Page 6

Louisiana Medicaid Eligibility Manual Eligibility Factors

Reissued October 21, 2025 Page 6 of I-1670 Replacing January 27, 2025 Revised/added text indicated by underscore Deleted text indicated by “**” holder retains the power to sell the property, its value as a resource is its full equity value because nothing of value was transferred since the owner can terminate the life estate at any time and restore full ownership to himself or herself.

If an individual transfers real property but retains or reserves a life estate, the value of the remainder interest, not the life estate would be used in determining whether a transfer of assets have occurred and in calculating the period of ineligibility.

The purchase of a life estate interest in another individual’s home may be a transfer of assets if the FMV was not received and the purchaser did not actually reside in the home for a continuous period of one year after the date of the purchase of the Life Estate/Usufruct.

If the applicant has not resided in the home for at least one year after purchase, the entire amount used to purchase the life estate is treated as a transfer of assets. The amount should not be reduced or prorated to reflect an applicant’s

residency for a period of less than a year.

If the applicant resided in the home for one year after the date of purchase, the value of the life estate interest purchased in another individual’s home should be counted as a resource in determining Medicaid eligibility unless it can be excluded as the applicant’s home.

Even if the applicant resided in the home for one year after the date of purchase, the purchase amount of the life estate interest cannot be greater than value of the life estate’s interest. The difference between the purchase amount for a life estate interest and value of the life estate’s interest should be treated as a transfer of assets.

The value of the Life Estate Interest must be determined to establish if fair market value was received.

To establish the value of the life estate interest, use the following steps:

1. Determine the current market (equity) value of the property to which the applicant/beneficiary purchased the Life Estate interest.