Will Medicaid Take Away Your Home?
Description of Medicaid Estate Recovery
Federal law allows states to recover money spent on behalf of the Medicaid beneficiary after that beneficiary's death. Recovery concentrates on what Medicaid considers an "estate." For most purposes, the only estate asset remaining at death is the personal residence.Each state approaches recovery differently. In some states, recovery is only executed if the personal residence shows up in probate court. In these states -- there are only 13 of them left -- a simple family living trust would likely prevent recovery. In other states, the definition of estate is expanded to include trusts or life estates and virtually any other property in which the deceased person had an interest. Typically, the state will wait until the last death in order to place a lien against the property. If a community spouse (the healthy spouse at home who is not receiving Medicaid) is living in the home, the state will wait until after he or she dies before applying its lien. In many states, if the community spouse outlives the Medicaid beneficiary, the state will not attempt recovery at all and will simply ignore it.A few states have adopted a federal lien procedure called a TEFRA lien. This allows the state to place a lien against the home as soon as the state starts paying for Medicaid costs. In these states, there is little that can be done to protect the home from recovery. These liens cannot be applied if the spouse is living in the home or if certain other entitled individuals are living in the home.In all states, Medicaid recovery does not occur if the home is worth less than a certain minimum limit established by the state. Also, if recovery produces an undue hardship, no recovery occurs pending a "hardship hearing" with the state.
Medicaid -- Transferring Ownership of the Personal Residence
For a single potential Medicaid beneficiary, transferring the ownership of the property to anyone other than the exempted individuals below will result in a penalty if Medicaid is applied for within five years of the transfer.For a married couple, title on the property should be transferred to the community spouse. In a number of states, the non-Medicaid spouse can transfer the property solely in his or her name to someone else and as a result, completely remove the home from recovery. In other states, this transfer will result in a gifting penalty for the nursing home spouse even though the nursing home spouse does not own the property. If the community spouse successfully transfers the home, this will still create a penalty for her with a five-year look back if he or she ever have to apply for Medicaid.Many seniors and their families don't use a lawyer to plan for Medicaid, often because they're afraid of the cost. But an attorney can help you save money in the long run. Contact Choice Connections if you’d like to be connected with an attorney who can help. Source: May 9, 2018 | by the National Care Planning Council