Long-term services and supports (LTSS) manual

Excess home equity

Revised Date: 
October 7, 2019

Section 6014 of the Deficit Reduction Act (DRA) of 2005 included a new provision which is a limitation on the payment of LTC services (Medicaid services in a medical institution or a Home and Community Based Waiver). The DRA states "this applies to individuals who are determined eligible for Medicaid with respect to nursing facility or other long-term care services."

WAC 182-513-1350 Defining the resource standard and determining resource eligibility for SSI-related long-term care (LTC) services.

Effective September 28, 2017

  1. General information.
    1. This section describes how the agency or its designee defines the resource standard and countable or excluded resources when determining a person's eligibility for SSI-related long-term care (LTC) services.
    2. "Resource standard" means the maximum amount of resources a person can have and still be resource eligible for program benefits.
    3. For a person not SSI-related, the agency applies program specific resource rules to determine eligibility.
  2. Resource standards.
    1. The resource standard for the following people is $2000:
      1. A single person; or
      2. An institutionalized spouse.
    2. The resource standard for a legally married couple is $3000, unless subsection (3)(b)(ii) of this section applies.
    3. The resource standard for a person with a qualified long-term care partnership policy under WAC 182-513-1400 may be higher based on the dollar amount paid out by a partnership policy.
    4. Determining the amount of resources that can be allocated to the community spouse when determining resource eligibility is under WAC 182-513-1355.
  3. Availability of resources.
    1. General. The agency or its designee applies the following rules when determining available resources for LTC services:
      1. WAC 182-512-0300 SSI-related medical—Resources eligibility;
      2. WAC 182-512-0250 SSI-related medical—Ownership and availability of resources; and
      3. WAC 182-512-0260 SSI-related medical—How to count a sponsor's resources.
    2. Married couples.
      1. When both spouses apply for LTC services, the resources of both spouses are available to each other through the month in which the spouses stopped living together.
      2. When both spouses are institutionalized, the agency or its designee determines the eligibility of each spouse as a single person the month following the month of separation.
      3. If the agency or its designee has already established eligibility and authorized services for one spouse, and the community spouse needs LTC services in the same month, but after eligibility has been established and services authorized for the institutionalized spouse, then the agency applies the standard under subsection (2)(a) of this section to each spouse. If doing this would make one of the spouses ineligible, then the agency applies subsection (2)(b) of this section for the couple.
      4. The resources of the community spouse are unavailable to the institutionalized spouse the month after eligibility for LTC services is established, unless (v) or (vi) of this subsection applies.
      5. When a single institutionalized individual marries, the agency or its designee redetermines eligibility applying the resource and income rules for a legally married couple.
      6. A redetermination of the couple's resources under this section is required if:
        1. The institutionalized spouse has a break of at least thirty consecutive days in a period of institutional status;
        2. The institutionalized spouse's countable resources exceed the standard under subsection (2)(a) of this section, and WAC 182-513-1355 (2)(b) applies; or
        3. The institutionalized spouse does not transfer the amount, under WAC 182-513-1355 (3) or (5), to the community spouse by either:
          1. The end of the month of the first regularly scheduled eligibility review; or
          2. A reasonable amount of time necessary to obtain a court order for the support of the community spouse.
  4. Countable resources.
    1. The agency or its designee determines countable resources using the following sections:
      1. WAC 182-512-0200 SSI-related medical—Definition of resources.
      2. WAC 182-512-0250 SSI-related medical—Ownership and availability of resources.
      3. WAC 182-512-0260 SSI-related medical—How to count a sponsor's resources.
      4. WAC 182-512-0300 SSI-related medical—Resources eligibility.
      5. WAC 182-512-0350 SSI-related medical—Property and contracts excluded as resources;
      6. WAC 182-512-0400 SSI-related medical—Vehicles excluded as resources;
      7. WAC 182-512-0450 SSI-related medical—Life insurance excluded as a resource; and
