Real property includes any land and related outbuildings needed to operate the home.
Real property that is recorded under a separate deed is considered a separate piece of property even though it is bordering the resident property.
Real property that is separated into several sections by a road or other barrier (such as a power line) and is recorded under one deed is considered a single piece of property.
Real property includes cooperative and condominium apartments, mobile homes, motor homes and houseboats used as a residence.
There are two types of real property: resident or non-resident. Generally, the equity value for both types of property is considered an available resource unless excluded under other DHS rules.
The individual is responsible for verifying the FMV of the real property. The CAO then uses these steps to verify the value:
1. Determine and verify the current market value using:
A written and signed appraisal from a knowledgeable source such as a real estate broker or bank, savings and loan association, mortgage company, or similar lending institution, and
Property tax assessment records.
NOTE: A property tax assessment record alone should not be used to determine the current market value (CMV). Not all municipalities use 100% of a property’s fair market value when determining the property tax. The CAO will multiply the assessed value by the common level ration factor to determine the FMV of the property.
See www.revenue.pa.gov. Click on "Forms and Publications" then click on "Forms for Individuals", then click on "Realty Transfer Tax Forms". The current and historical Common Level Ratio (CLR) factors will be available. When obtaining an appraisal and reviewing the County tax records, be sure to use the most current evaluation to determine the CMV of a property.
Example: Armstrong County’s common level ratio factor is 2.46. John's non-resident property is assessed at $40,000. $40,000 times 2.46 equals $98,400. The property’s FMV is $98,400.
2. Get written proof from the individual of the amount of any debt against the property. The individual must verify the debt with personal records, creditor’s records, or a copy of an agreement or note showing the amount and date when the debt occurred. Verification includes, but is not limited to:
Tax notices.
Mortgage books showing the balance.
Document showing lien balances.
Statements received at settlement itemizing transfer costs.
3. Determine the equity value by subtracting all liens, mortgages, and any other encumbrances recorded against the property from the CMV. Subtract all encumbrances and debts including, but not limited to:
Balances of mortgages, including primary, second, third, etc.
Home equity and other home improvement loans.
Tax liens for unpaid taxes.
Mechanical liens.
NOTE: A Mechanics’ lien is a guarantee of payment for contracted services, such as building a new home, for either real or personal property.
An individual can own real property in any of these five ways:
Sole Ownership – One individual owns all of the rights to the property and can sell the property.
Tenancy by the Entireties – This is usually the way a husband and wife take title to a property. Each individual owns an equal share of the entire property. To sell the property, the other owner must agree. If a spouse dies, the surviving spouse automatically becomes the sole owner.
NOTE: Only a husband and wife may own property by Tenancy by the Entireties.
Tenancy in Common – Two or more individuals each own a separate share of the property, with separate titles. The shares are not necessarily equal or half. Each owner is free to sell or borrow against his share of the property. If one owner dies, his or her share becomes part of his or her estate. One owner may sell, transfer or otherwise dispose of his or her share of the property without permission of the other owner(s). One owner cannot sell, transfer or otherwise dispose of the entire property.
Joint Tenancy with Right of Survivorship – There are two or more owners, each owning an equal share. When one of the owners dies, his share passes to the surviving owners. All owners must agree to sell the property. A joint tenant reserves the right at any time to file a petition to partition that would end the joint tenancy and give the joint tenant his/her share of the property.
Life Estate – An individual who owns property transfers ownership of that property to another person. The individual who is transferring ownership keeps certain rights to that property for the rest of his or her life (or the life of another individual). A life estate usually entitles the life estate owner (the grantor) to possess, use, and get profits from the property as long as he or she lives. However, actual ownership of the property has passed to another individual. For more information, see Section 440.423 for treatment of Life Estates.
The principal place of residence is the dwelling the individual considers his or her established or principal home.
The CAO will exclude the resident property of an individual with no spouse or dependent relative if all of these conditions are met:
It was the individual’s principal place of residence (home) before institutionalization.
The equity in the home is not more than the excess home equity limit listed in Chapter 468 Appendix A, Determining MA Eligibility and Payment Toward the Cost of LTC Facility Services (see Section 440.422, Excess Home Equity, for information on how excess home equity impacts eligibility) and
The individual or the individual’s representative states in writing the “intent to return” to the property. See Section 440.421 Intent to Return to Residence Statement, for specific verification requirements.
