Understanding the Impact of Selling the Family Home on Medicaid

When it comes to elder care and Medicaid benefits, understanding the implications of selling the family home is crucial. Knowing how this decision can affect Medicaid eligibility is essential if you or a loved one is considering this step.

The family home and Medicaid

Medicaid views your principal residence or family home as a non-countable asset. This means that it’s exempt for Medicaid eligibility purposes. Under current Medicaid rules, up to $955,000 of equity in the principal residence is considered exempt and non-countable for eligibility.

Selling the home: The risks

If you’re on Medicaid or looking to get on Medicaid and decide to sell the family home, you’re essentially converting a non-countable asset into a countable one. Here’s why:

  • Once you sell the home, you’ll be sitting on a significant amount of cash from the sale. This cash is countable for Medicaid purposes.
  • If you’re already on Medicaid, having this cash means you could exceed the asset limit, which is typically around $2,000. Exceeding this limit can make you ineligible for Medicaid benefits.
  • If you’re not on Medicaid but are considering it for the future, selling the home and having this cash can affect your eligibility due to the five-year look-back period. This period means that any assets or cash you have can be considered for Medicaid eligibility if they were obtained within the last five years.

What can you do?

If you’re considering selling the family home but also foresee the need for Medicaid benefits, it’s crucial to plan carefully:

  • Consider placing the cash from the sale into an irrevocable Medicaid asset protection trust. This can help protect the assets, but you’ll need to remain healthy for at least five years to bypass the Medicaid look-back period.
  • Always consult with an experienced elder law attorney before making any decisions. They can guide you on the best steps based on your situation.

Wrapping up

Selling the family home can have significant implications for Medicaid eligibility. Before making any decisions, ensure you’re informed about the potential consequences and have sought professional advice.
For more insights into estate planning and elder law, we’d love to see you at an upcoming workshop or check out our Elder Law Academy to learn about important legal matters from home at your own pace.

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