By Brian G. Quinn
Can Medicaid take your house? This is a question that one of my clients recently asked me after receiving a letter from the State Medicaid department. My client’s father had a stroke several years ago that left him in a nursing home. He quickly ran through his assets, and applied for Medicaid. When they applied, the family informed Medicaid that their father still owned his house, and they were assured the home would not be counted as an asset for qualification purposes.
The Medicaid Story Gets Tricky
Her father was approved for benefits and Medicaid paid for his nursing home until his death. After he died, however, the family discovered that the Medicaid department planned on placing a lien on the family home for the benefits they had paid out.
Here’s the Rule
When someone makes an application for Medicaid benefits, the Medicaid department will look at all of that individual’s assets to see if they have too much money to qualify. As a general rule, a person’s home is exempt from this asset calculation as long as the equity value is under a certain amount, or if you are married and your spouse lives in the home.
Here’s Where it Changes
Although the house may be exempt at the time you apply for Medicaid, current law requires Medicaid to go after the equity in the home after you die as reimbursement for the benefits paid out during life. The Medicaid department can even come after a partial interest in a home owned jointly with another person. If you transfer the house out of your name to try and avoid Medicaid liens, you may jeopardize your ability to ever receive Medicaid benefits. If assets (including the home) are transferred within the five years leading up to a Medicaid application, the Medicaid department can institute a “penalty period” on an individual for making those gifts. If a penalty period is imposed, the individual under the penalty will not receive Medicaid until that penalty period has run out. This can cost a family hundreds of thousands of dollars.
Planning Ahead is the Solution
Is there anything that we can do to protect the family home? There are several options available to individuals looking to protect the family home. Medicaid has several safe harbor provisions that allow someone to transfer the family home to a spouse, child caregiver, or disabled child without penalty. For those with the foresight to plan ahead, Irrevocable Asset Protection Trusts may be used to defeat Medicaid liens and save the family home.
Get the Help You Need
Remember that Medicaid rules are complicated and can change quickly. Individual circumstances will differ. For these reasons it is always important to consult a knowledgeable elder law attorney when formulating a plan to protect your assets. Next time someone asks, “Can Medicaid take your house?” you can now answer, “Not if you get help with proper planning.”
Written by Brian G. Quinn, Attorney with Quinn Estate & Elder Law.