Will renting Mom's house out affect her Medicaid eligibility?

A fellow caregiver asked...

We have moved my mother-in-law from her home to a independent living facility where her meals are provided, light housekeeping and 24 hour on premise emergency help. It is also down the street from us. We are renting out her home. She is 95. Should she go into a nursing home in the future, and her funds run out, how will owning the home, but renting it out, affect Medicaid.

Expert Answer

Both owning and renting out her house might affect your mother-in-law's future eligibility for Medicaid nursing home coverage. That's because Medicaid is intended for people with very low income and few assets.

First, let's look at her ownership of the house. To qualify for Medicaid nursing home coverage, a person must have very few assets (usually, no more than $2,000 for a single person). In many states, home ownership by a single person (unmarried, divorced, or widowed) disqualifies that person from Medicaid coverage of nursing home care. In some states, however, a single person's home does not count as an asset if the person applying for Medicaid states her intention to return to the home when she is able to do so (even if there is no realistic chance that she ever will). But this applies only to a home the person lives in. So, even if you live in one of these states with a "return-home" exception, your mother-in-law is unlikely to qualify because the house she owns is not her residence but merely an income property. If by some chance she did qualify for Medicaid nursing home coverage under her state's rules despite owning the property, the Medicaid program is supposed to collect -- when your mother-in-law dies -- out of the value of the house the entire amount Medicaid has paid for her nursing home care.

If owning the house does not disqualify your mother-in-law from Medicaid nursing home coverage, the income she gets from renting the house might affect her eligibility. If the rental amount is more than the income eligibility limit for your state's Medicaid nursing home coverage, the rent would disqualify her. If the rent is not so much that it disqualifies her from eligibility, the money she gets from rent would have to be paid to the nursing home, with Medicaid making up the rest of the nursing home costs. To find out the details of Medicaid eligibility in your state, contact your state's Medicaid program. Go to the federal government's Benefits.gov website and choose your state. This will take you to a page with contact information for your state's Medicaid program, as well as information about local offices.