Understanding Medicaid Home and Community Services: A Primer, 2010 Edition. Disqualification for Long-Term Care Medicaid Coverage for Individuals with Substantial Home Equity


Under Medicaid, an applicant’s home, regardless of its value, is generally an exempt resource for eligibility purposes. The DRA-2005 does not change this basic rule, but for applications filed on or after January 1, 2006, it limits the exemption to individuals whose equity interest in their homes is $500,000 or less, or at state option, a higher amount not to exceed $750,000. For those with home equity above the amount the state has set, the state must deny Medicaid payment for long-term care services (including those provided through HCBS waiver programs). States that choose to use an amount higher than $500,000 need not use this amount on a statewide basis, recognizing potentially wide variations in the cost of housing statewide. Also, states need not apply the higher amount to all eligibility groups.

The new limits on home equity do not apply to an individual if the individual’s spouse, child under age 21, or blind or disabled child is living in the individual’s home. If the home equity exceeds the maximum amount, individuals may use reverse mortgages or home equity loans to reduce their total equity interest in the home. Beginning in 2011, the limits on equity will increase from year to year based on the percentage increase in the consumer price index for urban areas, rounded to the nearest $1,000.

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