Even with the recent cooling of the real estate market, home prices have been on an impressive trajectory for the last several years. If you are a senior in retirement, could a significant increase in your home impact your eligibility for Medicaid?
Beyond the impact on your carrying costs, such as rising property taxes, your higher home value could have an impact in other areas, specifically Medicaid. With the average cost of nursing home care currently exceeding $10,750 a month in New Hampshire, qualifying for Medicaid assistance can help defray this often crippling expense.
Unlike Medicare, Medicaid has income and resource limits to access benefits. In New Hampshire, that resource limit is only $2,500. Part of the Medicaid eligibility determination in New Hampshire includes a five-year “look back” period of your finances, including any sale or transfer of assets.
The good news is that, for most individuals, an increase in their home value will not impact their Medicaid eligibility. Generally speaking, your primary residence is not counted as an asset. But there is an equity limit of $688,000 for 2023 (which generally increases each year). This limit applies if you are a single applicant and there are no qualified individuals such as a spouse or caregiver living in the home. For individuals who have lived in their home for some years, the appreciated value may put them over the equity limit and render them ineligible for Medicaid. If home equity remains under $688,000, you may still be able to qualify for Medicaid nursing home benefits. However, as a homeowner who is single with no qualified individuals residing in the home, you might be required to sell or rent your home to remain eligible. Importantly, the primary residence is protected for a community spouse, regardless of the equity value – this is just one of the many protections for a married couple under the Medicaid rules.
If you sell your home, that revenue does become a countable asset. This is not to be confused with any home sale tax exemption that may apply. These are two different calculations and areas of the law. Purchasing another primary residence within a given period will exclude the portion of the proceeds needed for the new home, but any remaining revenue will be countable, and steps will need to be taken to spend the assets down to the applicable resource limit before qualifying for Medicaid.
A home can also be considered as an asset to be targeted as part of an estate recovery plan after a Medicaid recipient’s death. As is the case with other states, the New Hampshire Department of Health and Human Services (DHHS) operates under federal and state law directives to recover Medicaid funds that were spent for a person’s nursing home care from a Medicaid recipient’s estate. A home that has appreciated significantly over the years can add considerable value to an individual’s estate, making it more likely that the state will file a claim against the estate as a creditor. It is very important to note, however, that the state cannot seek Medicaid recovery when there is a living spouse, and recovery is limited to the estate of the Medicaid recipient and does not extend to the estate of the recipient’s spouse.
You can learn much more about Medicaid rules for nursing home benefits in our downloadable guide to Understanding NH Medicaid Rules.
Comprehensive estate and benefits planning involves careful consideration of a number of complex laws and rules. Consulting with a knowledgeable estate planning attorney can help you take the right steps to protect your estate and the home you’ve worked so hard for. Contact us to learn more.