Making a decision to use Medicaid to pay for the costs of long term care whether at home or at a nursing home can be difficult if you don’t know whether or not Medicaid can take your home. There is an abundance of information out there, but sometimes it is hard to interpret. Just because your beautician’s mother had an issue similar to yours and received Medicaid or your friend’s spouse was denied Medicaid, does not mean you will have the same results. Each case is different and outcomes cannot be predicted based on someone else’s situation. Regardless, most of us have a strong desire to protect our home. It’s the place where our families were raised and where memories abound. Not to mention it is, for many people, their most valuable asset. It is no wonder then that people ask, “Will Medicaid take my home?’’ or “Can I qualify for Medicaid benefits if I own my own home?” or even “Should I give my home to my children?”
Well, there is good news. In many situations you can get Medicaid to pay for the cost of care at home or at a nursing home and still protect your home against recovery.
Let us begin to explain the relationship between Medicaid and your house. For an individual who is age 65 or over, blind, or disabled, in order to qualify for Medicaid, he or she must have no more than $15,450 in countable resources. Your primary residence is an exempt resource for becoming eligible for Medicaid benefits. However, it is not exempt from Medicaid’s recovery. This means that in many circumstances, owning your own home will not prevent you from receiving Medicaid benefits, but Medicaid will be permitted to recover what it paid out to you when you pass away by making a claim against your probate estate. The probate estate is the portion of a deceased person’s assets that passes under the terms of that person’s Last Will and Testament. Most people own their house outright, and therefore it passes through their Will.
Additionally, if your home is not occupied by a spouse or other designated family member, Medicaid has the right to impose a lien on the home during your lifetime if you enter a nursing home and are not reasonably expected to return home. Fortunately, Medicaid does not kick a spouse to the curb. They wait until the well, or “community,” spouse passes away before asserting their claim against the estate.
Now that we know the general rules, are there other rules that could help you avoid Medicaid getting your home? The quick answer is yes, and it comes in the form of a Trust. As we have detailed in previous issues of The Legal Updater, there are two basic types of Trusts: Revocable and Irrevocable.
Preserving your home against Medicaid claims falls primarily into the Irrevocable Trust category. This type of trust is the safest and most secure means to preserve your home for your chosen beneficiaries, while also allowing you to retain the tax advantages you would otherwise lose if you transferred your home directly to your chosen beneficiaries. By transferring ownership of your house to a properly drafted Irrevocable Trust, you can retain your same property taxes and STAR exemptions, and prevent Medicaid from placing a lien against the home during your lifetime, and from asserting a claim against your home after you pass away. All of this will ensure that you leave your house as a legacy to your chosen beneficiaries, rather than to the government.
The law regarding your home and Medicaid is complex and difficult to navigate without the advice of an experienced professional. Not understanding the full extent of the rules can prevent you from qualifying for nursing home care, or may cause you to suffer taxes that could otherwise be avoided. Ultimately, it could result in the government taking the value of your home from your estate before your chosen beneficiaries receive anything.
Therefore, we urge you to learn more about these concepts. You are certainly invited to attend any of our upcoming free educational seminars. You can learn about our upcoming seminar dates and locations by calling us at 631-686-6500. If you are looking for a more personal review of your particular situation, feel free to set up a consultation so that we can sit down and discuss how the Medicaid rules apply to your situation.
~ Craig & Christine Andreoli