When families contemplate Medicaid eligibility to cover expensive long term care costs, one of their greatest fears is the loss of the home. Many folks believe that if an elderly or disabled person leaves the home to receive care in an assisted living or skill nursing facility, the State will force him or her to sell the home as a condition of Medicaid eligibility. This is troubling myth.
The State cannot force a Medicaid applicant/recipient to sell his or her own home if the applicant/recipient expresses an intent to return there. The intent is subjective only. There is no requirement that the Medicaid applicant/recipient provide a medical opinion that he/she can return home.
The value of the home is an exempt, non-countable asset for Medicaid if the equity interest is less than $650,000. There is no equity limit on the home if the applicant/recipient’s spouse, minor child or an adult disabled child lives there.
In some circumstances, the home can be transferred to family members without the Medicaid applicant/recipient incurring a divestment penalty period. A penalty period is a certain time frame in which a Medicaid applicant/recipient will not receive Medicaid covered services because he or she transferred assets for less than fair market value in return. The law does allow a Medicaid applicant/ recipient to transfer the home to a spouse, to a child under the age of 21, to a blind and/or disabled child and to a caretaker child. Family members must meet certain requirements for the transfer to be allowed. It is important to consult with an attorney to determine if there are qualified family members and to determine whether there is a person authorized to make the transfer of behalf of the Medicaid applicant/recipient if he or she lacks the capacity to do so.
It is important to consider the transfer of the home to family members and other estate planning options to avoid Medicaid estate recovery on the Medicaid applicant/recipient’s death. The State can file a claim in the Medicaid recipient’s estate, the estate of the Medicaid recipient’s spouse and place a lien on the home. The claim or lien is equal is the value of the Medicaid benefits provided to the Medicaid recipient during his or her lifetime and can quickly eat away any home equity.
