From 24/7 Wall St. · Gerelyn Terzo · · 1m
She’ll Need Nursing-Home Care With a $760,000 House
A HELOC could lower her equity but leave too much cash for Medicaid.
In brief
A HELOC could lower her equity but leave too much cash for Medicaid. A widow with a $760,000 home needs nursing care but a HELOC to meet Medicaid’s $752,000 equity limit creates a $20,000 cash problem. Originally reported by 24/7 Wall St..
Medicaid’s Home Equity Limit
A widow needs nursing care but her $760,000 home exceeds Medicaid’s $752,000 equity cap by $8,000.
How a HELOC Fixes Equity
Borrowing $20,000 on a HELOC drops her home equity to $740,000, under the $752,000 cap.
The Cash Problem
The $20,000 loan creates a $18,000 cash problem as her checking account exceeds state resource limits.
Two Paths for the Money
She spends the cash on needs like a roof or care bills or leaves it unspent, risking a Medicaid penalty.
Home Value Changes
A 3.1% home price rise could add $23,200 to her house value, wiping out the HELOC’s cushion.
HELOC Risks
HELOCs carry interest and payments that add debt, potentially worsening her financial situation.
The main idea
A widow with a $760,000 home needs nursing care but a HELOC to meet Medicaid’s $752,000 equity limit creates a $20,000 cash problem.
