Home ownership is the American Dream. People work hard all their lives to own a home, and it is often their most valuable and significant possession. So when health begins to fail and the need for long-term care arises, we often get this fear-filled question from our clients: will they take away my home?
The enormous and on-going costs of nursing-home care are astronomical, as much as $15,000.00 a month or more depending on location. The joint federal and state Medicaid program foots the bill for one in four of around 75 million recipients in this country. This is an enormous drain on government funds. To recoup some of those costs, then, the Medicaid rules permit states to take the value of a recipient’s home in some cases, to reimburse the program for funds it has expended.
Yet, because a home is such an essential family possession, the rules treat a primary residence as exempt – that is, its value is not counted as available to pay for nursing-home care from the home-owner’s pocket, before Medicaid kicks in. The home is protected, to a certain extent, for the benefit of Medicaid recipients and their close relatives.
That protection can be lost, however. The value of the house can be counted against a Medicaid applicant, and benefits denied or curtailed, when:
* A home-owner has no living spouse or dependents, and
* The owner moves into a facility permanently, with no intent to return home, or
* The owner dies.
In other words, as long as the owner expresses the intent to return home, and the owner’s spouse or disabled or blind child live in the home, the home will not be counted against the owner for Medicaid-eligibility purposes.
Once the owner passes, however the state may place a lien on the home, to secure reimbursement of the value of the Medicaid services the owner received. This lien makes it impossible to sell the home or refinance a mortgage, without first paying the state what it may be owed.
As elder law attorneys we know a number of ways to protect homes from this kind of attachment. If you come to us at least five years before you anticipate needing nursing-home care, we can preserve your home or its value such that Medicaid will not count it, or lien against it, at all.
Or, if a child moves into the home and cares for an ailing parent for two years, permitting the parent to stay home and out of a nursing home, the house can then be given as a gift to that child without any Medicaid penalty or disqualification. Ordinarily, Medicaid heavily penalizes giving away property, but this is one exception. There are other strategies available. The home can be given to a disabled child without penalty or disqualification. Or, you might keep the right to live in the house for your lifetime and deed the remainder interest to others, who will then own the house after you pass. However, each strategy comes with risks that must be fully explored before determining the correct one with a qualified elder law attorney.
An overall plan that is tailored to suit each individual, and to meet as many contingencies as possible, requires juggling a number of puzzle-pieces. There is no one cookie-cutter solution. The key is to plan before you or your spouse may need nursing-home care.
As one piece in the overall picture of a balanced estate plan, we can help you save your home. We welcome the opportunity to work with you. WE have helped many of our clients with creating a Medicaid Asset Protection Trust (MAPT) to protect their family home but you need to do this when you are “alive and well” because of the “5 Year Look=back” period. Which means, your home has to be funded or titled to your MAPT and then you and your spouse must stay unincapacitated for 5 years before applying for Medicaid benefits to satisfy the 5 year look-back period.
To learn more watch our next free educational virtual on-demand estate planning and elder law webinar at www.elderlawcare.com because you will learn a lot. Contact our friendly elder law care team at 781-871-7526 or contact firstname.lastname@example.org to register for the next webinar because we fill up quickly.
Patrick Kelleher is an author and Estate Planning & Elder Law attorney and founder of the elder law care learning center in Hanover, Massachusetts. Patrick has been teaching free educational workshops for over 10 years at his learning center and surrounding communities. Learn more at elderlawcare.com or follow Patrick Kelleher on Facebook because you will learn a lot! Offices in Hanover and Quincy. You can find Patrick’s new book “How to Avoid the Four Headed Monster” of Estate Planning & Elder Law on Amazon at https://www.amazon.com/How-Avoid-Four-Headed-Monster-Financial-ebook/dp/B084MB96SK
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