Applying for Medicaid; No equity in the home

by Bill

What should you do about your home if you are in a nursing home, applying for Medicaid, already spent down any money in the bank, and the home value is even or underwater? Should you attempt to sell or just walkaway from the home?

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Oct 23, 2012
home mortgage and Medicaid
by: K. Gabriel Heiser

If a person is paying a mortgage on a house and then has to move to a nursing home, the Medicaid rules do not permit a deduction from the monthly income of the homeowner to continue the mortgage. Thus, unless family members chip in to pay the mortgage, the loan will default and the bank will foreclose on the house. This will have no effect on the homeowner's Medicaid eligibility if the home is "underwater," (i.e., the loan exceeds the value of the house), but if the value of the house exceeds the loan, then suddenly the nursing home resident will receive a lump sum of cash upon sale of the house, which will cause disqualification of the resident until that money is spent down or otherwise disposed of.

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