Medicaid is a means-based program. This means that you must be under a certain income and asset limit in order to qualify. As a result, in order to collect costs from the deceased persons estate, Medicaid can take your home after death. Medicaid is a joint federal and state benefit program. The federal government established a policy that forces all 50 states to try and recover the costs that the state paid for long-term care for a Medicaid beneficiary.
This includes in-home care, community-based care, assisted living, and nursing home care. Fortunately, there is a solution that can help you protect your home from Medicaid…. If you have a family member that needs long-term care and you are worried about if Medicaid can take your home after death, there are proven Medicaid Planning strategies that can help you protect your home while still qualifying for the benefits you need.
Proper Medicaid Planning has the following benefits. While Medicaid Planning can help prevent Medicaid from taking your home after death, it involves complicated legal strategies to do so. As a result, you should seek the help of a Medicaid Attorney.
Ways States Recover Costs While individual state laws on estate recovery vary, they all boil down to two different ways to recover costs paid: recovering from the deceased person's estate and putting liens on the person's property. Recovering From the Estate The first method states use is to seek repayment from the estate of a deceased Medicaid beneficiary.
Lien on Real Estate The second method for recovering Medicaid costs paid is to place a lien on any real property owned by the person who received Medicaid coverage. When States Can't Recover Costs Even though the states must recover for costs paid when appropriate, there are certain prohibitions that states must follow.
Surviving spouse. The deceased person's spouse is still living, regardless of where that spouse lives. Minor, blind, or disabled child. There is a surviving child under the age of 21, blind, or disabled, regardless of where that child lives.
In addition, states cannot recover costs from the former home of the deceased person in the following situations. Disability Law. Social Security Disability. Long-Term Disability. Veterans Disability. State Short-Term Disability. Hiring a Disability Lawyer. The person holding the life estate possesses the property currently and for the rest of his or her life.
The other owner has a current ownership interest but cannot take possession until the end of the life estate, which occurs at the death of the life estate holder. Example: Jane gives a remainder interest in her house to her children, Robert and Mary, while retaining a life interest for herself.
She carries this out through a simple deed. Thereafter, Jane, the life estate holder, has the right to live in the property or rent it out, collecting the rents for herself. On the other hand, she is responsible for the costs of maintenance and taxes on the property. In addition, the property cannot be sold to a third party without the cooperation of Robert and Mary, the remainder interest holders.
When Jane dies, the house will not go through probate, since at her death the ownership will pass automatically to the holders of the remainder interest, Robert and Mary.
Although the property will not be included in Jane's probate estate, it will be included in her taxable estate. The downside of this is that depending on the size of the estate and the state's estate tax threshold, the property may be subject to estate taxation. The upside is that this can mean a significant reduction in the tax on capital gains when Robert and Mary sell the property because they will receive a "step up" in the property's basis. As with a transfer to a trust, if you transfer the deed to your home to your children and retain a life estate, this can trigger a Medicaid ineligibility period of up to five years.
Purchasing a life estate in another home can also cause a transfer penalty, but the transfer penalty can be avoided if the individual purchasing the life estate resides in the home for at least one year after the purchase and pays a fair amount for the life estate. Life estates are created simply by executing a deed conveying the remainder interest to another while retaining a life interest. In many states, once the house passes to the remainder beneficiaries, the state cannot recover against it for any Medicaid expenses that the life estate holder may have incurred.
Trusts Another method of protecting the home from estate recovery is to transfer it to an irrevocable trust. Trusts provide more flexibility than life estates but are somewhat more complicated. Once the house is in the irrevocable trust, it cannot be taken out again.
How will Medicaid view this? Will it make Mom ineligible for Medicaid. She needs long term memory care. Popular Questions How much can an elderly parent give as gifts without worrying about "look back" laws? Why is it always a goal to put aging loved ones on Medicaid? If my father and I have a joint account, can Medicare take the money out of it when he enters a nursing home?
Is there a program within Medicaid that would help pay for a service that would help me with the housework and shopping? How do I receive pay from Medicaid and Medicare if I care for someone that is on it? Ask a Question. Post Question. Assisted Living Memory Care.
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