The rules about home ownership and Medicaid often confuse families. Here are the basics:
A person can own a home and qualify for Medicaid,
that home may be vulnerable to Estate Recovery after the person dies.
In other words, a nursing home resident can own a home and still get Medicaid benefits. The home is considered an exempt asset. However, once the nursing home resident dies, the home can be subject to Medicaid Estate Recovery.
When Medicaid helps pay for nursing home care, the state must attempt to recoup from the beneficiary’s estate whatever amount was paid on the resident’s behalf; this is called estate recovery. Since Medicaid rules limit the number and amount of assets a resident can own, the only property of substantial value that a Medicaid recipient is likely to own at death is his or her home.
How can a home be protected from estate recovery?
Here are Three Ways to Protect Your House From Medicaid Estate Recovery:
1. Transfer the house to another person before applying for Medicaid.
It is true that Medicaid penalizes a person for making transfers during the 60 months prior to applying for Medicaid; but there are circumstances in which it is legal to transfer a house. Transfers of the home can be made to the following individuals without incurring a transfer penalty:
• A child who is under age 21 or who is blind or disabled;
• A sibling who has interest in the home; or
• A “caretaker child,” who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant’s institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay.
2. Sell the house.
You can sell the house to another family member–thereby keeping it in the family but away from Medicaid Estate Recovery. This option requires intense and measured planning in order to protect the maximum amount from Medicaid Estate Recovery and to ensure Medicaid eligibility. It is advisable to seek guidance from a Certified Elder Law Attorney before pursuing.
3. Accept the consequences of Medicaid Estate Recovery.
If no action is taken to plan for a beneficiary’s home, that home will be subject to Medicaid Estate Recovery. This means that the state will put a lien on the house to recoup the costs spent on the beneficiary while in the nursing home. The state will not, however, put a lien on the house if a spouse (or a disabled/blind child, a child under age 21, or a sibling with an equity interest in the house) lives in the house. Only after the well spouse (or dependent relative) dies or moves out will the state try to collect. And even after a lien is placed on the house, the state does not force a person to sell the house—the house just does not have a free and clear title. The debt to the state would have to be paid before the house could ever be sold. This situation, although our least favorite option, is sometimes workable for families.
There are ways to protect the home from Medicaid Estate Recovery. The rules are tricky, so be sure to consult with a knowledgeable, experienced Elder Law Attorney. If you or someone you know has questions about how these rules could work for them, please call our office for a complimentary consultation at (404) 843-0121.