During a consultation about estate planning, one of the questions most frequently asked by clients is “Will Medicaid take my house?” While some people amass a great deal of wealth during their lifetimes, for the average middle class person the family residence is his/her most valuable asset, and the concern of losing this asset to pay for one’s long term care is at the forefront of many discussions revolving around long term care.
The answer to this frequently asked question is not a simple yes or no. First, in the context of eligibility for Medicaid, a home with a spouse still living in it is exempt. Similarly, if a disabled child lives in the home, the home is exempt. If the individual who requires nursing home care does not have a spouse or disabled child living in the home, the home loses its exempt status. However, if the value of the applicant’s home is no more than $878,000, the applicant can express that he/she intends to return home. If the applicant expresses this intent to return home, the house will not lose its exempt Nonetheless, the house will lose such status if the applicant is declared to be in permanent absent status because it is not likely that the individual can return home. At that point, the cost of the applicant’s nursing home care will continue to be covered by Medicaid, but Medicaid can place a lien on the house for the amount of funds it expended and can recover such funds once the applicant passes away or when the house is sold.
The most failsafe option for protecting a home from potential liens is to place the home in a Medicaid Asset Protection trust. These types of trusts will allow an individual to gift the home into the trust, maintain the right to live in the home for the rest of their lives, maintain eligibility for property tax benefits (STAR, Veterans, Enhanced STAR, etc.), and direct where the home shall go upon their passing. Due to Medicaid’s 5-year look-back period for gifts, it is essential to put a plan in place for protecting one’s home as soon as is practical.
Some of this information may be comforting to a person who had otherwise believed that he/she would most definitely lose his/her house to Medicaid in the face of long-term care needs. Nonetheless, there is still a significant amount of vulnerability. In light of the fact that an applicant’s house can be protected in its entirety if advanced planning is effectuated, it behooves individuals to plan in advance and seek the counsel of an attorney who concentrates in elder law/asset protection planning.