Can Community Spouse Keep Proceeds of Sale of Home?
Spouse is in nursing home on Medicaid. Well spouse is allowed to keep their home. Is the well spouse allowed to sell the home and rent in a cheaper neighborhood or purchase a condo or home elsewhere? Will a quitclaim deed help here?
Yes, the healthy spouse (also called community spouse) can sell the house and do what he wants with the proceeds. Under the Medicaid rules, the nursing home spouse must spend down her countable assets to $2,000 (in most states) and the so-called community spouse must spend his down to $128,640 (in 2020, in most states) before Medicaid will pick up the cost of the ill spouse’s care. However, once Medicaid has been approved, the limit on the community spouse’s assets disappears. He can have any amount without affecting the nursing home spouse’s continuing eligibility. Think of this like dancing the limbo; once you get under the limbo stick, you can stand up again.
As this applies to your question, the community spouse can sell the house and do whatever he wants with the proceeds, whether that’s buy another home or condo or rent. But your question about the quitclaim deed is important. If the nursing home spouse’s name is on the deed, it’s important to transfer sole ownership to the community spouse before the house is sold. Otherwise, the nursing home spouse would be entitled to half the proceeds, which could affect her eligibility for Medicaid and the ability to protect her half of the proceeds.