Can Medicaid take your home? Because the home is typically the largest asset a couple can keep while still qualifying for Medicaid, it is also usually the main target of estate recovery. For many people who need Medicaid benefits for long-term care, the home makes up most of their life savings. Often, it’s all a couple has to pass on to their children. Generally, a home is an exempt asset according to Medicaid up to a certain value. It continues to be exempt as long as the spouse lives there. However, after both the ill spouse and the healthy spouse pass away, the property may no longer be protected.
According to the Omnibus Budget Reconciliation Act of 1993, the state has the right to take back whatever it paid for the care of a Medicaid applicant. Usually, the only property of substantial value that a person on Medicaid is likely to own when they die is their own home. There is a lot of confusion around the question of how Medicaid treats the home. A lot of people have heard that the home is exempt from Medicaid. This is a misleading and incomplete statement. The equity in your house won’t make you ineligible for Medicaid, but its value is still vulnerable to Medicaid claims, once you no longer live there. Take the proper steps to protect yourself, your spouse or children. There are a number of different planning options that people can use to protect their homes from the Medicaid Estate Recovery Program. Let us discuss them with you at ElderLawLexington | McClelland & Associates, PLLC.
All 50 states are required to have Medicaid Estate Recovery Programs (MERP). Following the death of a Medicaid recipient, these programs attempt to collect reimbursement for the cost of Medicaid funded long-term care in which the state paid for that individual’s in-home care or nursing home care. These funds are collected via estate recovery and often the only asset a deceased Medicaid applicant still has of any significant value at the time of death is his/her home. Estate recovery does not apply when a Medicaid recipient is still living. If a Medicaid applicant dies and still has a living spouse, Medicaid cannot attempt to recover long-term care costs. With expert planning, especially if you plan in advance, seniors can ensure that their homes will stay in the family after their deaths and not be lost to estate recovery. Using an irrevocable, long-term care trust, your property can be protected from estate recovery when you die, even if you have a long stay in a nursing home.
Since the house is excluded, you do not have to get a mortgage or sell it at the time of your Medicaid application and receipt of Medicaid benefits. But, don’t try to apply for Medicaid yourself. Have one of our Elder Law attorneys at ElderLawLexington review your plans and actions before submitting the Medicaid application.
The best way to save your house from Medicaid recovery is by putting the house in an irrevocable trust. If children are the trustees, the trust can protect the house and the parents in case the child or children run into financial difficulties. The parents can also be protected from the children deciding it’s time for the parents to move out. There are also tax benefits for the children if a trust is used as opposed to an outright gift.
If you are concerned if Medicaid can take your home, contact us at ElderLawLexington | McClelland & Associates, PLLC.
Call Before The Fall ®