The CAO will determine if the individual owns real property, in whole or in part, that was his principal place of residence (home) or if the real property is now the principal place of residence of his spouse or his dependent relative.
NOTE: A relative includes, but is not limited to a son, daughter, grandson, granddaughter, stepson, stepdaughter, in-laws, mother, father, stepmother, stepfather, grandmother, grandfather, aunt, uncle, sister, brother, stepbrother, stepsister, half-sister, half-brother, niece, nephew or cousin. The CAO will not verify relationship unless there is reason to question the person’s statement. Dependency includes, but is not limited to, financial and medical dependency. The CAO will accept the statement of the individual or dependent relative unless there is reason to question the truth of the statement, such as conflicting information.
A person’s home is resident property in which the person has an ownership interest that may include:
The actual shelter.
The land on which the shelter is situated.
Related buildings on such land.
NOTE: An individual may not own the shelter itself. For example if an individual owns land and lives on that land in a trailer owned by another individual, the land is considered the home.
An individual’s resident property (home) is a countable resource. Do not count the home if the CS or dependent relative lives in the home and it is the principal place of residence or if the individual has the intent to return. A contact must notify the CAO if the property is sold.
Example: Sandra has been admitted to an LTC facility. She applies for MA LTC. She owns her home with an equity value of $100,000. Her home can be excluded as her principal residence if she states in writing that she intends to return there.
See Section 440.421 Intent to Return to Residence Statement.
Under Section 1917(e) of the Social Security Act, the home becomes a countable resource if it is placed in a revocable trust.
NOTE: The CAO will revise the original Resource Assessment if it was artificially increased by making an excluded resource an available resource and then later, at the time of application, that resource is reported as an excluded resource.
An institutionalized individual’s home that was the principal place of residence before the individual was institutionalized can be an excluded resource if the person signs an “intent to return” statement. The CAO bases the intent to return home only on the individual’s statement or the statement of someone acting on the individual’s behalf. It is not based on the individual’s medical condition or prognosis.
The individual (or someone acting on his or her behalf) only needs to give the statement of intent one time. If the individual is incapable of giving the statement of intent, accept a statement of intent to return from an individual with authority to act on the individual’s behalf. The CAO does not need to review at each renewal the individual’s intent to return home.
If the individual’s intent to return home changes and the property is placed for sale or transferred, the individual must notify the CAO within 10 calendar days.
The Deficit Reduction Act of 2005 enacted by Congress in February 2006 prohibits payment of MA LTC services to persons with an equity interest in their home of more than the excess home equity limit listed in Chapter 468 Appendix A, Determining MA Eligibility and Payment Toward the Cost of LTC Facility Services.
Regulations exclude the home in the MA LTC eligibility determination. An individual will no longer be eligible for payment of LTC services if the individual's equity interest in his/her home is more than the excess home equity limit listed in Chapter 468 Appendix A, Determining MA Eligibility and Payment Toward the Cost of LTC Facility Services.
The limitation of home equity value equal to or less than the excess home equity limit in Chapter 468 Appendix A, Determining MA Eligibility and Payment Toward the Cost of LTC Facility Services applies to:
Applicants who apply for payment of LTC services on or after March 5, 2007
Recipients, at each eligibility renewal, who applied for LTC services on or after March 5, 2007.
The limitation of home equity value equal to or less than the excess home equity limit in Chapter 468 Appendix A, Determining MA Eligibility and Payment Toward the Cost of LTC Facility Services does not apply to:
Applicants and recipients whose spouse lives in the home.
Applicants and recipients whose child is under the age of 21 and lives in the home.
NOTE: If the home is the residence of a child under 21, the CAO must complete a renewal when the child turns 21. A renewal is necessary to determine whether the equity value in the home exceeds the limit listed in Chapter 468 Appendix A, Determining MA Eligibility and Payment Toward the Cost of LTC Facility Services.
Applicants and recipients whose child is blind or meets Social Security’s definition of permanently and totally disabled.
