If we could name one asset that is the most important to manage when it comes to government-funded nursing home assistance, it would be the family home. While Medicare will pay for limited time in a nursing home to receive rehabilitative care following a qualifying hospital admission, Medicaid is the only government program that will pay for extended nursing home care in a facility or in the community. Unlike Medicare, however, Medicaid has strict income and asset requirements for eligibility.
The good news is that, when qualifying for Medicaid, the home an applicant is living in or intends to return to is not considered a countable asset unless the home equity interest exceeds a certain amount. The home also is exempt from imposition of any lien if a non-applicant spouse or a minor child or a child with disabilities also lives there. However, some families, in an effort to shield the value of the family home, may have transferred or “sold” the home to children or other relatives. That could be a problem if the transfer or sale was for less than fair market value and the transfer or sale occurred within the five years preceding a Medicaid application (the “look-back” period). If the home was transferred or sold for less than fair market value and if a Medicaid application is filed within the look-back period, a penalty period will be imposed during which an individual will be ineligible for Medicaid benefits. The formula for determining that penalty period is different in every state.
There are certain circumstances when a home may be transferred to a child who has been living in the home for an extended period (at least two years immediately preceding a nursing home admission) and the child can demonstrate their care and support postponed the nursing home admission. Additionally, there are some additional Medicaid protections for the home when a minor child, or a child who is disabled or blind, lives in the home. Stating an “intent to return,” also may shield a home for a certain period of time. In essence, intent to return is a statement that nursing home admission is anticipated to be temporary, and the individual still considers the property to be their primary residence.
Protecting the home from being considered a countable asset for Medicaid qualification is just the first step. Under Medicaid’s estate recovery program, on a recipient’s death, if the home is part of the Medicaid recipient’s estate for recovery purposes, the home can be considered an asset exposed to reimbursing the state for Medicaid benefits received during life. In fact, it is often the first asset they consider as it typically represents a large portion of the estate. Again, there is no recovery against the home if certain safe harbor persons are living there – including a surviving spouse. While some states only look at assets that go through probate, New Hampshire also considers property that is transferred outside the probate process.
Fortunately, there are effective strategies individuals and families can use to ensure the home is not a countable asset and protect the home from future Medicaid recovery. What those strategies are depends on your particular situation and needs. Consulting with a knowledgeable attorney in the areas of benefits and estate planning is the first step. Connect with us to learn more.