Nursing home residents do not automatically have to sell their homes in order to qualify for Medicaid (called TennCare in Tennessee), but that doesn't mean the house is completely protected. The state effectively has a lien on the house while the resident is living and will attempt to recover the property after the resident has passed away. Medicaid is very aggressive about estate recovery in Tennessee.
Medicaid (Tenncare) will not count a nursing home resident's home as an asset when determining eligibility for Medicaid (TennCare) as long as the resident intends to return home. In addition, the resident's equity interest in the home must be less than $585,000 (figures are adjusted annually for inflation; this is for 2019).
The equity value of the home is the fair market value minus any debts secured by the home, such as a mortgage or a home equity loan. For example, if your home has a fair market value of $400,000 and an outstanding mortgage of $100,000, the equity value is $300,000. Your equity interest depends on whether you own the home by yourself or with someone else. If you own the home by yourself, your equity interest is the entire equity value. If you own your home jointly with your spouse or someone else, your equity interest is only half of the home's equity value.
The home equity rule does not apply if the Medicaid applicant's spouse or a child who is under 21 or is blind or disabled lives in the home.
While the house may not need to be sold in order to qualify for Medicaid, it will count as an asset if the nursing home resident attempts to sell or dispose of the home, usually by and through an agent under a power of attorney or a trustee. If that happens, the home's exemption will end on the first day of the month after the month in which efforts were made to sell or dispose of the home. In order to sell the home a release will be needed from TennCare, and TennCare will not provide a release unless it is assured that all of the net proceeds will be remitted to TennCare to the extent of TennCare's claim for recovery of amounts paid by TennCare for the nursing home resident's care.
If the house remains in the nursing home resident's name until he or she dies, TennCare can collect on its lien after the nursing home resident dies.
There are steps you can take to protect your home. Contact our Crossville, Tennesse office at 931-250-8585 for more information.