Under Section
6014 of the Deficit
Reduction Act of 2005 some individuals with substantial home equity are
disqualified from receiving Medicaid assistance to pay for long term care. The section is codified at 42
U.S.C. 1396p(f). The idea underlying this provision of Medicaid law is to
force individuals with substantial equity in their homes to tap into that
equity to pay for their care before applying for Medicaid long term care
benefits.
The law initially
set an equity interest of $500,000 as the threshold for disqualification.
States were given the option to increase this level to $750,000 but
Pennsylvania declined to do so. The law also specified that beginning in 2011
the threshold would be adjusted for inflation based on the percentage increase
in the consumer price index -Urban (CPIU).
As a result
of this inflation adjustment, the home equity limitation will be $536,000 in Pennsylvania during 2013. In states like New York, New Jersey, and California
which elected to use the higher level, the limit in 2013 will be $802,000.
This limitation
on the on the value of home equity does not apply if the applicant has a
spouse, a child under age 21, or a child who is blind or disabled, any of whom
lawfully reside in the home. The limitation is also to be waived in the case of
a demonstrated hardship. (See 42
U.S.C. 1396p(f)(4). In Pennsylvania see also 55
Pa.Code § 178.62a).
The
limitation applies to Medicaid long term care benefits provided to nursing
facility residents and through home and community based services like the Aging
Waiver program. It does not affect an individual’s eligibility for other
medically necessary Medicaid covered services. Individuals who are disqualified
for benefits due to the equity limit may be able to reduce their equity
interest through the use of a home equity line of credit or reverse mortgage.
For more
information on the home equity limitation, see my December 2011 blog post here.
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