Medicaid has very strict rules regarding how much income the beneficiary can receive. Assets from a home sale are considered income for the purpose of Medicaid eligibility. While a current Medicaid beneficiary is typically able to keep their primary residence if there is an intent for the beneficiary to return home from long term care at some point sale of the home is not allowed. So, will selling a home mean Medicaid repayment for a current Medicaid beneficiary? Yes, Medicaid will require funds from the sale of a home (even a primary residence) to be used for Medicaid repayment.
Will gifting of a home avoid Medicaid repayment?
If a home is gifted or sold for below fair market value Medicaid will consider the recipient ineligible for Medicaid until the penalty (assessed by the fair market value of the asset) is repaid. Medicaid will not force the sale of the recipients primary residence if the recipient intends to return home from long term care, or if a qualified family member is still living in the residence. If the recipient does not intend to return home from long term care, or if the family member in residence decides to sell the house Medicaid will seize the assets of the sale for Medicaid repayment.
If the home is sold or gifted before applying for Medicaid will I be penalized?
Medicaid has a look back period starting from the day Medicaid benefits are applied for. Starting in 2006 this look back periods extends five years back from the date Medicaid benefits are applied for. If the home is sold or gifted (along with any other assets) during that five year period the assets resulting from the sale or gift will be considered when determining Medicaid eligibility.