F-3600, Substantial Home Equity

Revision 22-1; Effective March 1, 2022

As part of Public Law 109-171, Deficit Reduction Act of 2005 (DRA), a person with a home whose equity interest in the home exceeds the established limit is not eligible for vendor payment in an institution or for Home and Community-Based Services (HCBS) waiver services.

Exception: If the person's spouse, child or adult child with a disability is living in the home, substantial home equity policy does not apply.

Treatment of a homestead as a resource in Section F-3000, Home, continues but does not impact:

  • the disqualification determination for vendor payment in an institutional setting due to substantial home equity; or 
  • denial of HCBS waiver services or services in a state supported living center or a state center due to substantial home equity.

Once eligibility for services in an institutional setting is determined, consider if the equity value of the home disqualifies the person for vendor payment in a Medicaid-certified long-term care facility. When eligibility for HCBS waiver services or services in a state supported living center or a state center is requested, consider if the equity value in the home results in denial.

Home Equity Treatment

For a person who is eligible for Medicaid in an institutional setting based on an application filed on or after Jan. 1, 2006, they are not eligible for Medicaid for services in an institutional setting if the equity interest in their home exceeds the substantial home equity amount. This dollar amount may increase from year to year based on the percentage increase in the consumer price index (CPI).

Substantial home equity policy does not apply if either of the following lawfully resides in the person's home:

  • the person's spouse; and
  • the person's child, if the child is under 21, or is blind or permanently and totally disabled as defined by SSA.

This policy does not prevent a person from using a reverse mortgage or home equity loan to reduce the total equity interest in their home.

The secretary of the U.S. Department of Health and Human Services will establish a process to waive this policy in the case of a demonstrated hardship.

Related Policy

Persons Impacted by Substantial Home Equity Disqualification, F-3610

 

F-3610 Persons Impacted by Substantial Home Equity Disqualification

Revision 22-1; Effective March 1, 2022

Substantial home equity disqualification policy impacts any person who is:

  • Medicaid-eligible in the community and requests a program transfer for Medicaid in an institutional setting or Medicaid for home and community-based waiver services;
  • Residing in an institutional setting and applying for Medicaid; or
  • Applying for home and community-based waiver services.

    This includes:
    • Applications — Consider substantial home equity disqualification policy for the first determination of eligibility.
    • Program transfer requests — For program transfer requests from any Medicaid program to Medicaid in an institutional setting, consider substantial home equity disqualification policy for the determination of eligibility.
    • Redeterminations — Consider substantial home equity disqualification policy at all redeterminations.
    • Reported changes in homestead status — For reported changes in homestead status, consider substantial home equity disqualification policy.

Notes:

  • Substantial home equity disqualification affects payments for Medicaid-certified long-term care facility services (nursing facility care, ICF/IID vendor services, care in a state supported living center or a state center, and care in institutions for mental diseases) and eligibility for Home and Community-Based Services (HCBS) waiver services.
  • People who are getting Medicaid-certified long-term care facility services (nursing facility care, ICF/IID vendor services, care in institutions for mental diseases) remain eligible for all other Medicaid benefits and continue to get Medicaid benefits other than vendor payments for as long as the equity value of the home exceeds the limit. People in a state supported living center or a state center or who get HCBS waiver services are not eligible for benefits.
  • For people in a state supported living center or a state center, Medicaid eligibility is denied for any period when the equity value of the home exceeds the limit. This is because the only benefit the person receives is vendor payments.
  • If the HCBS waiver program requires receipt of waiver services, the HCBS waiver person is ineligible for all Medicaid benefits. Based on substantial home equity disqualification policy, a HCBS waiver applicant is ineligible as long as the equity value of the home exceeds the limit.
  • Denial based on substantial home equity disqualification does not disqualify a person for Qualified Medicare Beneficiary (QMB) or Specified Low-Income Medicare Beneficiary (SLMB) benefits. If the person meets all eligibility criteria for QMB or SLMB, certify the person, as appropriate.
  • At all complete redeterminations, evaluation of substantial home equity is required for all recipients in an institutional setting. At redetermination, the appreciation of home equity could result in disqualification or denial if the home equity value exceeds the limit.