Recipients who were receiving MA LTC services before March 5, 2007 and who have otherwise remained continuously eligible for MA LTC services since March 5, 2007.
Applicants and recipients who are granted an undue hardship waiver from this requirement.
The excess home equity policy affects eligibility for payment of LTC services only.
Individuals found ineligible for payment of LTC services due to excess home equity continue to be reviewed for MA in an LTC related category. They remain eligible for all other services except LTC services.
NOTE: A waiver from this policy may be granted when a person cannot access home equity due to a demonstrated hardship. See Section 440.89, Undue Hardship.
Example: Barry, a 68-year-old widower, was admitted to an LTC facility on January 3, 2022. Barry applied for MA LTC on March 1, 2022 asking for benefits effective February 7, 2022. The application showed home ownership and intent to return. Barry has monthly gross income of $2,000.
Barry provided an appraisal showing that the FMV of the home was $800,000. He also provided a statement from his mortgage company showing an outstanding mortgage due of $70,000. Therefore, the equity interest in the home was $730,000. Barry was found eligible for MA and ineligible for payment of LTC services.
Barry appealed the ineligibility for payment of LTC services decision. At the pre-hearing conference and at the fair hearing, Barry was unable to prove that he could not access the equity interest in his home and that denial of payment of LTC services would cause an undue hardship. Barry remains ineligible for payment of LTC services as long as the equity interest in the property exceeds the home equity limit listed in Chapter 468 Appendix A, Determining MA Eligibility and Payment Toward the Cost of LTC Facility Services.
On January 10, 2023, Barry applied for payment of LTC services effective January 3, 2023. Barry provided:
Documentation showing that on December 1, 2022, he had taken out a home equity loan for $80,000 and used the entire loan to pay the facility for the previous 11 months.
An appraisal showing the FMV of the home is currently $800,000.
Statements
from the lending institutions verifying the outstanding balances on
the loans.
The outstanding mortgage is currently $70,000 and the balance on the home equity loan is currently $80,000. Therefore, the equity interest in the home is ($800,000 - $70,000 - $80,000 = $650,000).
The CAO reviewed the application and found Barry otherwise eligible for payment of LTC services. The CAO authorized benefits, completed the appropriate entry for the 903 Q TPL screen, and sent a Notice of eligibility for payment of LTC services effective January 3, 2023.
NOTE: When the equity in the home is reduced below the limit listed in Chapter 468 Appendix A, Determining MA Eligibility and Payment Toward the Cost of LTC Facility Services, the person must complete a new application to apply for payment of LTC services. The CAO must verify that the person received FMV for any purchases/expenditures used to reduce the equity value.
U.S.C.A. 42 § 1396p(f)
A life estate is a form of joint ownership interest in real property between two or more individuals. A life estate is established when the owner of the property (the grantor, also known as life tenant, or tenant for life) deeds, grants or otherwise transfers ownership to another person (the remainderman).
Basic characteristics of a life estate are:
The grantor or other specified life tenant (or tenant for life) keeps ownership rights to property for the rest of the grantor’s (or life tenant’s or tenant for life’s) lifetime. This is called a “life estate interest.”
Two or more individuals have joint ownership of the property. Each individual has an ownership interest in the property, but for different time periods. The grantor possesses the property currently and for the rest of his/her life. The remainderman has current ownership, but cannot possess the property until the end of the life estate at the life grantor’s death.
The grantor can use the property and is entitled to any income the property generates. The grantor is responsible for the costs of maintenance and taxes on the property. The grantor cannot sell the property to a third party without the remainderman’s permission.
NOTE: The income is countable in the month the grantor receives it.
Upon the death of the grantor, ownership of the property passes directly to the remainderman without going through probate procedures. This avoids recovery through MA Estate Recovery.
A life estate can be:
A revocable life estate (life estate with full or partial powers), allowing the grantor to sell or dispose of his/her life estate interest in the property. The grantor can sell, transfer, or encumber the property included in the life estate if the deed specifies full powers.
An irrevocable life estate (life estate without powers), where the grantor does not have the power to sell or transfer the property included in the life estate. The grantor has the right to live in the property.
NOTE: An individual who merely has the right to use someone else’s property does not have an ownership in the property. Permission to use a property is not a legally transferable right.
