Real Estate and Medicaid (Part 2)

In my blog post last week, I addressed a common question about Medicaid when someone owns two homes.  “Knowing that there is an asset limit in order to qualify for Medicaid but there are also certain exempt assets, can I exempt both homes and still qualify for benefits?”  The answer is no, but that doesn’t necessarily mean you can’t keep both homes.

The primary residence is considered an exempt asset.  The second home is countable.  For a single applicant assets must be below $2000 and for a married couple the non Medicaid spouse can keep 1/2 of the countable assets up to a limit of $154,140 (for 2024).   Selling the second home and spending down the proceeds is one solution but not the only one.  As I said, there may be a way to keep the second home.

There are a couple of options.  One is to borrow enough money against the equity of the home so that the remaining equity plus other countable assets drop the asset total below Medicaid’s allowable limit.  The borrowed funds then need to be spent down.   Paying down other debt is one way to do that if there is other debt, such as a mortgage on the primary residence or credit card balances.  

Another is to utilize a Medicaid compliant annuity to convert the asset into a stream of income.  In the case of a married couple, if the annuity is purchased by the non Medicaid applicant spouse, the income is not counted in determining eligibility for the Medicaid applicant spouse.  The annuity payments must begin no later than 30 days after the annuity is purchased so the spouse will have the funds to then pay down the loan on the second home.

The second option does not involve taking a loan.  I’ll explain that next week.