Home ownership is a founding principle of the American Dream. For many people, owning equity in their home 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 the state take my home?
The enormous and on-going costs of nursing-home care are astronomical, on average around $8,500.00 a month, but often as high as $10,000 or more, depending on your 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, the Medicaid rules permit states to make a claim for the value of long-term care services covered by Medicaid, to reimburse the program for funds it expended on the person's behalf. Usually, the person's home is the most valuable asset of their estate, so the heirs are often forced to sell the home to pay off the Medicaid claim.
Because a home is such an essential family possession, the rules treat a primary residence as "non-countable" for eligibility purposes – 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 dies, 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 situation is one exception to that rule.
There are other strategies available. The home can be given to a disabled child without penalty or disqualification. Each strategy comes with risks that must be fully explored before determining the correct one.
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 single "cookie-cutter" solution. It would be best to plan well before you or your spouse needs nursing-home care, but we can often help preserve assets even after an elder needs long-term 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.