Impact of Home Ownership on Medicaid Eligibility Considering Marital Status & Medicaid Type

Many seniors worry that owning a home will make them ineligible for Medicaid, but they’re probably worrying too much. Most Medicaid applicants who are homeowners can keep their home and qualify for Medicaid Long Term Care. However, Medicaid’s rules governing home ownership are complicated, and they can vary depending on the type of Medicaid Long Term Care you’re applying for, the state where you live, your marital status and your home’s value.

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When Your Home is Exempt from Medicaid’s Asset Limit

To qualify for Medicaid Long Term Care, you have to meet certain financial requirements to qualify for Medicaid Long Term Care, including an asset limit. In most states in 2024, the individual asset limit is $2,000, which means you must have $2,000 or less in countable assets. Most assets are countable – bank accounts, retirement accounts, stocks, bonds, cash and anything that can be easily turned into cash or liquidated. These asset limits can vary by state. California, for example, has no asset limit as of 2024. In Illinois, the asset limit is $17,500.

However, some assets are exempt from the asset limit, meaning they are not counted. The applicant’s primary home will be exempt from the asset limit under the following conditions:

• The Medicaid applicant lives in the home, will continue to live in the home when they are a Medicaid recipient and meets the state’s home equity interest limit.
• The Medicaid applicant/recipient has filed an intent to return home statement and meets the state’s home equity interest/limit.
• The Medicaid applicant/recipient’s spouse, child under 21 or blind or disabled child of any age lives in the home.
• The home is in a Medicaid Asset Protection Trust.
• The Medicaid applicant/recipient has used the Child Caregiver Exemption.
• The Medicaid applicant/recipient has used the Sibling Exemption.

The rest of this article will explain the details of these conditions and how they might apply to your situation, starting with home equity interest in the next section. Before we get there, it’s important to know that a “home” can be a single family house, multi-family building, condominium, co-op apartment, mobile home or even a boat, if that is your primary residence. These rules and exemptions do not apply to second homes or vacation homes, which will be considered assets by Medicaid.

Beware: You can not simply give your home away in order to get under the asset limit and become Medicaid eligible. This would violate the Look-Back Period. For more information on the Look-Back Period, click here.

Understanding Home Equity Interest

Home equity value is the fair market value of the home minus any outstanding mortgage or debt. Home equity interest is the percentage of that home equity value owned by the applicant. For example, if an applicant’s home is worth $500,000 and there is still $100,000 owed on the home mortgage, the home equity value would be $400,000. If the applicant owns the house on their own, their home equity value is $400,000. If the applicant co-owns the house with their sibling with a 50/50 split, the applicant’s home equity interest would be $200,000.

Each state sets a home equity interest limit that helps in determining if the home will be counted or exempt from the asset limit. As we mentioned in the previous section, the home will be exempt from the asset limit if the Medicaid applicant lives in the home, will continue to live in the home once they become a Medicaid recipient and meets their state’s home equity interest limit. Or if the Medicaid applicant/recipient has filed an intent to return home and they meet their state’s home equity interest limit, the home will be exempt from the asset limit.

The table below shows the home equity interest in all 50 states and Washington, D.C.

Remember: When reviewing the information in the table below, recall that this is the home equity interest limit, not the value of the home.