As of January 1, 2022, the homestead equity limit for a Medicaid applicant who is not married and who either applies for the nursing home Medicaid program or “waiver” home care Medicaid program will increase to $636,000 (presently $603,000). Thus, if the home equity (the difference between the appraised value and any debts owed secured by the home) limit is less than that, it is a non-countable resource in determining Medicaid eligibility (which is means-tested).
As a result, the vast majority of Texans who have a home and apply for one of those Medicaid programs will not have their home count as a resource. There is an unlimited equity limit if the Medicaid recipient is married (so even a home with an equity of $800,000 would not count as a resource if married). However, although the home is usually a non-countable resource, the government has a right to make a claim against the home (commonly referred to as “estate recovery”) after the death of the Medicaid recipient to the extent Medicaid benefits were advanced. Estate recovery is avoided if the Medicaid recipient is survived by his or her spouse; or by a child of the Medicaid recipient if the child is under 21 or the Medicaid recipient’s child is blind or disabled or in cases where there is a demonstrative hardship for the beneficiaries. There are also options such as enhanced life estate deeds (also known as Ladybird Deeds), transfer on death deeds, using exceptions to the transfer penalty rules, etc. that can avoid a successful claim by the state for Medicaid benefits advanced. It should be noted that even if the Medicaid applicant’s equity limit exceeds the threshold, creative options can sometimes be taken (i.e., increasing debt and purchasing non-countable resources).
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