Can You Buy A House While On Medicaid?

Last Updated on August 5, 2023 By Emma W. Thomas

Yes, you can buy a house while on Medicaid. Medicaid is a health insurance program, and it does not restrict individuals from purchasing property. However, eligibility for Medicaid benefits may be affected by the value of the house and other assets.

Can You Buy A House While On Medicaid?

Medicaid, a healthcare program for low-income individuals, is designed to provide medical assistance. If you are on Medicaid, you might wonder if you can buy a house without jeopardizing your eligibility. While the rules surrounding this topic can vary depending on the state, here are seven important factors to consider.

1. Asset and income limits:
   Medicaid eligibility is determined by your income and assets. Generally, you must have limited resources to qualify for the program. However, the value of the primary residence is typically excluded when calculating these limits. Therefore, owning a home while on Medicaid is usually permitted.
2. Home equity:
   While owning a home is allowed, the amount of home equity you have might impact Medicaid eligibility. Each state has its own guidelines regarding home equity limits, which typically range from $600,000 to $900,000. If the equity in your home exceeds the set limit, it could affect your eligibility for Medicaid benefits.
3. Using resources for the home:
   If you are on Medicaid, you can use your income or savings to buy a house, but it might impact your eligibility. Any resources that increase your assets, such as purchasing a new property, can affect Medicaid qualification, especially if your income remains limited.
4. Exempt transfers:
   Medicaid imposes a five-year “look-back” period to prevent individuals from transferring assets just to qualify for benefits. If you transfer ownership of a home or sell it below fair market value during this period, it can result in a penalty during Medicaid eligibility assessment. It is crucial to plan your real estate transactions carefully to avoid penalties.
5. Inheritance and gifting:
   Receiving an inheritance or a gift can be a significant financial event. Such transfers can affect your Medicaid eligibility, even if used for purchasing a home. It is advisable to consult an attorney with expertise in Medicaid regulations to understand the implications better.
6. Living arrangements:
   Your living arrangements can also affect your Medicaid eligibility. If you rent out a property you own, the rental income will be counted as income, potentially affecting your Medicaid eligibility. It is essential to speak with a professional to determine the best course of action depending on your specific situation.
7. Protections for spouses:
   If you are married and your spouse is living in a home you own, protections exist to prevent the spouse from becoming homeless due to Medicaid’s eligibility criteria. For example, laws like the Spousal Impoverishment Protection provide safeguards to ensure the spouse can remain in the house while the Medicaid beneficiary qualifies for assistance.

Buying a house while on Medicaid is possible, but navigating the intricacies can be complex. Understanding the rules, limitations, and asset thresholds set by your state’s Medicaid program is critical. Always consult an attorney or financial advisor experienced in Medicaid planning to ensure you make informed decisions that protect your Medicaid benefits and financial future.

Will I Lose My Medicaid When I Buy A House?

It depends on how you bought the house. You will not lose Medicaid if you buy a house through a mortgage on Medicaid-based income or when you buy your primary residence. However, if you have cash for the down payment, you may no longer qualify for medical aid. Another scenario is when you buy a house out of your benefit state or have a mortgage that’s not in line with the income you claimed; you risk losing your medic aid.

Medicaid Eligibility Criteria

Medicaid is a government program by both federal and state governments that provides health coverage to children, seniors, pregnant women, and individuals with a disability in the U.S.A.  it is the largest source of health coverage in the United States.

To be eligible for Medicaid, you must meet some general and financial requirements and be in the eligibility group. The general requirements for you to qualify for eligibility are that you should be:

• a U.S citizen or meet certain immigration rules
• a resident of the state you are applying in
• have a social security number
• be in the eligibility group: 65 years and above, the beneficiary of supplementary security income SSI, have a permanent disability, blind or pregnant, or be a child, parent, and caretaker of a child
• some states also provide Medicaid to senior citizens with an income that is below 100% of the federal poverty level 

The financial requirements for eligibility of Medicaid long-term care services are you to be either medically needy or fall under the special income level group. For you to be eligible for Medicaid, you must have limited income and assets.

