Selling a Home in Washington When a Spouse Needs Care

Can you sell your house in Washington if your spouse needs long-term care? Yes, you can sell. Under Washington’s rules, cash from the sale of an excluded home counts as a resource starting the next month, unless it is used to buy another home within three months. Timing is the whole question.

Your spouse needs care, and Medicare doesn’t pay for long-term care. The house is protected while you live in it, but the day it sells it turns into cash, and the rules treat cash differently.

In Washington, the family home is protected while the healthy spouse lives in it, and Medicaid has rules for married couples so the spouse at home is not left with nothing. Selling is a different event from keeping. That is why the order of the steps matters more than the sale price.

A note before you read on. This article is general information, not legal, tax, or financial advice. I am a real estate broker, not an attorney, CPA, or lender, and no attorney has reviewed this article. Most rules described below link to their source. Where the sources used for this article do not answer a question, the article says so plainly, and that question becomes one to ask a lawyer or DSHS before you act.

What kind of care and which couples this covers

This is written for married couples in Washington where one spouse needs nursing home or other long-term care that Medicaid might pay for. Washington calls its Medicaid program Apple Health. According to WashingtonLawHelp, the state’s Department of Social and Health Services (DSHS) decides whether you qualify for long-term care.

Three boundaries:

• You may never need Medicaid. If you can pay for care privately, selling the house is a normal sale with a normal timeline. Everything below only matters if you expect to apply.
• Single and widowed homeowners follow different rules. The spousal protections here only apply to married couples.
• This is about care that goes on for months or years, not a short rehab stay.

How Washington treats the family home

When one spouse enters a nursing home and applies, the state looks at the couple’s money together. According to Washington’s legal aid organization, WashingtonLawHelp, it does not matter whose name an asset is in at the time of the application. (Washington is a community property state, so much of what a married couple owns is shared anyway.)

From there, the rules protect the spouse who stays home. Here is what the state rules say.

The savings are split by a formula. Under WAC 182-513-1355, the spouse at home can keep the greater of two amounts: half of the couple’s combined countable resources, up to a federal maximum, or a state standard amount. The couple’s resources are measured as of the first day of the month the current stretch of continuous care began.

After approval, the spouse at home’s money stops counting. Under WAC 182-513-1350, the resources of the community spouse are unavailable to the spouse in care starting the month after eligibility is established, with exceptions the rule lists. WashingtonLawHelp adds that once approved, only the resources in the applicant’s own name count as theirs, and anything over $2,000 in the applicant’s name should be moved to the spouse within about a year.

The home equity limit does not apply while your spouse lives there. The rules include a cap on how much equity a person can have in their home. But the same rule says the cap does not apply if the person’s spouse lawfully lives in the home (WAC 182-513-1350, subsection 8). The cap is the federal maximum and can change each January. It is a large number, over a million dollars at the time of writing, so it matters mainly for high-value homes. The rule also protects a home where the person’s dependent child under 21, or a blind or disabled child, lawfully lives. If none of those people live in the house, the cap can matter.

Transfers to a spouse are exempt from the transfer penalty. WAC 182-513-1363 exempts transfers of assets to a spouse from the penalty. Whether a title change makes sense for your situation is a question for a lawyer.

To give a sense of scale, here are the figures as they stood when this article was written. They change, so treat them as examples and check the current numbers before relying on any of them.

• $2,000: the resource limit for a single applicant, and $3,000 for a married couple when both spouses apply, both stated in WAC 182-513-1350.
• About $162,660: the figure WashingtonLawHelp lists as the most the spouse at home can keep, which is the federal maximum for the spousal share. The state also sets a lower standard amount that a smaller couple’s share can be raised to.
• About $1,130,000: the federal maximum for the home equity limit, as listed in a federal Medicaid bulletin from CMS (the same chart lists a federal minimum of $752,000). Washington’s rule gives no number and says only that the limit is the federal maximum allowed, adjusted each January.

Washington’s own pages did not agree with each other on some of the other allowances, probably because they were updated at different times, so I left those out. The Health Care Authority posts its program standards for income and resources, and WashingtonLawHelp links to the same charts, so that is the place to look for the current numbers.

What changes when you sell

While the home is protected, it does not count against you. When it sells, the equity becomes cash.

Here is what the rules say about that cash. Under WAC 182-512-0300, cash from the sale of an excluded resource, which includes an excluded home, becomes a countable resource on the first day of the month after the sale. The exception is cash used to replace the home. Under WAC 182-512-0350, the proceeds stay excluded if you use them to buy another home by the end of the third month after you receive the proceeds.

One caution: those are Washington’s general resource rules for the program, and the long-term care rules build on them. Nothing in the long-term care rules reviewed for this article changes them for married couples, but that cannot be ruled out.

Here is a hypothetical, not a real client. Picture a couple in Shoreline who sell the family home and plan to buy a smaller place. The rules give them until the end of the third month after the sale to buy that replacement home with the proceeds. If the purchase falls through, or they decide to rent instead, the cash does not get that protection.

