Selling your home is a big step in life no matter what you plan for your future. And if you are a Medicaid recipient, you may wonder how selling your home will affect your profits.
This Redfin article outlines options when selling a home during Medicaid. Whether you’re selling a home in Atlanta, Georgia or a townhouse in Columbus, Ohio, you should know about the potential impact on Medicaid coverage.
Medicaid eligibility when selling your home
If you need to sell your home during Medicaid, you may wonder if you will lose your profits. The short answer is that it depends. Whether selling your home will affect your Medicaid eligibility depends on how much revenue you earn from the sale.
Medicaid is testing the means to determine your eligibility. Medicaid usually uses income or assets limits to determine whether they are eligible. In many states, the individual limit is around $2,000. Depending on the state and household situation, it can be high or low. If home sales exceed the asset limit, you may not qualify for Medicaid until your assets are reduced or exempt according to state guidelines.
One important factor to consider is that “major homes” are not considered as assets. However, the revenue from selling a house is counted towards your assets. If you are buying a new major home with revenue from this sale, you will not lose Medicaid.
How does Medicaid know if you sell your home?
Because Medicaid eligibility is based on income and assets, states have several ways to identify financial changes. These methods are generally the same as those used when you first apply for Medicaid. Common ways home sales can be identified are as follows:
Public Records: Real estate transactions are public records, so state Medicaid offices can access this information when needed. Financial Disclosure: When renewing Medicaid, you must disclose your finances, including real estate transactions. State and federal agencies: Medicaid often coordinates with other agencies.
Can you sell your home and keep Medicaid?
It’s possible, but it depends on your revenue and what you do with them. In most states, the money you receive from selling your home will count towards your Medicaid asset limit unless you use it in a way that is exempt under Medicaid rules. If revenue exceeds the state’s asset limits, you may lose your Medicaid eligibility until your assets are reduced or exempt.
Here are some options that you can keep Medicaid while selling your home:
Buy a new major home
If you are selling your home to buy new ones, you can maintain Medicaid coverage. For example, using revenue from home sales to buy a new home is not usually counted for Medicaid eligibility. Some states allow shorter and sometimes months to use these revenues to buy new major residences. Please note that timelines vary widely depending on the state.
Use additional assets
If you haven’t purchased a new home, you may have earned money from the home sale. These additional assets count towards Medicaid eligibility and may temporarily lose Medicaid. However, there are several ways to spend these assets in exemptions or eligible categories.
Included purchases may include paying medical expenses that are not covered by insurance or repairing a vehicle that is essential for transportation. However, eligible categories and spending restrictions vary from state to state. Because spending rules are complex, it is best to consult a financial advisor or Medicaid expert to know what to expect.
Consult with a lawyer or a Medicaid expert
Medicaid is a complex topic with different laws in different states. Consulting with an attorney specializing in Medicaid or other professional Medicaid planners will help you understand the laws and regulations when selling your home.
Can you give a house instead of selling it?
Giving your home with Medicaid may sound like the right idea. But it’s complicated and you might still lose Medicaid. In most states, Medicaid has a “lookback” period of 60 months (5 years). This means that transferring assets below fair market value can result in penalty periods that delay Medicaid eligibility and profits.
There are several exemptions in the rules, but it is always important to talk to Medicaid experts and other experts who understand the complexity of these rules.
FAQs about selling your home during Medicaid
Can I sell my home below market value?
Generally, no. Medicaid may consider the difference between the selling price and the fair market value of a home as a “gift.” This may result in ineligible penalty periods. Rules vary by state, so check with a Medicaid expert before listing your home below market value.
What is “intention to go back”?
The intention to return to Japan is an official declaration that you temporarily live outside your home, such as a physical rehabilitation facility, but intend to return to your home. This ensures that your primary home is an exemption asset under Medicaid requirements.
Is Medicaid involved in the home sales process?
No, Medicaid does not oversee home sales. However, revenue from sales can affect eligibility and must be reported correctly.
