How To Protect The Family Home From Medicaid Recovery
December 21, 2011 § 4 Comments
When confronted with the out-of-pocket costs of long-term, and the possibility of utilizing Medicaid to help pay those costs, the most common question I hear is, “Am I going to lose my house?”
For married couples, as long as one spouse lives in the home, the home is exempt and the spouse in the facility can qualify for Medicaid. However, in 1993, Congress passed the Omnibus Budget Reconciliation Act, which mandated that states try to recover monies paid out for many medical assistance claims that were paid for by Medicaid. Because of the act, states began creating Estate Recovery Units to help collect these funds. So, when the spouse who remained in the home dies, the state can attempt to recover any funds they paid out on behalf of the institutionalized spouse from the equity in the home.
For example, if Sidney dies before Rachel after living in a nursing home for two years and Medicaid has paid the nursing home $3,000 per month, the state will have paid $72,000 for Sidney’s care ($3,000 per month times 24 months). If the family home where Rachel lives is worth $100,000, the state would have a claim for the first $72,000 that comes from the sale of the house.
So, the house is protected while Rachel is alive. However, when she passes, the state may place a lien on the house. Whatever’s left over after Medicaid is paid back ($100,000 minus the $72,000 taken out to repay Medicaid) would go to their children.
A Married Couple Strategy For Protecting The Family Home From Recovery
According to federal law, a married Medicaid applicant is allowed to transfer the home to his or her spouse – without any penalty. Once the transfer is made (meaning the ill spouse no longer has any interest in the house), the community spouse may be able to make some changes to that asset. In some states the community spouse can even give the house away!
That sort of gift, of course, would create a period of Medicaid ineligibility if the community spouse needs nursing home care within the five-year look-back period.
The family home remains one of the most difficult assets to protect because of timing, but there are proven strategies that make it possible to protect the home from Medicaid Recovery. If you have a spouse facing the possibility of nursing home care, you need to consult an elder law attorney to find out the best way to protect the home.
If you have any questions or concerns about protecting your family home, please contact the Law Office of Dawn M. Weekly, PC. The law firm located in Sandwich, Illinois and focuses on elder law and Life Care Planning for clients. Their office may be reached by calling 815-570-2334.