Example: Paul transferred ownership of his home to his son. His son promised his father that he can live in the home until his death. This is not a life estate arrangement. Paul does not have any ownership in this home. He transferred the property into the name of his son. Paul may not sell his permissive right to live in the home to a third party.
For MA purposes, there are four types of life estates:
A revocable life estate (also known as life estate with full or partial powers) in which the applicant, the recipient, the applicant’s spouse or the recipient’s spouse is the grantor of the property and is deeding or granting ownership to a remainderman.
An irrevocable life estate (also known as life estate without powers) in which the applicant or recipient or applicant’s spouse or recipient’s spouse is the grantor of the property and is deeding or granting ownership to a remainderman.
A revocable life estate in which the applicant or recipient or applicant’s spouse or recipient’s spouse is the purchaser (remainderman) of a life interest in another person’s home.
An irrevocable life estate in which the applicant or recipient or applicant’s spouse or recipient’s spouse is the remainderman of a life estate in another person’s home.
A revocable life estate in which the applicant or recipient or applicant’s spouse or recipient’s spouse is the grantor may be treated as an available asset. The remainderman might be left with nothing. The deed establishing a life estate with full or partial revocable powers is not considered a transfer of ownership.
1. Count the fair market value (FMV) of the property as an available resource if the property is the applicant’s/recipient’s home and the applicant/recipient has not indicated intent to return to the property.
Example: Brian established a revocable life estate on his home with his son. The property’s FMV is $120,000. Brian is the grantor. Brian does not plan to return to the property. The FMV of $120,000 is counted as an available resource.
2. Exclude the property if the property is the applicant’s/recipient’s home and the applicant/recipient has indicated intent to return to the property.
Example: Carl established a revocable life estate on his home with his daughter. The property’s FMV is $90,000. Carl is the grantor. Carl plans to return to the property and indicates intent to return. The FMV of the property is not counted as an available resource, because Carl indicated intent to return to his own home.
3. Exclude the property if the property is the current home of the applicant’s/recipient’s spouse.
4. Count the FMV of the property as an available resource if the applicant’s/recipient’s spouse is the grantor and the property is not the current home of the applicant’s/recipient’s spouse.
An irrevocable life estate in which the applicant/recipient/applicant’s spouse/recipient’s spouse is the grantor:
The grantor may not sell or transfer his life estate interest in the property.
The grantor does have the use and enjoyment of the property.
The grantor’s share of the FMV of the property is the amount used to count available resources of the home if the applicant/recipient does not intend to return home to the property.
The property is treated as a resource (remainderman’s share) disposed of without receiving FMV, and
The remainderman’s share of the FMV of the property is the amount used to calculate a penalty period based on the age of the grantor.
To calculate the grantor’s and remainderman’s share of the life estate:
1. Verify the FMV of the property at the time of the established life estate.
2. Multiply the property’s FMV by the life estate factor of the grantor’s age using the percentage amount for the grantor. See Chapter 440 Appendix C, Life Estate and Remainderman Interest Table. The resulting amount is the grantor’s share of the FMV.
3. Multiply the FMV of the property by the life estate factor of the grantor’s age using the percentage amount for the remainderman. Use the value amount of the remainderman’s share to calculate a penalty period.
Example 1: Anita, age 65, owns a home with a FMV of $100,000. She deeds the home to her son at no cost and keeps an irrevocable life estate in the property. Anita plans to return to her home.
To determine the value of Anita's life estate, multiply the FMV of the property ($100,000) by the life estate factor for a 65-year-old (.67970). Anita's life estate value is $67,970.
To determine the remainderman value of the life estate, multiply the FMV of the property ($100,000) by the remainder value for a 65-year-old (.32030). The remainderman value is $32,030.
The home is excluded when determining eligibility for MA LTC because Anita intends to return home. The establishment of the life estate for less than FMV results in a penalty period. Divide the remainderman value of $32,030 by the current average daily private pay rate (see Chapter 440 Appendix A, Resource Limits) to determine the length of the penalty period.
Example 2: Byron, age 70, lives in an LTC facility and receives MA LTC. His wife lives in their home with a FMV of $70,000. The home was transferred into the name of the wife, removing Byron's name from the deed.
