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Refer to SECTION 18.4 SPOUSAL IMPOVERISHMENT ASSETS and SECTION 18.4.1 SPOUSAL IMPOVERISHMENT ASSETS INTRODUCTION for the definition of institutionalized spouse and home exemptions when Spousal Impoverishment policies apply. 16.8.1.4 Long-Term Care Home Equity Limit Persons who apply for Medicaid coverage of long-term care (LTC) services (i.e., Institutional, Family Care, Family Care Partnership, PACE, or IRIS) are not eligible for LTC services if the equity interest in their home is greater than the long-term care home equity limit. They are still eligible for card services if all other eligibility requirements are met. See SECTION 39.4.8 LONG-TERM CARE HOME EQUITY LIMIT for the annual limit. This restriction does not apply if a spouse, child under age 21, or disabled adult child resides in the home. The LTC home equity limit can be waived in situations whereby the imposition of this eligibility requirement results in an "undue hardship” for the individual. When determining whether or not an undue hardship exists, follow the same undue hardship guidelines outlined in SECTION 22.4 UNDUE HARDSHIP. This policy applies regardless of whether or not the applicant or member lists the home for sale. The equity value of a home is the current FMV minus any encumbrance on it. An encumbrance is a legally binding debt against the home. This can be a mortgage, reverse mortgage, home equity loan, or other debt secured by the home. Note: Property tax assessments can be used to determine a property’s FMV if both the local agency and applicant/member agree that it accurately represents the price it would sell for on the open market in that geographic area. If both parties do not agree, statements from one or more realtors could be sufficient. If the local agency requests a comparative analysis, they are required to pay for it. Regardless of what process is used, the member always has the right to appeal the agency decision if they think it is incorrect.

Example 1: Bob is a 66 year old bachelor, living in his own home who applies for Medicaid on February 1. His home has a FMV of $760,000 with no encumbrances. Bob meets all other Medicaid eligibility requirements and is certified for Medicaid effective February 1. In October, Bob’s health deteriorates and he applies for IRIS. That application is denied because Bob’s equity interest in his home exceeds the LTC eligibility limit. On December 15, Bob reapplies for a IRIS and reports that on December 1, he took out a $12,000 home equity loan and used the entire loan proceeds to purchase exempt burial assets and furniture for his home. Bob’s December 15, application for IRIS is approved because Bob’s equity interest in his home is now $748,000, which is below the LTC equity limit, and he meets all other Medicaid eligibility requirements.

Example 2: Dave is 75 years old, married and living with his wife Ruth in their home which sits on a 75 acre parcel of property. The entire property qualifies as homestead property. It has a FMV of $1,000,000 with no encumbrances. On March 5, Dave applies for HCBW LTC Medicaid, which is approved. Even though Dave’s home equity value exceeds the LTC equity limit, his wife resides in the home, so the LTC home equity limit does not apply.