Lisa Dunn

What does selling a home have to do with Medical Assistance?
More than you might think!

When the county takes applications for Medical Assistance, it's their job to look at eligibility and to protect the system against fraud. If you sell your home below the tax assessed value given to your home by the county, that will send up a red flag for the application process. Here's the irony: because of the real estate market over the last few years, it's become common to sell a home below the tax assessed value. The price at which the county assesses the value of your home, is not necessarily what a buyer would be willing to pay for it. 

This isn’t a new rule.  The rule was created so seniors don't sell their home to a friend or family member for $100, and then have the government (Medical Assistance or Medicaid) pay for health care.  The rule protects the system and the taxpayers from fraud.

We know that tax assessed values of properties tend to lag behind market values.  In 2004 when home prices were selling well above the tax assessed value,this rule didn't cause seniors a problem.  Now that it seems more common for homes to sell below the tax assessed value, it has become an issue for many adult children and seniors who are selling homes due to health issues.

I hear stories all the time from seniors who have been denied for Medical Assistance. Not because they don't financially qualify, not because they don't need health care services, but because the home is on the market below the tax assessed value, or was sold below the tax assessed value.  

So, what should you do?

1. Plan ahead. If there's even a remote chance the homeowner is going to need some kind of health care in the next several years, make sure you follow these steps Work with a REALTOR who specializes in working with seniors (Look for the CSA, SRES, or RSA designations).  They’ll be able to make referrals to professionals that can walk you through this process.
2. Know and work with a good elder law attorney. Not only can they potentially help you protect assets, but also ensure you don't do anything today in the sale of your home that could (i) cause you to pay more taxes (ii) have a lien placed on your home (iii) limit benefits available to your elderly loved one. 
3. Build a body of evidence to show you are selling (or at least trying to sell) the home for fair market value. Keep all of your documentation in a safe place. In addition to keeping a copy yourself, you may have your Realtor scan your documents, so they’ll be stored electronically for at least 7 years.  Real Estate Brokers are required to keep copies of their files for 7 years, and an appraisal and records of tax assessed values and list prices are within the realm of what a broker could keep.

Here's the good news. When you partner with a savvy Senior Real Estate Specialist and an elder law attorney, those professionals will be able to help you navigate through this health care maze. The good news is you don't have to know it all.