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16.8 Real Property

16.8.1 Home/Homestead Property Multi-unit Dwelling Non-Motorized Trailer Homes Exempt Home Property Home Equity Over $750,000.00 Sale of Home Property Life Estate



Real property means land and most things attached to the land, such as buildings and vegetation.

16.8.1 Home/Homestead Property

A home is a place of abode and lands used or operated in connection with it. In urban situations the home usually consists of a house and lot. A home can consist of a house and more than one lot. As long as the lots adjoin one another, they are considered part of the home.


Homestead property may have more than one building or house on it. This applies to urban home owners as well as farm families. In farm situations the home consists of the house and buildings together with the total acreage property upon which they are located that is considered a part of the farm. There will be farms where the land is on both sides of a road and considered a part of the home.


Land should be considered part of the home property if it is not completely separated from the home property by land in which neither the individual nor his or her spouse has an ownership interest.


Easements and public rights of way (utility lines, roads, etc.) do not separate other land from the home plot.


If land is completely separated from the home property by land in which neither the individual nor his or her spouse has ownership interest it should not be considered part of the homestead property. Multi-unit Dwelling

When a Medicaid fiscal group member lives in one unit of a multi-unit dwelling and owns all of the units, exempt all of the units and the property they are on. Consider the whole multi-unit dwelling as the group member's home. Non-Motorized Trailer Homes

A non-motorized trailer home is considered real property, regardless of whether or not the member owns the land that it is on. Consider the non-motorized trailer home:


  1. Home property (see Section 16.8.1 Home/ Homestead Property) if the member currently lives in it or had lived in it before entering an institution, or


If the member owns the land that the non-motorized home is sitting on, consider it and any other buildings on that land as part of the homestead.


  1. Non-home property if the member does not live in it or had not lived in it prior to entering an institution.


If the non-motorized trailer home is listed for sale, it is considered unavailable (see Section 16.2 Assets Availability). Exempt Home Property

Although home property is an exempt asset under the conditions described in this subsection, there are limits on divesting home property (see Section Homestead Property).


Non-Institutionalized Person. For a person who is not residing in an institution, the home is exempt as long as the person resides in it, or intends to return to it. There is no time limit for an intended return. The home remains exempt even if the person rents out part of it while he or she continues to reside there.


Institutionalized Person. When a person resides in an institution, the home is exempt if one of the following conditions is met:


  1. His or her spouse or dependent relative resides in the home. The dependency of the relative may be of any kind, such as financial or medical. The relative may be father, mother, daughter, son, grandson, granddaughter, in-laws, stepmother, stepfather, stepson, stepdaughter, grandmother, grandfather, aunt, uncle, sister, brother, stepbrother, stepsister, half-sister, half-brother, niece, nephew, or cousin.

  2. The institutionalized person expresses his or her intent to return to the home. If he or she is able to form an intent but unable to express it, determine his or her intent through other available evidence. Other evidence includes:

  1. His or her written statements.

  2. His or her oral statements made before incapacitation. Accept reports of these statements made by family members.

  3. Accept reports of his or her intent made by an authorized representative. If there is no evidence he or she disagrees with the statement, accept the authorized representative's statement.


If he or she appears unable to form an intent but has not been judged incompetent by a court, accept a family member's statement as evidence of his or her intent.


If he or she has been judged incompetent, accept the intent statement of his or her guardian. Use the guardian's intent statement even if it differs from the member’s.


If neither condition #1 nor #2 is met, the property is no longer the principal residence and becomes non-home property. Home Equity Over $750,000.00

Effective January 1, 2009, persons who apply for Medicaid coverage of long term care (LTC) services (i.e., Institutional, community waivers, Family Care, Partnership or PACE) are not eligible for LTC services if the equity interest in their home is greater than $750,000. He or she is still eligible for card services if all other eligibility requirements are met.


This restriction does not apply if a spouse, minor, or disabled child resides in the home.


The $750,000 LTC home equity limit can be waived in situations whereby the imposition of this eligibility requirement results in an "undue hardship” for the individual. When determining whether or not an undue hardship exists, follow the same undue hardship guidelines outlined in Section 22.4 Undue Hardship.


This policy applies regardless of whether or not the applicant or member lists the home for sale.


The equity value of a home is the current FMV minus any encumbrance on it. An encumbrance is a legally binding debt against the home. This can be a mortgage, reverse mortgage, home equity loan, or other debt secured by the home.


