Can Community Spouse Keep Proceeds of Sale of Home?
Question:
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?
Response:
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 $2,155 (in most states) and the so-called community spouse must spend his down to $130,000 (in 2021, 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.
Related Articles:
How the Community Spouse Can Keep More Assets
Spending Down for Medicaid Eligibility
The Magic of Testamentary Trusts in Medicaid Planning
Asset Limits for Medicaid Coverage of Nursing Home Care
Medicaid Income Rules and Spousal Protections for Nursing Home Residents
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A quit claim deed. Does this have to be executed BEFORE the spouse enters into Medicaid funding? Husband started receiving Medicaid on 2/1/23. I need to sell our home or buy into a senior community.
Kathy,
No. The house is a non-countable asset, so one spouse can receive Medicaid coverage while the other spouse remains in the home. But they should put the house solely in the well spouse’s name so that when she sells it, none of he proceeds are deemed to belong to the spouse who needs Medicaid coverage. Timing can be an issue if the house is sold prior to Medicaid being approved for the ill spouse. It’s often better to wait to sell the house after the approval comes through.
Harry