Do I Need to Worry About Losing the Family Home Due to Medicaid?

“Do I need to worry about losing my family home due to Medicaid?” This is a very common question we receive from many families. This question often arises when one spouse enters a nursing home while the other spouse is remaining at home. Adult children also ask this question as their parents are getting older and one is getting ready to enter a nursing home.

Whatever your case may be, this is a difficult conversation to approach and an even more difficult situation in which to plan.

Paying for Nursing and Long-Term Medical Care

In general, a person has several ways to pay for nursing care and long-term medical care. A person can privately pay for their long-term care. This may not be a cost-effective approach as long-term medical care will cost most families a minimum of $5,000 to $6,000 per month.

Another option would be obtaining long-term care insurance to cover part or all the coverage. However, this may be difficult to obtain if a family waits too long before looking into this option. The final option would be to apply and receive Medicaid assistance to pay for all or a portion of that person’s long-term care.

How does paying for long-term care affect whether a person can keep their home?

From a Medicaid perspective, a person can own a home that has less than $572,000 in equity, one car, moderate personal property, pre-paid funeral arrangements, and no more than $2,000 and still qualify for Medicaid from an asset perspective. Therefore, there is no risk of losing the home while on Medicaid or while a spouse is on Medicaid for a married couple.

However, upon the death of the Medicaid recipient and the surviving spouse of the Medicaid recipient, Medicaid will exercise a lien upon the estate. You can be forced to sell the home so that Medicaid can be repaid for all the Medicaid benefits paid out during the Medicaid recipient’s lifetime.

A common misunderstanding is that Medicaid is not a free government program. Medicaid is a government entitlement program that is used to help pay long-term care costs for those who cannot afford to pay for their own care. However, the program is not a free government entitlement program. One of the rules allows Medicaid to recoup their costs advanced by exercising a lien against the person’s estate after death.

Protecting Your Family Home

One of the strategies that a family can use to protect the family home is by utilizing an Irrevocable Medicaid Asset Protection Trust. This is a trust in which the title of the home (and other assets) are titled into an Irrevocable Medicaid Asset Protection Trust. The benefit of this type of planning is that the assets transferred to the Trust are not considered for Medicaid qualification purposes. However, more importantly, upon death the assets of the trust would be protected from a Medicaid lien.

An important caveat is that the Medicaid Planning and the use of an Irrevocable Medicaid Asset Protection Trust are subject to certain rules. One of the most important rules are that this type of trust must be established and in place for five years before applying for Medicaid. This is referred to as the five-year look back. If this look-back period is not established, then the benefits received from an Irrevocable Medicaid Asset Protection Trust will not be as beneficial.

However, as with all Medicaid Planning, this is just one strategy and one of the rules which apply to Medicaid Planning as a whole. It is important that you speak with a qualified and experienced Medicaid and Estate Planning Attorney before making any legal decision and planning decisions with your assets.

For More Information

If you have questions about Estate and Medicaid Planning, please contact Aronoff, Rosen & Hunt at (513) 241-0400. You can also use our contact form to schedule a time to discuss your Estate and Medicaid Planning questions. Our Ohio Estate and Medicaid Planning Attorneys look forward to speaking with you!