How Does Home Foreclosure Affect Medicaid Qualification?

by Hattin
(Mississippi)

Question:

My mother's home is in both our names. she is in nursing home on medicaid. there is an equity line on the house that i can not afford anymore.

We are trying to sell the home but have had no luck except offers that are too low for medicaid's rule for selling prices.

If they foreclose on the house will she lose her medicaid or be penalized? we live in mississippi.

Answer:

In most cases, a house that is offered for sale at at least 2/3 of the appraised value and still cannot sell will not be counted as an available asset for Medicaid eligibility purposes. Of course, in this case the home, being your mother's primary residence, would be exempt in any case.

If the bank forecloses on the home, it will first satisfy its outstanding loan and turn over the remaining funds from the sale to your mother. At that point she will indeed have too much money and will be disqualified for Medicaid until she disposes of the excess above $2,000. She can't just give you the money, because that would cause her to be disqualified for a certain number of months under the gift-giving rules.

A better option, depending on the amount of money she gets from the sale, may be to purchase a "Medicaid-friendly annuity," pre-pay her funeral and burial expenses, purchase an interest in your home, or other techniques to convert countable assets (money) to non-countable.

I devote several chapters in my book to this topic, and you may want to read a copy of it to give you some ideas of the options. Best of luck!