After authorization of MA LTC, Betty, age 68, deeds the home to their daughter with an irrevocable life estate. The home remains excluded for MA LTC purposes.
Treat the establishment of a life estate as though Byron and Betty did not receive FMV for the remainderman’s portion of the life estate. To determine the remainderman value of the life estate, multiply the FMV of the property ($70,000) by the remainder value for a 70-year-old (.39478). The remainderman value is $27,634.60.
Divide the remainderman value of $27,634.60 by the current average daily private pay rate (see Chapter 440 Appendix A, Resource Limits) to determine the length of the penalty period.
Example 3: Clive, age 85, owns his home which has a FMV of $90,000. Clive deeds the home to his son with an irrevocable life estate. Clive does not indicate intent to return home.
Clive's life estate value is a countable resource in determining eligibility for MA LTC. To determine the value of the life estate, multiply the FMV ($90,000) by the life estate factor for an 85-year-old (.35359). Clive's life estate value is $31,823.10 and is considered an available resource.
Once Clive reduces resources and is otherwise eligible for MA LTC, there must be a penalty period for the remainderman’s share of the life estate. To determine the remainderman value of the life estate, multiply the FMV of the property ($90,000) by the remainder value for an 85-year-old (.64641). The remainderman value is $58,176.90.
Divide the remainderman value of $58,176.90 by the current average daily private pay rate (see Chapter 440 Appendix A, Resource Limits) to determine the length of the penalty period.
A life estate bought by an applicant, recipient, applicant spouse or recipient spouse in another individual’s home may be treated as a transfer of an asset without receiving fair consideration unless it meets these two requirements:
1. The individual paid an amount for the life estate interest that was at FMV at the time of the purchase of the life estate, and
2. The individual lived in the property as his or her home for at least 12 consecutive months beginning with the date of the purchase of the life estate.
NOTE: The individual’s address must be on official documents such as driver’s license, utility bills or income tax returns. Documents must show proof that the person lived in the property at least 12 consecutive months. Being gone from the home for short rehabilitation stays or vacations does not necessarily mean the person failed to meet the residency requirement, but the CAO must review the circumstances for each case.
To determine whether the individual paid FMV for the life estate interest:
Ask the individual to show proof of the property’s fair market value at the time of the life estate purchase.
Multiply the fair market value of the property by the life estate factor corresponding to the individual’s age. This gives the value of the life estate. See Chapter 440 Appendix C, Life Estate and Remainderman Interest Table.
Subtract the determined value of the life estate from the amount the individual actually paid for the life estate interest.
The individual received FMV if the determined value of the life estate equals or is less than the amount the individual paid for the life estate interest.
The individual did not receive FMV if the determined value of the life estate is more than the amount the individual paid for the life estate interest.
The purchase of a life estate for the right to live in another individual’s home meets fair consideration requirements if:
The transaction meets the above requirements, and
The determined value of the life estate equals or is less than the amount paid for the life estate interest.
The entire purchase amount of a life estate for the right to live in another individual’s home does not meet fair consideration requirements if:
The individual did not live in the property as his or her home for at least 12 consecutive months beginning with the date of the purchase of the life estate, or
The determined value of the life estate is more than the amount paid for the life estate interest.
NOTE: Be careful about equating the owner of the Life Estate with the grantor. On a deed, the grantor is the individual who conveys the property. The owner of the Life Estate may or may not be the grantor. The owner would always be a grantee.
For those life estate purchases that do not meet fair consideration requirements, the CAO will:
Determine a period of ineligibility for MA LTC services. See Section 440.85 Period of Ineligibility for Payment of LTC Services.
Deny payment for LTC services and send a notice to the applicant/recipient telling him or her of this determination.
Authorize/Continue MA in the appropriate LTC category.
Tell the applicant/recipient about the Undue Hardship Waiver request.
Example: On August 1, 2022, Sal, a 76-year-old widower, bought a life estate interest in a home owned by his son. The home was appraised at $100,000. Sal paid his son $75,000 for the life estate interest. On September 1, 2022, Sal was admitted to an LTC facility. He applied for MA LTC on the same date and was determined income and resource eligible.
