If you or a loved one is planning to apply for Medicaid, often the family home is central to your financial concerns. Fortunately, the state of Texas allows applicants to own a primary residence (up to $595,000 in equity) and still qualify.
However, things can get a bit complicated if you try to sell or rent the home – or if you have income-producing investment properties. Not only that, the state may attempt to recoup your Medicaid benefits from your estate after your passing. This is called the Medicaid Estate Recovery Program (MERP). There’s a chance they could obtain your family home as part of MERP in probate court.
Keeping the Family Home
If keeping the home in the family is your primary goal, we can assist you in setting up a Lady Bird Deed (or Enhanced Life Estate Deed). This conveys the property to new owners at the death of the current owner. Recognized by Medicaid in Texas, using this deed will ultimately protect your loved one’s home from the Medicaid Estate Recovery Program (MERP).
Selling the Family Home
When selling the home, you want to avoid the transfer penalty imposed by the Texas Health and Human Services Commission. This occurs when you gift or sell an asset for less than fair market value within five years of applying for Medicaid. They will divide the value of the asset by $213.71 (2020 rate). The result is the number of days the state withholds payment. Our licensed real estate experts can help you balance Medicaid compliance and profitability for your property.
Managing Real Estate Income
If rental property profits push your income above Medicaid thresholds, we can help you open a qualifying income trust. Your excess income is directly deposited each month into a restricted funds account and it’s no longer considered part of your assets for the purposes of qualifying for Medicaid. However, you can use these funds to pay medical bills and care costs, such as nursing home bills and Medicare premiums.