Most of the time you should not have to sell your home in order to qualify for Medicaid coverage of nursing home care. The state is allowed to file a claim against your house after you die, but they probably won’t force you to sell it right away. Often the house is the only asset left when a person enters a nursing home, so many ask if there is anything that can be done to protect it at that time.
If you try to give your house to your children (or someone else) at the time you need nursing home care, it will probably make you ineligible to get Medicaid. There are a few exceptions where you can transfer your home to someone without incurring a Medicaid penalty. You can transfer your home to your spouse, a child under age 21, a child who is blind or disabled, a trust for the benefit of a disabled person, a sibling who lives with you and has an equity interest in the home, or a “caretaker child” who has lived with you and provided care for you. The rules are quite particular, so you must consult an attorney if you have any of these situations.
- If you sell your home, then the proceeds will make you ineligible for Medicaid and you will have to spend them on your care. If you keep your home, Medicaid will probably put a lien on it. You won’t be able to sell it during your lifetime without paying off the lien.
- If you die, still owning the house, and there is a Medicaid lien, the State will contact your Executor with the amount of the claim. Your Executor will have to satisfy the State’s claim (this is called “Estate Recovery”) out of the Estate assets. Usually the only way to pay the claim is by selling the house. If there is any money left from the sale, after paying off Medicaid, it can go to your family. But if there isn’t enough value in the house, the State gets paid first and your heirs may get nothing. Estate recovery is not allowed while your spouse or minor or disabled child are still living in the home.
- If you and your spouse were joint owners of the home and your spouse becomes sole owner after your passing, then the State cannot proceed with any estate recovery (not even after the death of your spouse – unless your spouse gets Medicaid benefits later on). In many cases we recommend that the house be transferred into the name of the community spouse if one spouse is in a nursing home. This avoids any lien issues and is allowed under the rules. There are some other exceptions to estate recovery under the “undue hardship” rules. Once again, these rules are quite specific and difficult to apply, so good legal advice is necessary.
In some cases there may be a way to save the house for a spouse or children, but without advanced planning the house is often lost to nursing home costs. It really makes sense, if you own a home, to see an Elder Law Attorney and plan ahead so your home can be protected in the best way possible for you and your family.