During a consultation about asset protection, one of the questions most frequently asked by clients is “Will Medicaid take my house?” This query, though brief, reflects so many of the concerns and anxieties that a senior faces when potentially confronting the prospect of paying for long term care.
While many people amass a great deal of wealth during their lifetimes, for the average middle class person, the family residence is his/her most valuable asset, and the concern of losing this asset to pay for one’s long term care is daunting, painful and overwhelming.
The answer to this frequently-asked question depends on each individual’s specific situation. Firstly, in the context of Community Medicaid, which covers home care, the applicant’s home is exempt. In such instance, the applicant can receive benefits and will not lose his/her home.
Nonetheless, Medicaid would have the ability to recover any expenses it laid out on behalf of the applicant from such person’s probate estate. In other words, the home is exempt but loses that status once the person dies, unless there are certain individuals, such as a surviving spouse, residing in the house after the applicant dies. Accordingly, a client should review a plan with an elder law attorney to protect the house from future Medicaid recovery from the estate of an applicant or spouse.
When an individual requires nursing home care, his/her personal residence generally loses its “exempt” status. There are a few exceptions to this rule. For example, if the applicant is married, the home is exempt as long as the non-applying spouse resides there.
This rule is also true for a disabled or blind child or a child under the age of 21 who resides in the house. In addition, transfers of ownership of the residence to these individuals (i.e., spouse, disabled, blind or under age 21 child) are considered exempt and will not be penalized by Medicaid.
For a non-married individual Medicaid nursing home applicant where none of the above-described exemptions apply, his or her personal residence is an available asset. This does not literally mean that Medicaid will take such person’s house. Rather, the applicant will not be eligible for Medicaid because he will be deemed to have assets in excess of the allowable amount.
There are still some planning opportunities for a person in this predicament. If the value of the applicant’s home is no more than $814,000, the applicant can express that he/she intends to return home. If the applicant expresses this intent to return home, the house will not lose its exempt status.
Nonetheless, the house will lose such status if the applicant is declared to be in permanent absent status because; it is not likely that the individual can return home. This typically occurs once the applicant has been in the nursing home for more than six months.
The cost of the applicant’s nursing home care will continue to be covered by Medicaid, but Medicaid can place a lien on the house for the amount of funds it expended and can recover such funds once the applicant passes away or when the house is sold.
Some of this information may be comforting to a person who had otherwise believed that he/she would most definitely lose his/her house to Medicaid in the face of long term care needs.
Nonetheless, there is still a significant amount of vulnerability. In light of the fact that an applicant’s house can be protected in its entirety if advanced planning is effectuated, it behooves individuals to plan in advance and seek the counsel of an attorney who concentrates in elder law/ asset protection planning.
Ronald A. Fatoullah, Esq. is the principal of Ronald Fatoullah & Associates, a law firm that exclusively concentrates in elder law, estate planning, Medicaid planning, guardianships, estate administration, trusts, wills, and real estate. Debby Rosenfeld, Esq. is a senior staff attorney at the firm. The law firm can be reached at 718-261-1700, 516-466-4422, or toll free at 1-877-ELDER-LAW or 1-877-ESTATES. Mr. Fatoullah is also the co-founder of JR Wealth Advisors, LLC. The wealth management firm can be reached at 516-466-3300 or 800-353-3775.