The substantial home equity limit is:

Effective Date Limit
Jan. 1, 2022 to present $636,000
Jan. 1, 2021 to Dec. 31, 2021 $603,000
Jan. 1, 2020 to Dec. 31, 2020 $595,000
Jan. 1, 2019 to Dec. 31, 2019 $585,000
Jan. 1, 2017 to Dec. 31, 2018 $572,000
Jan. 1, 2017 to Dec. 31, 2017 $560,000
Jan. 1, 2016 to Dec. 31, 2016 $552,000
Jan. 1, 2015 to Dec. 31, 2015 $552,000
Jan. 1, 2014 to Dec. 31, 2014 $543,000
Jan. 1, 2013 to Dec. 31, 2013 $536,000
Jan. 1, 2012 to Dec. 31, 2012 $525,000
Jan. 1, 2011 to Dec. 31, 2011 $506,000
Jan. 1, 2006 to Dec. 31, 2010 $500,000

 

F-3620 Persons Not Impacted by Substantial Home Equity Disqualification

Revision 09-4; Effective December 1, 2009

Any person who has a date of application or program transfer request date for Medicaid in an institutional setting before Jan. 1, 2006, and who has continued to receive services with no break in coverage will not be impacted by the value of the home equity.

Regardless of the date of application or program transfer request date, any person who has either a spouse, minor child or disabled adult child residing in the home will not be impacted.

 

F-3630 When the Equity Value is Greater Than the Limit

Revision 09-4; Effective December 1, 2009

If an institutionalized person has a home with equity value greater than the limit, follow notice and procedures in Appendix XXIII, Procedure for Designated Vendor Number to Withhold Vendor Payment, and indicate on Form H3618-A, Resident Transaction Notice for Designated Vendor Numbers, the vendor number 5988 for the Home Equity Manor. Unlike a transfer of assets penalty period, there is no end date for Home Equity Manor unless the home equity value changes to be less than or equal to the limit. When the person's home equity value is less than or equal to the limit, do not impose this penalty.

A person applying for waiver services or requesting a program transfer to waiver services, who has home equity greater than the limit and does not have a spouse, child or disabled adult child living in the home, is not eligible for waiver services. A person must receive waiver services to be eligible for a waiver program. Follow current denial procedures for the applicable Home and Community-Based Services waiver program. Determine if the person is eligible for Medicaid programs other than Home and Community-Based Services waiver services.

 

F-3640 Reverse Mortgage or Home Equity Loan

Revision 09-4; Effective December 1, 2009

A person may use a reverse mortgage or home equity loan to reduce the person's total equity interest in the home. If the person has a reverse mortgage or home equity loan, consider this in determining countable home equity.

Based on conversion of a resource policy (see Section F-1260, Conversion of Resources), do not consider funds from the reverse mortgage or home equity loan as a countable resource or income in the month of receipt. Any remaining funds from a reverse mortgage or home equity loan become a countable resource as of 12:01 a.m. on the first day of the month after the month of receipt.

Although the funds are not considered a countable resource or income during the month of receipt, consider transfer of assets policy if the funds from a reverse mortgage or home equity loan are transferred during the month of receipt.

The money received is a countable resource the month after receipt. See Section F-4150, Promissory Notes, Loans and Property Agreements. Consider transfer of assets policy if the funds from a reverse mortgage or home equity loan are transferred after the month of receipt.

Follow regional procedures to request assistance from HHSC Legal regarding the terms and conditions of reverse mortgage or home equity loan information to assist in determining the appropriate amount of the reduction in home equity value.

 

F-3650 Documentation

Revision 09-4; Effective December 1, 2009

Obtain verification of home equity value, including a copy of the reverse mortgage or home equity loan, for the case record. Thoroughly document in case comments the home equity value and information about the reverse mortgage or home equity loan, if applicable.

 

F-3660 Undue Hardship

Revision 09-4; Effective December 1, 2009

Undue hardship may be considered when a person is impacted by the substantial home equity policy. Use the transfer of asset hardship criteria for undue hardship consideration due to substantial home equity policy. See Chapter I, Transfer of Assets, for undue hardship.