Medicaid long-term care benefits are a
primary source of payment of the cost of care for many seniors who need
services and supports in their homes or in nursing facilities. According to the Pennsylvania Health Care
Association, 47% of our nation's $275 billion in annual spending on long-term care --excluding
unpaid family caregiving—is paid for by Medicaid. See: PA Long-Term
Care Statistics.
Medicaid long-term care benefits are
available only to those who qualify both medically and financially. In
Pennsylvania an applicant is allowed no more than $8,000 in countable assets.
This means that most homeowners would be disqualified if their home equity were counted. But Medicaid has special rules that apply to your home.
Prior to the enactment of the Deficit
Reduction Act of 2005 (DRA) Medicaid disregarded the full value of an
Medicaid long term care applicant’s primary home as long as the home owner was
residing there or evidenced an intent to return to the home.
Section 6014 of the DRA [codified at 42
U.S.C. 1396p(f)] made a fundamental change in this treatment. Now some
individuals with substantial home equity are disqualified for Medicaid
long-term care assistance. The idea behind the change is to force individuals with substantial
equity to use that resource to pay for their care before they can get financial help from Medicaid.
The law allowed states to choose an amount between
$500,000 and $750,000 as its equity interest limitation. Pennsylvania chose $500,000
as the threshold for disqualification. 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).
2014 Equity Limit is $543,000
As a result of this inflation adjustment,
the home equity limitation will be increased to $543,000 in
Pennsylvania during 2014. In states like New York, New Jersey, and
California which elected to use the higher level, the limit in 2014 will be
$814,000.
The Equity Limit may not apply to you
This limitation 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 only to Medicaid long-term care benefits provided to nursing facility residents and through home and
community based services like Pennsylvania’s Aging
Waiver program. It does not affect an individual’s eligibility for other
medically necessary Medicaid covered services (soemtimes called "regular Medicaid").
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.
2 comments:
Do you have the list of states that elected to have a house equity limit of $814,000? Thanks.
Sorry, I'm unaware of the existence of any such list.
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