A $393,700 New Home Looks Like a Bargain. Medicaid’s 3-Month Clock Starts When Her Old House Sells

The median new house sold in the U.S. went for $393,700 in August 2026, per the U.S. Census Bureau. A widow on Medicaid might sell the house she has lived in for decades and find a new build priced right around that median. It feels like a simple trade: one house goes, another comes, and her benefits carry on.

Then the clock starts. Supplemental Security Income rules give someone who sells an excluded home three full calendar months to use the proceeds toward another excluded home. Miss the deadline, and any unused money can lose its protected status retroactively.

How the 3-Month Home Replacement Clock Runs

SSI ignores the home you live in and the land it is on. A sale turns that protected asset into cash, and cash normally counts. The replacement rule buys her a short grace period.

SSA defines the deadline precisely: “by the end of the last day of the third month after the month in which the proceeds are received.” If her check clears in May, she has until August 31. The month of the sale itself doesn’t count toward the three.

The proceeds equal the net amount the seller receives at settlement. “Using” them includes obligating them by contract as well as actually paying them out, so a signed purchase agreement can stop the clock before the new house closes. Qualifying uses go well beyond the purchase price. They include the down payment, settlement costs, loan processing fees and points, moving expenses, and mortgage payments, plus necessary repairs to the new home’s roof, furnace, plumbing, or built-in appliances, as long as those repairs are identified and documented before she moves in.

Why an SSI Rule Decides Her Medicaid Case

A joint federal-state program, Medicaid pays for nursing homes and in-home care for people with limited income and assets. Medicare, which most people qualify for at 65, is a separate program with no asset test at all, so this whole problem belongs to Medicaid.

Federal law generally requires state Medicaid programs to use the SSI program’s eligibility methodologies for people who qualify based on age, blindness, or disability. That’s why SSI’s treatment of home-sale proceeds can carry directly into a Medicaid eligibility decision. Michigan’s eligibility manual, for example, repeats the requirement to buy another excluded home within three full calendar months of receiving the proceeds, and Louisiana’s SSI-related resource rules carry the same window.

States still differ. Eight so-called 209(b) states (Connecticut, Hawaii, Illinois, Minnesota, Missouri, New Hampshire, North Dakota, and Virginia) may apply at least one eligibility rule stricter than SSI’s. In those states, the state Medicaid manual sets the terms, and the three-month window can’t be taken for granted.

What $2,000 Means for Money Left After the Deadline

Back to the widow. Her old house sells for more than the new one costs, which looks like a happy ending. She closes on the new build, pays the movers, and deposits the remaining money in checking while she decides what to do with it.

Once the third month ends, that leftover balance becomes a countable resource. For an individual, the countable resource limit on SSI is $2,000, and that cap covers everything she owns that counts, including her regular bank balance. A modest surplus can push her over.

The consequence can reach backward. If she misses the deadline, SSI rules revoke the exclusion on the unused lump-sum proceeds back to the date she received them. For Medicaid programs using that methodology, months that looked safe while the money was temporarily excluded may have to be revisited.

Delays create the same trap. If the builder pushes the closing past the deadline and she hasn’t already obligated the proceeds through a binding contract, the unused sale money can lose the exclusion.

Paperwork That Protects the Exclusion

SSA asks the seller for a signed statement of intent saying whether she plans to buy another home by the deadline, and recognizing that the exclusion of any funds not used by the date specified will be revoked retroactively. Families that line up the replacement home before closing on the old one start the clock with a destination already chosen.

Records do the rest: both settlement statements, the purchase contract, moving bills, and the contractor’s estimate for the furnace, dated before move-in day. Each document links a dollar from the old house to the new one.

The $393,700 replacement can work if the old home’s proceeds are committed to qualifying costs by the deadline: the new house, closing costs, the move or documented repairs. Any money left over in checking after that date counts against her.

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