Updates to the MaineCare Eligibility Rules Regarding Real Estate
The MaineCare program, administered by Maine’s Department of Health and Human Services, provides important medical and long-term care benefits to many Mainers. There are a variety of MaineCare benefits, based on the type of services and the basis for qualifying for benefits. DHHS encapsulates the rules for these subsets of the MaineCare program within the MaineCare Eligibility Manual (the “Manual”). The rules are based on both federal Medicaid law and state policy. The Manual is updated regularly to adjust to changing conditions, incorporate updates from federal law, and provide greater clarity to existing rules.
The Manual was updated effective October 1, 2016. (The most recent prior update was on November 2, 2015.) Many of the updates were done to delete outdated references, expand the explanations of existing rules, and correct typographical errors, and there were also a few updates to comply with federal law. DHHS’s summary of the updates stated that none of the updates were considered controversial. However, there were several noteworthy substantive changes.
Two of the updates, done to comply with federal law, concern the applicant’s personal residence. Generally, an applicant’s personal residence is an exempt asset, meaning it does not count against the applicant when eligibility is being determined, though it may be subject to estate recovery after death. To establish the personal residence as an exempt asset, usually all the applicant (or his or her agent) needs to do is complete paperwork stating that the applicant intends to return (or remain) home, even if it is not medically likely to happen. Part 16, Section 4.40B(1), of the Manual has now been updated to state that the personal residence can still be excluded as an exempt asset when the applicant is fleeing domestic violence and has no intent to return there. See also 20 C.F.R. § 416.1212(d).
Also, although the personal residence usually qualifies as an exempt asset, proceeds from the residence’s sale have not been automatically exempt. That is, the applicant or benefit recipient needed to spend down the proceeds within the month of receipt, to the extent the proceeds would place the person over asset, or qualify the proceeds for another exclusion. Part 16, Section 4.40D, of the Manual was updated to provide that proceeds from the sale of an excluded home will be considered an excluded asset for up to three months to the extent the proceeds are intended to be and actually are used to purchase another exempt personal residence. See also 20 C.F.R. § 416.1212(e). This change will be useful for people downsizing a residence to ensure they can remain in their home. If the sale was for another reason, the seller should consult with an experienced elder law attorney to confirm that any spend down or transfer of the proceeds is done appropriately.
Beyond the personal residence, other real estate will count against the asset limit applicable to the applicant unless it qualifies as exempt under another exclusion within the rules. Other real estate may only be excluded if it is listed for sale, unsellable, income-producing, or held in joint tenancy or tenancy in common with others who refuse to sell the property. When the fair market value of the property, including equipment and livestock, used to produce income is multiplied by a certain percentage, that sum is the amount of income that must be earned on the property after the property has been in operation for three years to qualify for that exemption.
That “certain percentage” is based on the average rate of return for a Certificate of Deposit at banks in Maine. Prior to this update, the rate was 4.04%, which has not been accurate for some time. It is now 0.22%. Now that the percentage has been appropriately updated, it will be easier to exclude property like woodlots and seasonal rentals that do not earn much income but which may be of too much emotional significance to sell. (Again, real estate that is an exempt asset during the benefit recipient’s lifetime may still be subject to estate recovery after death, which is why some individuals consider placing real estate into a trust designed specifically for this purpose before an illness strikes.)
Applying for MaineCare benefits, particularly long-term care benefits, can be a complex process because of the detailed rules and required documentation. Our firm is available to assist you by explaining the options for paying for long-term care services before any health crisis occurs and by assisting with applying for MaineCare long-term care benefits in the unfortunate event that a health crisis does occur.