      8. WAC 182-512-0500 SSI-related medical—Burial funds, contracts and spaces excluded as resources.
      9. Chapter 182-516 WAC, Trusts, annuities, life estates, and promissory notes—Effect on medical programs.
    2. The agency or its designee determines excluded resources based on federal law and WAC 182-512-0550, except:
      1. For institutional and HCB waiver programs, pension funds owned by a nonapplying spouse are counted toward the resource standard.
      2. For long-term services and supports (LTSS), based on the need for either nursing facility level of care or intermediate care facility for the intellectually disabled level of care, one home is excluded only if it meets the home equity limits of subsection (8) of this section. See WAC 182-512-0350 (1)(b).
    3. The agency or its designee adds together the countable resources of both spouses if subsections (3)(b)(i) and (iv) apply, but not if subsection (3)(b)(ii) or (iii) apply. For a person with a community spouse, see WAC 182-513-1355.
  5. Excess resources.
    1. For LTC programs, a person may reduce excess resources by deducting incurred medical expenses under subsection (6) of this section;
    2. The amount of excess resources is limited to the following amounts:
      1. For LTC services provided under the categorically needy (CN) program:
        1. In a medical institution, excess resources and available income must be under the state medicaid rate based on the number of days the person spent in the medical institution in the month.
        2. For HCB waiver eligibility, incurred medical expenses must reduce resources within allowable resource standards. The cost of care for the HCB waiver services cannot be allowed as a projected expense.
      2. For LTC services provided under the medically needy (MN) program, see:
        1. WAC 182-513-1395 for LTC programs; and
        2. WAC 182-513-1245 for hospice.
    3. Excess resources not otherwise applied to medical expenses will be applied to the projected cost of care for services in a medical institution under WAC 182-513-1380.
  6. Allowable medical expenses.
    1. The following incurred medical expenses may be used to reduce excess resources:
      1. Premiums, deductibles, coinsurance, or copayment charges for health insurance and medicare;
      2. Medically necessary care defined under WAC 182-500-0070, but not covered under the state's medicaid plan. Information regarding covered services is under chapter 182-501 WAC;
      3. Medically necessary care defined under WAC 182-500-0070 incurred prior to medicaid eligibility. Expenses for nursing facility care are reduced at the state rate for the specific facility that provided the services.
    2. To be allowed, the medical expense must:
      1. Have been incurred no more than three months before the month of the medicaid application;
      2. Not be subject to third-party payment or reimbursement;
      3. Not have been used to satisfy a previous spenddown liability;
      4. Not have been previously used to reduce excess resources;
      5. Not have been used to reduce participation;
      6. Not have been incurred during a transfer of asset penalty under WAC 182-513-1363; and
      7. Be an amount for which the person remains liable.
  7. ​Nonallowable expenses. The following expenses are not allowed to reduce excess resources:
    1. Unpaid adult family home (AFH) or assisted living facility expenses incurred prior to medicaid eligibility;
    2. Personal care cost in excess of approved hours determined by the CARE assessment under chapter 388-106 WAC; and
    3. Expenses excluded by federal law.
  8. Excess home equity.
    1. A person with an equity interest in a primary residence in excess of the home equity limit is ineligible for long-term services and supports (LTSS) that are based on the need for either nursing facility level of care or intermediate care facility for the intellectually disabled level of care, unless one of the following persons lawfully resides in the home:
      1. That person's spouse; or
      2. That person's dependent child under age twenty-one, blind child, or disabled child.
    2. The home equity provision applies to all applications for LTSS received on or after May 1, 2006.
    3. Effective January 1, 2016, the excess home equity limit is $552,000. On January 1, 2017, and on January 1st of each year thereafter, this standard may change by the percentage in the consumer price index-urban.
    4. A person who is denied or terminated LTC services due to excess home equity may apply for an undue hardship waiver under WAC 182-513-1367.
  9. Institutional resource standards are found at http://www.hca.wa.gov/free-or-low-cost-health-care/program-administration/program-standard-income-and-resources.