The amount of income you should have for you to be eligible varies by state. Each state has different policies on the eligibility group they cover. When the states determine your financial eligibility for Medicaid, they will count your income from some sources. These sources include:

• salaries
• wages
• pensions
• dividends from bonds and stocks
• interests from certificates of deposits or bank accounts
• veteran benefits
• disability payment, social society retirement, and other benefit payments

Income sources that are not counted include:

• food stamps or any nutritional assistance
• federal government housing assistance
• home energy assistance

Medicaid counts payments that you are entitled to receive even if you don’t receive all of them. If you receive joint income with your spouse, such as rent, the states allocate half the amount to you and the other to your spouse.

Another way to be eligible for Medicaid in over 40 states is to fall under the special income level group. This group specifically aims at people who need long-term care services. To be eligible under this group, you need to meet the general requirements and be in a nursing home or institution for at least 30 consecutive days.

In this group, the income limit is higher compared to the others. The income limit for you to be eligible under the special income level group is up to $ 2130 per month. That is three times higher than the usual limit of $ 710 per month for those receiving SSI. However, the amount of assets that an individual can have is similar to the other avenues and is $ 2 000. If your state determines your eligibility for the special income level group, Medicaid pays for all the care you receive from the beginning of your stay at the nursing home. In some states, you can get long-term care while still living in your home.

In some instances, people who receive long-term care under the special income group are sometimes required to pay part of their nursing home cost. This is referred to as post -eligibility treatment of income. This is because when you are living at a nursing home, everything is provided for, and you have no living expenses. Therefore, the state deducts your bills, expenses, and allowance for personal needs from your income, and what is left is your share of cost. You will, therefore, have to pay this share to the nursing home.

To qualify for Medicaid under the medically needy category, you need to be in one of the 33 states covering this group. In these states, people with high medical expenses and high income are eligible for long-term care services. Medically needy people have too much income to qualify for Medicaid under other pathways but can spend down to their state income limits. When a person incurs the obligation to pay medical expenses in a way that they will spend down their income to reach their state limit, then that person is eligible for Medicaid.

As an example of how this works, if Mr. Joe has an income of $1200 and the limit for his state is $500, then his income is too high to qualify for Medicaid. This means that he has a spend-down amount of $700, which is the difference between his income and the state’s limit. If he incurs medical expenses of more than $700, Mr. joe can qualify for Medicaid as medically needy.

What You Need To Know About Medicaid Financial Asset Assessment

During the Medicaid application process, you will be required to provide documentation of all the assets you have. Some assets are counted to determine eligibility, while others are not. Some of the assets that are counted include: 

• stocks and bonds
• savings accounts and checkings
• certificates of deposits
• property other than your primary residence
• additional motor vehicles if you have more than one

Assets that are not counted include:

• your primary residence
• household belonging and personal property
• one motor vehicle 
• life insurance whose value doesn’t exceed $1500
• assets held in specific kinds of trusts

sometimes in some states, the value of your home equity is counted if it exceeds a certain amount. Mostly, if you have kids under 21 or if applying this rule causes undue hardship to you, then it doesn’t apply.  There are other considerations for eligibility that are quite complex and will depend entirely on our situation and state.

What Is The Medicaid Estate Recovery?

This is a requirement by federal law for states to recover the amount of Medicaid spent on your behalf for long-term care services from your estate after you die. In this case, your estate refers to your home, personal property, and other assets that you owned.

Estate recovery happens after a Medicaid recipient who was 55 years and older or permanently institutionalized dies. Some estates are exempt from estate recovery, such as if the spouse is still alive.

Conclusion

Buying a house while still on Medicaid can be hard but not impossible; if you don’t have a primary residence and have a family, getting one is a good idea since it secures your family’s future.

If you are receiving long-term care at a nursing home and have no spouse or kids, buying a home may not make sense. This is because the state will still recover the house after your death. At the application stage, make sure you ask as many questions as you possibly can for you to get the most out of your Medicaid. We hope that this post was insightful to you as you seek long-term care.

References:

https://yourfloridaprobatelawyer.com/can-you-own-a-house-and-get-medicaid-in-florida/
https://blog.rehabselect.net/property-ownership-and-medicaid-common-myths-debunked