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Selling your house is a major life step, no matter what you have planned for the future. And if you’re a Medicaid recipient, you may be wondering how selling your house impacts your benefits.
In this Redfin article, we’ll outline your options when selling your house while on Medicaid. Whether you’re selling your house in Atlanta, GA, or your townhouse in Columbus, OH, here’s what to know about the potential impacts on your Medicaid coverage.
Medicaid eligibility when selling your house
If you need to sell your house while on Medicaid, you may be wondering if you’ll lose your benefits. The short answer is, it depends. Whether selling your home impacts your Medicaid eligibility depends on how much proceeds you make from the sale.
Medicaid is means-tested to determine your eligibility. Usually, Medicaid uses income or asset limits to determine if you qualify. In many states, the limit for an individual is around $2,000. It may be higher or lower depending on your state and household situation. If home sale proceeds exceed the asset limit, you may become ineligible for Medicaid until your assets are reduced or exempted following your state’s guidelines.
One important factor to consider is that your “primary home” isn’t considered an asset. However, any proceeds from selling your home are counted toward your assets. If you’re purchasing a new primary home with the proceeds from this sale, you may not lose Medicaid.
How will Medicaid know if you sell your house?
Medicaid eligibility is based on income and assets, so states have several ways of identifying any changes to your finances. These methods are generally the same ones used when you first applied for Medicaid. Common ways a home sale may be identified include:
- Public records: Real estate transactions are public record, so state Medicaid offices can access this information if needed.
- Financial disclosures: When renewing Medicaid, you’ll likely need to disclose your finances, which include real estate transactions.
- State and federal agencies: Medicaid often coordinates with other agencies, which may notify them of changes to your finances.
Can you sell your house and keep Medicaid?
It’s possible, but it depends on your proceeds and what you do with them. In most states, the money you receive from selling your home counts toward Medicaid’s asset limit, unless you use it in a way that’s exempt under Medicaid rules. If the proceeds exceed your state’s asset limit, you may lose Medicaid eligibility until your assets are reduced or exempted.
Here are some options that may allow you to keep Medicaid while selling your home:
Buy a new primary home
If you’re selling your home in order to buy a new one, then it’s possible to keep your Medicaid coverage. For example, using the proceeds from your home sale to purchase a new home typically doesn’t count towards your Medicaid eligibility. Some states allow a short window of time, sometimes a few months, to use those proceeds to purchase a new primary residence. Keep in mind that timelines vary widely by state.
Spend down additional assets
If you’re not purchasing a new home, it’s likely you’ll have proceeds from the sale of your home. These additional assets count toward your Medicaid eligibility, and you may temporarily lose Medicaid. However, there are some ways you can spend down these assets in exempt or eligible categories.
Some eligible purchases may include paying for medical expenses not covered by insurance or repairing a car that’s critical to your transportation. However, eligible categories and spend-down limits vary by state. Spend-down rules are complex, so it can be a good idea to consult with a financial advisor or Medicaid specialist so you know what to expect.
Consult with an attorney or Medicaid professional
Medicaid is a complicated topic with laws varying from state to state. Consulting with an attorney who specializes in Medicaid or other professional Medicaid planners can help you understand the laws and regulations when it comes to selling your home.
Can I gift my home rather than sell it?
Gifting your home while on Medicaid may sound like the right idea. However, it’s complicated, and you may still lose Medicaid. In most states, Medicaid has a “look-back” period of 60 months (5 years). This means any transfer of assets below fair market value can result in a penalty period that delays your Medicaid eligibility and benefits.
There are some exemptions to the rule, but it’s always important to talk with a Medicaid specialist or other professional who understands the complexities of these rules.
FAQs about selling your home while on Medicaid
Can I sell my home below market value?
Generally, no. Medicaid may consider the difference between the sale price and the home’s fair market value as a “gift.” This may cause a penalty period of ineligibility. Rules vary by state, so check with a Medicaid professional before listing your home below market value.
What is “intent to return?”
Intent to return is a formal declaration that you are temporarily living outside of your home, such as in a physical rehabilitation facility, but intend to return to your home. This ensures your primary home is still an exempt asset under the Medicaid requirements.
Is Medicaid involved in the home selling process?
No, Medicaid doesn’t oversee the home sale. However, proceeds from the sale may affect your eligibility, so you’ll need to report them correctly.
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