Sal gave the CAO proof that he lived in the life estate property from the date of purchase to the date he was admitted to the LTC facility (13 months). The CAO reviewed the purchase of the life estate to determine if it was for FMV. The CAO compared the value of the life estate at the time of the purchase to the purchase price.
To determine the value of the life estate at the time of the purchase, the CAO must multiply the appraised value of the home by the life estate factor for a 76-year-old. See Chapter 440 Appendix C, Life Estate and Remainder Interest Table. Based on Sal's age, the value of the life estate on the purchase date was $50,441. ($100,000 x .50441, life estate factor for 76-year-old = $50,441.)
Sal purchased the life estate interest for $75,000. The CAO determined that Sal transferred $24,559 for less than FMV ($75,000 – $50,441 = $24,559). To determine the period of ineligibility, divide the transfer amount ($24,559) by the average daily private pay rate in effect at the time of the application. The begin date of the period of ineligibility is the date Sal would otherwise be eligible for MA.
DRA of 2005 (Public Law 109-171 (6016)
If the individual owns several properties, the CAO will exclude only the property that is the individual’s principal residence. The principal residence is the dwelling the individual considers his or her established or principal home and where he intends to return to if he leaves.
The principal residence can be real or personal property, fixed or mobile and located on land or water. If a single tract of land has more than one home, only one home may be excluded. The CAO treats additional homes as non-resident property unless they are income producing, used in trade or business or essential to self-support.
The CAO will not exclude additional properties the individual owns where a spouse or dependent relative lives. The CAO will treat any additional properties as non-resident property. See Section 440.43 Non-Resident Property.
The CAO will accept the statement of the individual or his or her representative as to which is the principal place of residence, unless there is conflicting information. If there is conflicting information, the CAO will base its decision on other sources such as:
Voting registration
Employer’s records
Current address for Medicare
Income tax return
Physician or guardian statement
Driver’s license
Car registration
The CAO will not exclude the property if the individual does not intend to return to his home. If the equity value of the property plus other resources is more than the resource limit, the CAO will exclude the property for six months while the individual makes a bona fide effort to sell.
A bona fide effort to sell a property requires that an individual:
List property with a realtor.
Show proof that property is listed for sale and of the listed sale price.
Accept any reasonable offer.
Inform the CAO of the agreement of the sale and settlement date, and
Show proof of proceeds from the sale of the property.
Exception: There is no six-month exclusion period if the equity value of the property is more than the excess home equity limit. Section 440.422 Excess Home Equity.
The CAO will extend the period another three months if the individual does not sell the resident property by the end of the six-month period and there is good cause that the property did not sell. Good cause includes:
Severe weather conditions
The general real estate market in the area
Economic or labor problems in the area
Type, conditions and location of the property
If a recipient of MA LTC sells his excluded resident home, it must be reported to the CAO within 10 days. The CAO will:
Verify the amount and receipt date of the proceeds
NOTE: Proceeds are the net payments the individual receives after deducting all encumbrances, attorney fees, moving costs, and sales expenses.
Determine if the individual intends to use or obligate the proceeds to buy another excluded resident home within three months in which the individual, spouse, or dependents will live. The three-month replacement period begins:
On the date MA LTC eligibility begins for the person who received the proceeds before applying for MA LTC, or
On the date the recipient received the proceeds.
Count as income any interest earned on the proceeds.
Count as a resource to the individual the amount left after subtracting the purchase price and costs related to occupying the new home (such as moving costs) from the net proceeds of the previous home, if the recipient, spouse or dependent buys a new resident home.
Example: Simon is an MA LTC recipient since his admittance on June 1. Simon sold his home on August 1 and received $150,000 in proceeds from the sale of the home. Simon intends to buy a new home and return to this new home. The CAO excludes the $150,000 for three months. On October 18, Simon buys a new home for $120,000. He paid $2,000 to move his belongings into the new home.
$150,000 (proceeds from sale of old home) - $120,000 (cost of new home) = $30,000 - $2,000 (moving costs) = $28,000 excess net proceeds to be counted as a resource.
NOTE: Mortgage payments made on the new home for any period after occupancy are not considered a purchase or occupancy cost for purposes of this exclusion.