This is a reprint of the official rule as published by the Office of the Code Reviser. If there are previous versions of this rule, they can be found using the Legislative Search page.

Clarifying Information

WAC 182-513-1350 (8) is the rule for excess home equity. The current excess home equity standard is found in the LTC medical standards.

Definition of a home:

Federal SSI related Policy Manual

WAC 182-512-0350 SSI related medical

The excess home equity is not an eligibility factor for noninstitutional Medicaid. It is a limitation on payment for long-term services and supports (LTSS). This includes Community First Choice (CFC), PACE, HCB Waiver and institutional Medicaid. A primary residence would not be counted as a resource under regular community Medicaid rules.

If there is a legal impediment it would still render the person ineligible for LTSS unless a hardship waiver is approved under WAC 182-513-1367.

Individuals with an equity interest in their home greater than the excess home equity limits are ineligible for nursing facility and other long-term care services (this includes Home and Community based Waivers).

This is a pass/fail provision. If an applicant or recipient has equity interest over the standard in the home, there is no eligibility for long term care services. Putting the home up for sale does not allow conditional eligibility when there is excess home equity. Deny an application based on reason code 410 excess home equity. The system will generate information regarding hardship waivers described in WAC 182-513-1367. For recipients, terminate the case following 10 day notice rules. Reason code 410 will generate information regarding excess home equity and hardship waivers.

The ACES system is programmed to do this for all K and L track programs. The denial/termination reason code 410-Excess home equity.  Unless the following criteria is met, excess home equity is based on:

  • On LTC services prior to 5/1/2006 with no break in service
  • A spouse, dependent minor or disabled adult child are living in the home
  • The home is essential for self-support
  • Hardship Waiver due to application of the rule has been approved

Excess home equity provision is a pass/fail provision

The excess home equity provision applies to the first determination of eligibility as well as at future redeterminations. The home equity provision does not apply to individuals who applied and were determined eligible before May 1, 2006 and have no break in LTC eligibility after May 1, 2006.

The amount of the individual's equity interest in the home should be based solely on the current market value of the home, minus any encumbrances such as mortgages or other loans that are secured by the home. If the overall equity interest in the home is shared by co-owners equity interest is determined according to POMS SI 0110.510. (fractional interest determination).

CMS guidance indicates that an allegation that home equity should not be counted because of a legal impediment to selling or transferring the home does not prevent a determination of the individual's equity interest. Such an allegation may be a legitimate reason for the state to consider waiving the application of the excess home equity requirement because of a hardship. (see Hardship Waiver).

The excess home value is not applied to the resource standard. It is a pass/fail provision.

How is reverse mortgage line of credit treated?

The most popular option to reduce equity interest is through a reverse mortgage. The equity value is reduced by deducting the debt from the current market value. The homeowner will have to receive the money for it to reduce equity.

Costs relating to obtaining the reverse mortgage can be included to reduce the home equity if the costs are paid out of the loan proceeds. (They become part of the outstanding debt). If the person pays out-of-pocket costs up front, they do not reduce the equity.

Excess home equity and LTC Partnership Rules

The home equity is not protected per se under the LTC Partnership rules. A person can take out a home equity loan converting equity into an otherwise countable resource and then the equity will be treated as any other resource will be treated.

Example #1
Applicant recently entered a nursing home. Equity in the home is $625,000. There is no spouse or dependents. Applicant intends to return home.

In this example, the application is denied due to excess home equity provisions.

Example #2
Applicant recently entered a nursing home. Equity in the home is $625,000. There is no spouse or dependents. Applicant's representative has put the home up for sale.

In this example, the application is denied due to excess home equity provisions. Putting the home up for sale does not negate this provision as it is a pass/fail test for LTC services. The applicant can look into the possibility of a reverse mortgage.

Example #3
Applicant recently entered a nursing home. Equity in the home is $625,000. The community spouse lives in the home.

In this example, the home is excluded. The excess home equity provision does not apply if the spouse (or dependents) are living in the home.

Example #4
Applicant recently entered a nursing home. Equity in the home is $552,000. In addition to the home, there is noncontiguous property worth $625,000 that is up for sale. There is no spouse or dependents. The applicant intends to return to the home.

The excess home equity provision only applies to the individual's home. In this example, the home equity value is under the standard. The individual intends to return home, so it is excluded from eligibility.

The 2nd piece of property is over the excess home provision, however was not the individual's primary home. The excess home provision does not apply to this 2nd piece of property. The property is listed for FMV, therefore we can look at conditional eligibility as the house is listed for sale.

Example #5
Applicant recently entered a nursing home. Equity in the home is $587,000. The 1/1/2019 excess home equity standard is $585,000. The individual has no other resources.

The application is denied based on excess home equity. In this example we cannot apply the $2,000 that is over the standard toward the $2,000 resource standard. The home equity can exceed the standard by $1 and the case would need to be denied.

Example #6
Applicant recently entered a nursing home. Equity in the home is $552,000. In addition to the home, there is a contiguous property worth $50,000. There is no spouse or dependents. The applicant intends to return to the home.

In this example the home and the contiguous property all count towards the equity limit, so the applicant would be denied for excess home equity.