What happens to a parent's home when they need care
When a parent needs long-term care, the family home is often the largest thing they own. This guide covers keeping or selling it, how Medicaid looks at a home, estate recovery and reverse mortgages.
General information only. This guide is not medical, legal or financial advice. Talk with a physician, and with an elder-law or financial professional where money or legal papers are involved, about your own situation.
Keeping or selling the home
Some families keep the home so a spouse can stay, or so the person can return. Others sell it to help pay for care. Each choice can affect Medicaid, taxes and family plans in different ways.
Before deciding, families often gather a few facts:
- Who else lives in the home, and whether they plan to stay
- Whether the person may return home after care
- Who holds power of attorney to sign for the person
- How the state Medicaid agency would treat the home or money from a sale
How Medicaid looks at a home
Medicaid for older adults generally looks at both income and resources. States apply federal rules, so how a home counts can differ from place to place.
A spouse who stays at home has special protections, so they are not left without means. Medicaid can also deny long-term care coverage when assets were given away or sold below their value during a look-back period. An elder-law attorney or the state Medicaid agency can explain how these rules apply.
Medicaid estate recovery
After some Medicaid enrollees die, states must seek repayment from their estate. This applies to people who were older when they got care, for services such as nursing home care and care at home. States may choose to recover for other services too.
Federal rules set some protections, and states fill in the details:
- No recovery while a spouse, a child under 21, or a blind or disabled child survives the person.
- States must have a way to waive recovery when it would cause undue hardship.
- Rules on what counts as the estate vary by state; the state Medicaid agency can explain them.
Reverse mortgages
A reverse mortgage lets older homeowners borrow against their home's value. The most common kind is a Home Equity Conversion Mortgage, or HECM. The amount owed generally grows over time.
The CFPB points out a few things to know before applying:
- Borrowers first meet with a HUD-approved counselor to talk through the loan and other options.
- Borrowers keep paying property taxes and insurance, and keep the home in repair.
- The loan generally comes due when the borrower dies or no longer lives in the home.
- A spouse who is not on the loan may or may not be able to stay; ask a counselor how the rules apply.
- Taking the loan too early can leave less money for later, when care costs may be higher.
Frequently asked questions
Federal rules limit when a state can place a lien on the home during a person's life. A lien is not allowed while a spouse or certain other relatives live there. Your state Medicaid agency can explain how its rules apply.
Medicaid can deny long-term care coverage when assets were given away or sold for less than they were worth during a look-back period. An elder-law attorney can explain how this applies to a home.
A reverse mortgage generally comes due when the borrower no longer lives in the home. That can include a long stay away for medical care. A HUD-approved housing counselor can explain the details.
Sources
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