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Part 4: “Medicaid Guidelines on Expensive Home Is Confusing”
Originally published January 16, 2010 in the Stamford Advocate
Copyright Julie Jason 2010. All rights reserved.
Fairfield County residents who own expensive homes may think that they can’t qualify for Medicaid, but that may not be so. Some homes are exempt and don’t have to be counted to determine Medicaid eligibility, which means that the value of the home will not disqualify you from nursing home assistance.
When I contacted Connecticut’s Department of Social Services (DSS) for an explanation of how to interpret its own report on what is and what is not excluded, I was advised that this was “one of the most complex areas of Medicaid.” So, I caution you up front to educate yourself before taking any action, and be sure to get legal advice (more about that later).
Guidance is provided by a DSS report entitled, “Long Term Care Issues and Medicaid,” published by the DSS Adult Services, Bureau of Assistance Programs. (Go online to www.ct.gov and search “Medicaid.”)
Page 9 of the DSS report provides the following explanation, which does nothing but raise interpretive questions.
“1. Real property used as principal residence by the applicant and his or her spouse is excluded. 2. For applications taken on or after January 1, 2006, property in which the individual has an equity interest of less than $750,000 is excluded.”
If you notice, #1 has no limit on value but #2 does ($750,000 in equity). Does #2 modify #1? Does title matter? It seems to in #2 but not in #1? And, so on.
It turns out that #1 applies only to married couples and #2 applies to single folks. The date reference in #2 is important: before January 1, 2006, homes were excluded regardless of the value, whether or not you were married, according to elder law attorney, K. Gabriel Heiser, author of “How to Protect Your Family’s Assets from Devastating Nursing Home Costs.” The $750,000 equity limit applies to Connecticut and is the highest state limit; other states have limits as low as $500,000, according to Heiser.
Now, if you are married, a residence of any value is exempt, irrespective of which spouse owns the property; if you are single, the $750,000 equity limit applies, explained attorney Jennifer Wilcox, with Pullman & Comley, LLC of Bridgeport.
But, even a single individual can catch a break, as explained on page 11 of the report, under home equity limitations:
“An individual with an equity interest in his or her home of greater than $750,000 is ineligible for the payment of nursing facility and other long-term care services unless any of the following persons is lawfully residing in the home:
a) The individual’s spouse; or
b) The individual’s child who is under 21; or
c) The individual’s child who is considered blind or disabled under the criteria for SSI eligibility.”
So, if you are single, you may indeed be able to keep your residence even if your equity is more than $750,000 if you have a son or daughter under the age of 21 living in the home – or, get married (a suggestion offered in jest).
These provisions open up the opportunity for planning. And, there is more.
The report goes on to say that “the following individual may be eligible to receive Medicaid payment for long-term care services, notwithstanding possessing home equity in excess of $750,000:
a) Individuals who demonstrate, to the satisfaction of the [DSS], that they cannot obtain a reverse mortgage, home equity loan or similar instrument; and
b) Individuals eligible for a Long-Term Care Insurance disregard in an amount greater than or equal to the amount of home equity in excess of $750,000 plus the amount of any other counted assets.”
Then there is another important nuance. Page 10 of the report introduces the concept of “non-home real property” – which includes “property previously used as a primary residence. . . when the individual enters a long term care facility and no relative of acceptable relationship is lawfully residing in the home and the individual cannot reasonably be expected to return to the home.” Non-home real property “is excluded for as long as a written agreement is made to sell the property and any offer which approximates fair market value is not refused. However, in some situations a lien may be placed upon the property.”
All perfectly clear, right?
Click here to read part 5 for illustrations that show how these rules work.
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