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Homestead Exemption

To be eligible for Medicaid in 2016, a Medicaid applicant must have resources (or assets) no greater than $14,850.00 in total. Despite this low threshold many individuals are Medicaid recipients despite owning a valuable asset – their home. This is achieved because of the homestead exemption.

A homestead is defined as the primary residence occupied by a Medicaid applicant or Medicaid recipient and/or members of his or her family. Family members may include the Medicaid applicant’s or Medicaid recipient’s spouse, minor children, certified blind or certified disabled children, and other dependent relatives. The homestead includes the home, land and integral parts such as garages and outbuildings. The homestead may be a condominium, cooperative apartment or mobile home. Vacation homes, summer homes or cabins are not considered to be homesteads. i

New York Social Services Law states that the home shall be exempt and shall not be taken into consideration in determining a person’s eligibility for medical care, services and supplies available from Medicaid. However, the individual shall not be eligible for Medicaid if the individual’s equity interest in the homestead exceeds eight hundred twenty eight thousand dollars ($828,000.00) in 2016.

Example: Sally and Stuart of Smithtown, NY are both 95 years old. Sally must enter a nursing home where she is expected to remain. She applies for Medicaid and at the time of application she owns her home and it is worth $900,000.00. Sally is eligible for Medicaid and the value of the house does not count — her house is an exempt homestead. Although her equity interest in the homestead exceeds $828,000.00, the home equity limitation does not apply because Stuart (the spouse of the Medicaid applicant/recipient) is lawfully residing in her homestead.

Example: Karen of Kings Park, NY is 67 years old and a widow. Karen has three children including Karl (a “surprise” baby) who is 20 years old who lives with Sally in the Kings Park home. After suffering a stroke, Karen entered a nursing home where she is expected to remain. She applies for Medicaid and at the time of application she owns her home and it is worth $900,000.00. Karen is eligible for Medicaid and the value of the house does not count — her house is an exempt homestead. Although her equity interest in the homestead exceeds $828,000.00, the home equity limitation does not apply because Karl (the child of Karen under age 21) is lawfully residing in her homestead.

To be continued….
Aaron E. Futterman, CPA, Esq. is a partner in the law firm of Futterman & Lanza, LLP with offices in Smithtown, NY and clients throughout Suffolk, Nassau, Queens, Brooklyn, Bronx, Richmond, New York, Westchester and Rockland Counties. He concentrates his practice to Elder Law, Medicaid Planning, Medicaid Applications, Estate Planning, Probate, Estate Taxes, and Estate Administration.

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