When a parent moves to assisted living or a nursing home
A hard season for any family. Here's how the house fits in, the Medicaid questions to ask before you sell, and how to take it one step at a time.
No obligation. No pressure. Takes about 2 minutes.
The short answer
You don't have to decide about the house the week your parent moves. If your parent may need Medicaid for long-term care, talk to an elder-law attorney before the house is sold or given to anyone, because Medicaid reviews transfers made in the 60 months before an application and has its own rules on home equity and estate recovery. When a sale does make sense, your parent signs, or an agent under a power of attorney that covers real estate.
Step by step
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1
Give it a little time
Keep the house insured, locked and the bills paid while everyone catches their breath. If it will sit empty, tell the insurance company, because leaving a home vacant can suspend part of the coverage.
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2
Ask about Medicaid before anything changes hands
When someone applies for Medicaid long-term care, the state looks back 60 months for transfers made for less than fair market value, like giving the house to a child. Those transfers can delay coverage. There is also a home equity limit for long-term care coverage, with exceptions such as a spouse still living in the home.
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3
Understand estate recovery
For people 55 and older, states must seek repayment from the estate for nursing facility services and some other long-term care. They can't recover while a spouse, a child under 21, or a blind or disabled child survives. An elder-law attorney can explain how this affects the house.
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4
Sort out who can sign
If your parent can still make decisions, they sign the sale papers. If not, an agent under a power of attorney that covers real estate can sign; our power of attorney guide explains what to check. If there's no power of attorney, ask an attorney what your options are.
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5
Know the home-sale tax rule for time in care
For the home-sale gain exclusion, if your parent can't care for themselves and lived in the home at least 12 months of the 5 years before the sale, time in a state-licensed care facility counts toward the 2-year residence requirement. Our capital gains guide covers the rest.
Sources: CMS: Transfer of Assets in the Medicaid Program · Medicaid.gov: Estate Recovery · 42 U.S.C. § 1396p · IRS Publication 523 · Virginia SCC: Homeowners Insurance Guide
This page gives general information. It isn't legal, tax or Medicaid advice. Each state applies Medicaid rules to your parent's own facts, so talk to an elder-law attorney or your state Medicaid agency before selling or transferring the house.
Cash offer vs listing
Example: a $250,000 home
| Offer | $205,000 |
|---|---|
| Repairs | $0 |
| Commissions | $0 |
| Closing costs | $0 |
| You walk away with | $205,000 |
| In 7 to 14 days | |
| Sale price | $250,000 |
|---|---|
| Repairs | about $8,000 |
| Commissions | about $13,800 |
| Closing and holding | about $6,000 |
| You walk away with | about $222,200 |
| In 60 to 90 days | |
Example only. Your numbers depend on your home and market.
When the family is ready, we'll put a cash offer next to what listing could net, so everyone is looking at the same numbers.
Frequently asked questions
Will selling the house affect my parent's Medicaid?
It can. Medicaid reviews transfers in the 60 months before an application, and how a sale plays out depends on your parent's situation and your state's rules. Talk to an elder-law attorney or your state Medicaid agency before you sell.
Can we sell the house to a family member for a low price?
Be careful. A sale or gift for less than fair market value can count as a transfer that delays Medicaid long-term care coverage. Get advice from an elder-law attorney first.
Do we have to decide right away?
No. Getting a cash offer and a listing estimate is free and comes with no obligation, so the family can look at both and decide when you're ready.
Who are you?
We are real estate investors based in Baltimore, helping homeowners since 2016. We buy houses directly for cash. We are not a licensed real estate brokerage and do not list homes ourselves; if listing could get you more, we show you the math so you can choose.