while it does mean that these assets are now countable for Medicaid purposes, that applies only to Betty, if at some point in the future she applies for benefits.  It does not affect Joe’s Medicaid eligibility.  This is very important to Betty because, as I said, she will lose some of Joe’s income and she doesn’t have much  in the way of investments.  She can’t afford the cost of maintaining the home and has determined that renting will cut her monthly expenses considerably.  Betty was relieved to hear what I had to say as I could see the stress just drained from her face.  She was onboard and gladly will accept our guidance.