Protecting Your Home From Nursing Home Costs

For many people, their most valuable asset is their home. It represents a lifetime of savings and has great sentimental value. So, the most often asked question is “Will I lose my home if I go to a nursing home?” The answer is the normal lawyerly “it depends.”

Most people will not have to sell their home if they enter a nursing home. If you cannot afford to pay the nursing home bill ($10,000 – $12,000 per month) you will have to apply for Medicaid benefits (called MassHealth in Massachusetts). You shouldn’t have to sell your home to get Medicaid benefits, but the Medicaid agency may put a lien against your house.

If your spouse is still at home, Medicaid won’t lien it, and if your spouse outlives you, the home will be safe for your spouse. But, if you are single (or your spouse dies), then after your death, the Medicaid agency will seek “Estate Recovery” against it. That means they will total up how much the state Medicaid program paid to the nursing home on your behalf, and demand to be paid back from your estate. The State cannot get more than the value of the house, but they can get all of it, if the lien is big enough.

Female nurse helping an elderly man to get him in the bed

The changed Medicaid rules implemented in 2006 only allow you to keep your home if it is worth less than $750,000 in Massachusetts or $500,000 in New Hampshire (those limits are now inflation-adjusted yearly so ask about the current numbers). If you have a spouse at home, the limit does not apply. If you are single with a very valuable house, you might be forced to draw out some of the equity in order to keep the home.

A problem for many individuals is that once they go on Medicaid, they have to pay all of their income to the nursing home (except for some limited deductions). So, there is nothing left to maintain the home. This may force the family to sell it, or to take the risk of maintaining it with their own money. If the Medicaid lien is greater than the value of the house, those family members may never get paid back for the money they put into it.

Massachusetts has a rule that allows a home to avoid Estate Recovery, if the individual who enters the nursing home has a Long Term Care Insurance policy that meets the specific qualifying rules. The family may still have tokeep the home until the elder dies, and find some way to pay for its carrying costs.

Many people ask if there is a way to give their home to a family member in order to protect it. Unless you do it early enough you cannot usually just give your house to your children or other family members. A transfer of assets from an elder to another will result in the elderbeing disqualified from getting Medicaid benefits (if the transfer occurred anytime during the five year look-back period prior to the Medicaid application date.)

There are some exceptions to the normal transfer rules. You can transfer your home to your spouse without penalty. You can also transfer it to a child who is under age 21, blind or disabled, to a trust for the sole benefit of a disabled person under age 65, to a sibling who has lived in the home prior to the entry of the elder into a nursing home, or to a “caretaker” child (a child of the Medicaid applicant who lived in the home and took care of the elder for at least two years and kept the elder out of the nursing home – this can be difficult to prove).

There are some other exceptions in the Medicaid rules, so you should consult with an experienced Elder Law Attorney if you need advice. It is best to consult with an Elder Law Attorney well before the need for nursing home care arises, as there is more that can be done if you have time. You must understand the Medicaid rules, so consult with an Attorney even if the elder in question is already in a nursing home.