That three-month window is a real estate problem as much as a legal one. It means the closing on the sale and the closing on the purchase have to be planned together.

Because the cash from a sale is what the rules look at, it helps to know the number before you decide anything. Sale price, selling costs, and what is owed on the home all change it, and the costs of selling a home page walks through each one.

The question this article cannot answer. None of the rules or guides used here explains, in plain terms, how the proceeds of a home sold before Medicaid approval are weighed against the couple’s allowance. The rules above point in two directions: cash from a sale counts, but the spouse at home’s resources stop counting after approval. How those two rules fit together for a sale on either side of the approval date is not stated in these sources. A sale cannot be undone, which is why this is the first question to put to DSHS or a lawyer before listing.

The table puts the situations next to what the rules say and what to ask.

Situation	What the rules say	What to ask
Spouse at home keeps living there	The equity limit does not apply while a spouse lawfully lives in the home	Does anything on the title need to change now?
Sell and buy another home	Proceeds stay excluded if used to buy another home by the end of the third month	What happens to leftover cash if the new home costs less?
Sell and do not buy	The cash becomes countable the first day of the next month	How is that cash weighed against the couple’s allowance?
Sell after approval	Only the applicant’s own resources count, and anything over $2,000 should move to the spouse	Whose name is on the title on the day of the sale?
Sell to a family member below market value	A gift or below-market transfer in the last five years can trigger a penalty	Does an exception apply?
After the healthy spouse passes away	The state may seek repayment from the estate and can put a lien on the home	What happens to the proceeds or a replacement home?

The five-year look-back and the family-sale trap

When you apply, Washington reviews transfers made in the five years before you apply, according to WashingtonLawHelp and the rule at WAC 182-513-1363. If you gave something away, or sold it for less than it was worth, the state can impose a penalty period when Medicaid will not pay. The penalty is calculated by dividing the amount of the gift by a rate the state sets. For how a home sale fits into this rule, see Medicaid Look-Back Period and Selling a House in Washington. Two related guides cover estate recovery and the family home and the three-month replacement home rule.

For homeowners, the trap can look well-meaning. Here is a hypothetical: a parent sells the house to a daughter for far under market value because she has been helping out. Or the sale proceeds are handed to the kids to “keep them safe.” Both can look like gifts to the state.

The rules do list exceptions. Under WAC 182-513-1363, a transfer is exempt in these cases:

• The home goes to a spouse.
• The home goes to a child who lived in the home for at least two years and provided verifiable care that let the parent stay at home.
• The home goes to a child with a disability, or a child under 21.
• The home goes to a sibling who has lived in the home and had an equity interest in it for at least a year.

Each has conditions, and this is only a summary. The rule text is linked above.

A sale on the open market at fair market value is the kind a written market analysis can document, including for a home in King County or Snohomish County. Whether DSHS asks for one, or whether an appraisal would be better, is not covered in the sources used here. That is a question for DSHS or a lawyer.

Practical snags before and after the sale

Who can sign for the house?

This is the snag that can stop a closing, so check it before you list.

If a spouse can no longer make decisions, someone with legal authority has to act for them. There are two routes in Washington law:

• A power of attorney. Under RCW 11.125.270, an agent with general authority over real property may sell or convey it. That means the wording of the document itself matters, so it is worth checking whether it grants authority over real estate.
• A conservatorship. Under RCW 11.130.435, a conservator needs court approval to sell the primary home of the person under conservatorship, and needs added authority from the court over what happens to the proceeds. (Washington’s guardianship law uses “conservator” for the person who manages someone’s finances.)

Two things are not answered by the sources used here: how this works when the home is owned jointly and only one spouse can no longer sign, and how long court approval typically takes. Both are questions for the title company and a lawyer, and both are worth asking before a hospital discharge date or a placement deadline sets the schedule.

If a placement date is close, the order of events on the real estate side matters. How I list and sell a home in Seattle lays out each step from prep to closing, so you can see where the time goes.

When to apply

WashingtonLawHelp’s advice is to apply at least 45 days before you need coverage, if possible. Its page also says that for a nursing home, coverage can start the first day of the month you apply and may reach back earlier. For care at home or in a community setting, there is no retroactive coverage: it starts only after DSHS decides you are eligible. The same page warns against giving away money or property to reduce your resources without talking to a lawyer who knows the Medicaid rules, and says DSHS reviews five years of financial records.

Those dates matter when a placement date is driving your schedule. The sources used here do not say how to line up a home sale against the application date, which is the question raised above. If a placement date is close, that is worth bringing up with DSHS or a lawyer first, and with me right after.

After the sale: estate recovery

Medicaid can ask to be repaid. RCW 43.20B.080 directs the state to seek recovery from the estate of a person who received long-term care services, and allows a lien on real property the person owned. According to WashingtonLawHelp’s guide to estate recovery, DSHS might try to recover money from a person’s estate after death, including by putting a lien on a home the person owned. The state says it will not enforce the lien while a spouse, a registered domestic partner, a child under 18, or a child with a disability of any age lives in the home. In some other situations a hardship deferral is possible, through the state’s Office of Financial Recovery.