Note: Property tax assessments can be used to determine a property’s FMV if both the local agency and applicant/member agree that it accurately represents the price it would sell for on the open market in that geographic area. If both parties do not agree, statements from one or more realtors could be sufficient. If the local agency requests a comparative analysis, they are required to pay for it. Regardless of what process is used, the member always has the right to appeal the agency decision if they think it is incorrect.


Example 1: Bob is a 66 year old bachelor, living in his own home who applies for Medicaid on February 1, 2009. His home has a FMV of $760,000 with no encumbrances. Bob meets all other Medicaid eligibility requirements and is certified for Medicaid effective February 1, 2009. In October 2009, Bob’s health deteriorates and he applies for a community waiver program. That application is denied because Bob’s equity interest in his home exceeds the LTC eligibility limit by $10,000.


On December 15, 2009 Bob reapplies for a community waiver program and reports that on December 1, 2009, he took out a $12,000 home equity loan and used the entire loan proceeds to purchase exempt burial assets and furniture for his home. Bob’s December 15, 2009 application for community waivers is approved because Bob’s equity interest in his home is now $748,000, which is below the LTC eligibility limit, and he meets all other Medicaid eligibility requirements.


Example 2: Dave is 75 years old, married and living with his wife Ruth in their home which sits on a 75 acre parcel of property. The entire property qualifies as homestead property. It has a FMV of $1,000,000 with no encumbrances. On March 5, 2009, Dave applies for Family Care. The Family Care application is approved because even though Dave’s home equity value exceeds the $750,000 LTC eligibility limit, his wife resides in the home, which negates the $750,000 LTC home equity restriction.


This home equity provision applies only to individuals who apply for LTC Medicaid (i.e., nursing home, Family Care, etc.), on or after January 1, 2009. It does not apply to individuals who are current members of Medicaid LTC programs as of January 1, 2009, as long as they remain continuously eligible for LTC Medicaid after that date. A Medicaid LTC member who becomes ineligible for Medicaid LTC after January 1, 2009, for a calendar month or more, would be subject to the $750,000 home equity limit during any subsequent reapplication for Medicaid LTC programs. Sale of Home Property

Money from the sale of real property is an asset. When the property that is sold is a homestead, disregard the proceeds if they are placed in an escrow account and used to purchase another home within three months. Life Estate

A life estate allows an individual to gift a home or other possession but retain certain property rights for his or her lifetime. Generally a life estate provides an individual the right to possess and use a gifted property, and to make money from it. The person does not have the title to or the right to sell the property. He or she usually may not pass it on to his or her heirs as an inheritance. He or she also has the right to sell his or her interest in it. He or she is liable for all costs of the property such as taxes and repairs, unless the will (or deed) states otherwise.


When property is conveyed to one person for life (life estate holder) and to another person (the remainder man), both a life estate interest and remainder interest are created. When the life estate holder dies, the remainder man holds full and unconditional title to the property and can dispose of it as he or she wishes (fee simple). Life estate values need to be determined for divestment calculation.


Example 3: Sidney gifted away his $100,000.00 home to his nephew Frank, but retained a $30,000.00 life estate, the divested amount is $70,000.00.


The life estate interest is an unavailable asset when determining Medicaid asset eligibility for Sidney. However, the remainder interest is an available non-exempt asset for Frank, the remainder person, for Medicaid eligibility determinations.


Determine the value of the remainder interest for the date you are determining Medicaid eligibility. To do this, use the age of the life estate holder on the date that you are determining eligibility for the remainder person. Also use the property's FMV as of that same date. Then select the remainder multiplier (the one that corresponds to the age of the life estate holder) from the life estate table and multiply the FMV by that number. The result should be the value of the property's remainder interest for the remainder person as of the date that eligibility for Medicaid is being determined for that person.


To determine the value of a life estate or remainder interest:

  1. In the Life Estate and Remainder Interest Table (see Section 39.1 Life Estate and Remainder Interest), find the line for the person's age as of the transaction date.

  2. Multiply the figure on that line in the Life Estate or Remainder column times the fair market value to determine the value of the life estate or remainder interest.


When a life estate holder moves off the property and the property is rented, follow the instructions in Section 15.5.3 Rental Income for counting the rental income.


If a remainder person sells the property for which a life estate is retained, the life estate holder is not entitled to any of the payments.


However, if the life estate holder gives up his or her life estate to secure the sale of the property, then the life estate holder would be entitled to some portion of the proceeds from the sale of the property. Treat money received as a result of property settlement as an asset (see Section 16.7.10 Property Settlement).




This page last updated in Release Number: 17-01

Release Date: 05/05/2017

Effective Date: 05/05/2017