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my 80 year old mother has lung cancer and no life insurance,the only thing she has of value is her home, can she sell it so she has money for a funeral and still keep her medicaid

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She can sell her home, but to continue Medicaid, she would have to spend down the money in the normal way. Purchasing funeral services can be part of the spend down. I don't know how much the property is worth, so I don't know what type of effect it would have on the length of time she would be ineligible to receive Medicaid.
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Her home is an exempt asset for Medicaid as long as she maintain's it as her primary residence. BUT if she sells it, then the proceeds (the $$) from the sale of the home is now an asset, which would have to be spent down back to your state's Medicaid compliance level. Depending on how much $$ the house brings in, it will make a big difference on how much spend down.

If she doesn't have a prepaid NCV (no cash value) funeral and burial policy, then she can use that $$ to do on. The funeral home will know how to do this so that it is Medicaid compliant (a NCV policy) and it will have a limit as to how much. Each state can make this different. My mom's state has it so that it has to be under 10K.

She can also spend the $$ on anything for her needs or her care - so she can get expensive dental work done; buy new clothes and shoes; get new hearing aids, eyeglasses, walkers or other health related items that Medicaid doesn't pay for or pays for really cheap and ugly ones. She can also have a car as an exempt asset - most states have the value on the car with a limit but it's reasonable. She can spend some of the $$ to have all her legal updated - so check her legal stuff to make sure it's all there and see an attorney to get it updated if need be.

You want to keep very good track of what she spends the $$ on and receipts too.
She cannot gift any of the $$ under Medicaid rules, if she does there can be a transfer penalty done. Remember that all real property ownership - like homes, autos, land - are recorded by the local county assessor and then in turn dovetailed into the state system. So Medicaid can find out this information in just a few keystrokes and ask about where the $ went. Good luck!
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