How estate recovery treats sale proceeds or a replacement home is not covered in the sources used here, so it is a question to ask if you sell. The plan for the house after the second spouse passes belongs in the same conversation as the sale, and probate real estate in Washington explains what happens to a home when an estate has to sell it.

What about a “Medicaid divorce”?

Some couples hear about divorce as a way to protect assets when one spouse needs care. It is a real topic and people search for it, so here is what the sources say.

The state rules for couples are written for legally married couples, so the protections described above are built around marriage. A public radio report once quoted an Ohio Medicaid eligibility official saying that if someone could prove a couple divorced with that intent and only that intent, it would be fraud. That is one official in one state, and no Washington source used here says whether Washington treats it the same way.

The sources used here also do not say whether a divorce settlement that gives the healthy spouse most of the assets would be penalized as a transfer. That is a question for a lawyer, along with the question of what else divorce changes, such as the legal standing a spouse has.

This article does not recommend a divorce for this purpose and does not advise on it. If someone has suggested it to you, a lawyer is the place to get an answer before acting on it. The companion article Is a Medicaid Divorce Legal in Washington? goes through what the divorce and transfer rules do and do not say.

What I do, and what I do not do

Once you know the order of the steps, I can take the real estate side off your plate:

• Price the home against recent sales so the price is supported by comparable sales.
• Build a timeline that works around the care placement, hospital stays, and the healthy spouse’s own move, including the three-month window if you are buying a replacement home.
• Coordinate with whoever is signing, the title company, and your lawyer so the paperwork is ready before offers come in.
• Handle the physical side: clearing out a long-held home, staging, showings around a caregiving schedule, and a closing date that gives you time to move.

Moving out of a home you have lived in for decades is its own project. Downsizing in Shoreline: what to know before you list covers the practical side, from sorting belongings to timing the move.

I do not decide whether you sell before or after Medicaid approval, give legal or tax advice, or tell you whether you will qualify. Those answers come from DSHS and a lawyer.

Questions to ask before you list

Take this list to DSHS or a lawyer. Some questions have partial answers above, but none should be taken as settled for your situation.

• How are the proceeds counted if we sell before my spouse is approved, and how if we sell after?
• If we sell and buy a smaller home, what happens to leftover cash, and what must the new home meet?
• Whose name is on the title today, and does it need to change before the sale?
• If there is a power of attorney, does it cover real estate? If my spouse can no longer sign and there is none, what is needed, and how long does it take?
• Does anything we did in the last five years need to be reviewed?
• How does estate recovery treat the sale proceeds or a replacement home?
• Can we request a resource assessment before we apply? The rule at WAC 182-513-1355 allows one before an application in some situations.

Frequently Asked Questions

Does Medicaid take the house if my spouse goes into a nursing home in Washington?

Under the rules cited above, the equity limit does not apply while a spouse lawfully lives in the home, and transfers to a spouse are exempt from the transfer penalty. The state can seek repayment from an estate later, including through a lien, but says it will not enforce that lien while a spouse lives in the home.

Can I sell the house if my spouse is on Medicaid?

Yes, but timing matters. Washington’s rules treat cash from selling an excluded home as countable the next month unless you use it to buy another home by the end of the third month. After approval, the spouse at home’s resources stop counting against the applicant. The sources used here do not say how a sale before approval is weighed, so that is a question for DSHS or a lawyer.

What is the Medicaid look-back period in Washington?

Washington reviews transfers made in the five years before you apply for long-term care Medicaid. Gifts and below-market sales can create a penalty period when Medicaid will not pay. Transfers to a spouse are exempt, along with some transfers to certain children and siblings. Each exception has conditions, so read the rule before you rely on one.

Is a Medicaid divorce legal?

Divorce is a legal process, but the state’s spousal rules are written for legally married couples. A public radio report quoted an Ohio official saying a divorce done only to qualify could be fraud. No Washington source used here addresses that question, so a lawyer is the place to ask.

Who signs the sale documents if my spouse can no longer sign?

An agent under a power of attorney with general authority over real property may sell it, according to Washington law. For a person under conservatorship, the conservator needs court approval to sell the primary home. The sources used here do not say how this works for a jointly owned home when one spouse cannot sign, so the title company and a lawyer are the places to ask early.

Talk it through before you list

If a spouse is moving into care and you own a home in King County or Snohomish County, call me before you list. I can build the real estate timeline, line it up with what you learn from DSHS or your lawyer, and make sure the house is ready when the legal side is.

The page on selling a home when a spouse needs long-term care sums up how I work with families in this situation.

I am Emily Cressey with HomePro Associates at Keller Williams Greater Seattle. You can reach me at 206-245-8813, or start with the downsizing guide and its short form. More at HomeProAssociates.com.

This article is general information, not legal, tax, or financial advice. Emily Cressey is a real estate broker, not an attorney, CPA, or lender. Rules change and every situation is different, so consult a qualified professional before acting on anything here.