Count as a resource to the individual the total amount of the proceeds from the sale of the original property if the applicant/recipient does not buy another excluded resident home within the three-month replacement period.
Example: Tina is a recipient of MA LTC. Tina sold her home on July 1 and received $135,000 in proceeds from the sale of the home. The CAO contacted Tina. She intends to buy and return to a new home. The CAO will exclude $135,000 for three months and set an alert to monitor the purchase of the new home within 90 days.
On September 15, the CAO sent a letter asking Tina to verify if she bought a new home. On September 25, Tina's daughter called to say that her mother would not be buying a new home. The CAO will process an overpayment from July 1 and treat the $135,000 as an available resource. The CAO will also issue an advance notice to end eligibility for MA due to excess resources.
NOTE: If a recipient can establish a valid reason for not buying another home within a three-month period, do not count the proceeds from the sale of the original property. Set a reasonable time to review the circumstances.
If an individual (and /or the individual's spouse) sells the resident property and buys a new residence with the net proceeds, the property will remain excluded.
If an individual (and/or the individual’s spouse) sells the resident property and does not buy a new resident property, the sale proceeds may be considered a resource to the individual.
The CAO will count the equity value of a non-resident property as an available resource for both the Resource Assessment and MA LTC benefit eligibility. The former resident property counts as non-resident property if the applicant/recipient owns but does not intend to return to the property and no spouse or dependent relatives are living there.
NOTE: If the individual is making a good faith effort to sell the non-resident property, the CAO will exclude it for a period of 6 months. The individual must report the sale to the CAO within 10 days. The six-month period begins on the date of the CAO notification that the individual must take steps to sell the non-resident property. See Section 440.431, Exclusion of Non-resident Property.
If the non-resident property is jointly owned with a non-applicant/non-recipient, the CAO must determine if the joint owner(s) will allow the disposal of the property.
If the joint owner(s) will allow disposal of the property, consider the property available. Count the applicant’s share in both the RA and MA LTC determination.
Example: Bryce, who is married, is admitted to an LTC Facility on August 1. His wife, Bella, owns a non-resident property with their son. The son’s name was added to the deed before the look-back period. The FMV of the home is $80,000. The son agrees to sell the home. Consider the property available. The CAO will count $40,000 in the RA and determine the available resource amount to be used in the MA LTC determination.
Property titled as a Joint Tenancy with Right of Survivorship is a potential resource even if it is owned with a non-applicant/non-recipient who refuses to dispose of the property. An applicant/applicant spouse must cooperate in establishing eligibility for all potential resources or income. The applicant/applicant spouse must file a “petition to partition” in the appropriate court before authorization of MA LTC.
A “petition to partition” asks the court to end the joint tenancy. If the court grants the petition, the individual may sell his share of the property. If the applicant/applicant spouse gives proof that he or she is pursuing this potential resource, the property will remain an excluded resource for the MA LTC eligibility determination. The CAO can authorize MA LTC if the applicant meets all other eligibility conditions. If the applicant fails to pursue a potential resource, he or she is not eligible for MA LTC benefits.
Example: Carla is admitted to an LTC Facility on August 1. Her husband, Charles, owns non-resident property with their son. The son’s name was added to the deed before the look-back period. The FMV of the property is $80,000. The son refuses to sell the property. The property is excluded for the RA.
Before MA LTC can be authorized, Charles must give proof that he has filed for a “petition to partition” with the appropriate court. If the proof is given, the property will remain excluded. The CAO can authorize MA LTC if Charles meets all other eligibility requirements. If no proof is given, the CAO will determine the applicant ineligible for MA LTC.
NOTE: If the individual transferred the deed within the required look back period, the CAO will evaluate the transfer to determine if the individual received FMV.
Example: Zelda applies for HCBS effective August 1. Zelda owns a non-resident property with her daughter. The daughter’s name was added to the deed within the look-back period. The FMV of the property is $90,000. The daughter refuses to dispose of the property.
Zelda gives proof that she has filed a “petition to partition” the property. The CAO excludes the property from her countable resources in determining MA LTC. However, the CAO must apply a penalty period for the transfer of an asset for less than FMV within the look-back period. The CAO will consider half the FMV of the property as a transfer for less than FMV.
