Medicaid is a program that helps millions of Americans by providing the finance to pay for healthcare. That includes elderly adults, low-income adults, pregnant women, children, and people with disabilities. With healthcare costs climbing, Medicaid is vital for many, many people and helps them have a quality of life that would be otherwise impossible. It is funded by states in partnership with the federal government and administered by the states.
In order to qualify, an individual has to prove that they meet the asset threshold. The rules vary from state to state. In most cases, the figure is $2,000 for one person and $3,000 for a couple but it can be as high as $15,750 and $23,100 (New York State) so you may need to get advice from a Medicaid expert.
For the majority of people, their house is their biggest asset and worth way above the asset threshold, but if it is their primary residence it is exempt. But what happens if you want to sell the house? Does this automatically take you out of Medicaid? Let’s see what your options are.
We become attached to our family home and it is a psychological wrench to sell it. But the cost and effort required to maintain a home are substantial and for many people on Medicaid holding on to their home becomes too much. There’s a problem though. The median price for a home in the US has risen to over $400,000 and even if you still have a large mortgage the profit on the sale is going to make your assets worth many times the maximum allowable for Medicaid.
There are legal ways to protect the proceeds from your house sale from having a negative effect on your qualified assets. If the profits are to be used to address those aspects of care that Medicaid fails to provide for – home care or extra therapies, for example – or for paying off debts then they will not form part of your qualified assets.
This requires planning and it’s often best to discuss the possibilities with an elder law attorney before going ahead.
Once you receive the proceeds of the sale you only have 10 days within which to inform Medicaid of your change of circumstances. After that, you need to spend or protect the profits by the end of the following month in order to remain on Medicaid. That’s why planning is so vital.
You may think that one way out is to gift your home to someone else as it is no longer your residence. But with certain exceptions – gifting to a spouse, a child, or a sibling who has resided in the property for a year or more, for instance – there are conditions that preclude this. You would lose your Medicaid if you were to do this.
This is another area where planning is a must. If you gift the house five years or more before you apply for Medicaid then you can leave that inheritance for your family without losing out on Medicaid.
Selling your house below the market value is also regarded as gifting. If you sold your home for less than the maximum asset requirement hoping to be able to qualify for Medicaid the difference between that and the market value would be regarded as a gift and you would lose out on Medicaid for a period of time.
This is one thing you don’t need to worry about. While you could lose your Medicaid if you sell a home, they won’t ever seize your assets. If you can then spend or protect the proceeds before the end of the month following the sale your Medicaid should be uninterrupted.
The profits on your property sale will undoubtedly take you beyond the asset limits set by Medicaid but you can “spend-down” the profits over the following month to remain on the Medicaid plan. Paying off debts – mortgage, credit cards, and the like – is allowable as is paying outstanding medical bills, making car payments, and so on. You can also spend-down by paying for a family member who is willing to be your carer, accessing additional therapies, improving your lifestyle, and so on.
The process of selling when on Medicaid is the same as any other house sale:
- Get an appraisal: Before you do anything else you need to have an accurate idea of your house’s market value. A good real estate agent should be able to help and you may need a licensed real estate appraiser. You won’t be able to market your property or plan your spend-down without this information.
- Prepare for showings: To effect a quick sale your home wants to be in as good a condition as possible. So it needs to be thoroughly clean, well maintained, and have no major repairs necessary.
- Accept an offer and close: If the above has been done properly you should get more than one offer and you need to choose the best which depends on the buyer’s position as well as the actual price offered. The time between acceptance and closing may be protracted.
If you have decided to sell your house you may not have the time and energy to go through the whole process, especially if you are unwell or if your home is no longer suitable for you. There is a way to sell your home quickly, by selling your home to a cash buyer.
We can save you all the worry and stress involved in selling your house. We will make a cash offer for any property in Massachusetts, regardless of condition. We can close in as little as 2-3 weeks, saving you months on a traditional sale. To find out more about how selling your home to us works or to contact us about your home, click here.