The applicant/applicant spouse/recipient must report receipt of the “petition to partition” court order within 10 days. The CAO will treat the value of the applicant/recipient’s share as a countable resource. If the individual makes a good faith effort to sell the non-resident property, the property will be excluded for six more months.
Example: Zelda receives the “petition to partition” order on November 1. She reports the court order on November 7. The CAO will count half of the FMV of the non-resident property as an available resource for Zelda. If Zelda makes a good faith effort to sell the property, the property will be excluded for six more months.
The CAO will compare the equity value of nonresident property plus any other countable resources to the resource limit.
No other action is necessary at application if the equity value of the countable nonresident property, combined with all other resources, is equal to or less than the resource limit after deducting the spousal share, if applicable.
If the total is more than the resource limit, the individual may transfer excess resources to the spouse if it is not more than the spousal share. The CAO will review the equity value of the nonresident property at each renewal if the property was not transferred to the CS.
If the equity value combined with all other resources is more than the MA LTC resource limit plus the maximum spousal share, the CAO will discuss the steps the individual must take to remain eligible for MA.
Exclude the property for six months if the equity value of nonresident property is more than the appropriate MA LTC resource limit when added to other countable resources after deducting the spousal share at application, if applicable. The individual must make a good faith effort to sell the nonresident property.
NOTE: There is no need to put the property up for sale if the equity value of the property is less than the resource limit for the appropriate MA LTC category when added to other non-excluded resources.
A good faith effort includes:
Placing the property for sale at FMV with a licensed realtor in the area.
Accepting from the first qualified buyer an offer that reflects the fair market value as established by the realtor.
Listing for sale at auction.
Listing and advertising for sale in a newspaper at FMV by family members.
NOTE: If the individual refuses a reasonable offer, the CAO will count the nonresident property as a resource at its equity value as of the date the offer is refused.
If the individual does not make a good faith effort to sell the property, the CAO will count its equity value as a resource. The CAO will give the individual 30 calendar days to show proof that steps have been taken to sell the property.
If the individual does not sell the nonresident property by the end of the six-month period, the CAO will extend the period another three months. There must be good cause that the property did not sell. Good cause includes:
Severe weather conditions.
The general real estate market in the area.
Economic or labor problems in the area.
Type, conditions, and location of the property.
Unusual family circumstances such as the death or serious illness of a family member.
The CAO will exclude the nonresident property during the period the individual is making a good faith effort to sell it.
If the individual sells the nonresident property within the exclusion period, the CAO will count the net proceeds from the sale (after encumbrances) as a resource. The CAO will determine if the individual received fair market value for the property. See Section 440.8 Disposition of Assets and Fair Consideration.
If the property is not sold by the end of the exclusion period, the CAO will determine if the property can not be sold. Lack of interest or reasonable offers may mean the fair market value was set too high. Evidence that the property can not be sold includes:
1. Proof that steps have been taken to sell, including lowering the price, multiple listings, changing the realtor.
2. An evaluation by the realtor.
3. A statement from a property appraiser.
4. Severe economic conditions in the area.
5. A natural disaster affecting the property or general real estate market.
If the property cannot be sold, the CAO will:
1. Continue to exclude it as a resource.
2. Review the situation at each renewal, including the property’s current equity value.
3. Determine that the property cannot be sold and the person must take all reasonable steps to sell, including lowering the price, multiple listings, advertising, changing realtors, etc.
If the property can be sold, the CAO will count the equity value as a resource and review the individual’s eligibility.
The CAO will count any income earned from the property while it is for sale.
The CAO will exclude property that is used as a trade or business and is essential to self-support of the individual or spouse.
The CAO will exclude real or personal property used in a trade, business, or certain non-business and essential to self-support, regardless of value.
In order for a property to be excluded that is not used as a trade or business, but is essential to self-support, the property must be used exclusively to produce items for home consumption. Examples of this are cows supplying milk, chickens supplying eggs, or a garden plot used for fruits or vegetables.
To determine that individual received fair consideration for disposal of the property, the CAO must review an excluded non-resident property that is later sold. See Section 440.8, Disposition of Assets and Fair Consideration.
Updated March 14, 2023, Replacing January 2, 2019