Maintaining the value of real estate when care is needed

“I need to sell my house to pay for nursing home care.” This is a common misconception among people who need skilled nursing home care and/or their family members. Often times, a person who needs long-term nursing home care will need Medicaid benefits to pay for that care, as nursing home costs can average between $10,000 and $15,000 per month. In these cases, selling your home and using the proceeds to pay for the nursing home is not the only option.

With a suitable care and asset protection plan, you can protect the value of your property for your loved ones and/or for your additional needs and care, even if your only asset is your home.

Exempted property

If you require nursing home care, your home remains an exempt asset (meaning it will not count toward your available funds for Medicaid) if you have the “intention to return home.” If a person plans to return to their home after receiving nursing home care or rehabilitation treatment, their home remains an exempt asset for purposes of qualifying for Medicaid’s payment for long-term care.

In addition, if a spouse, a minor, or a disabled child continues to live in the home after the person moves into a nursing home for care, the property remains an asset exempt from Medicaid insurance.

Transfer to a child in care or a disabled child

If a person’s child has lived with him or her in the same household for at least two years and has cared for the parent in a way that has enabled the parent to remain in the household rather than being placed in a nursing home, the property may be transferred to that child as a “foster child.”

Normally, any transfer of property within five years of Medicaid being required to cover the cost of long-term nursing home care will result in a penalty period. A penalty period means that Medicaid will not cover your nursing home care for a period of time due to a transfer of your property(s). A transfer to a foster child is considered a tax-free transfer and does not result in a penalty period.

Similar to transferring to a foster child, a person can also transfer their home to a disabled child. This type of transfer is also exempt from Medicaid and does not result in a penalty period or prevent receipt of Medicaid long-term care benefits.

Medicaid Asset Protection Trust

There are also plans that can be made five years before applying for Medicaid benefits. This type of plan allows for the transfer of assets, such as a home, to a Medicaid Asset Protection Trust. The asset is transferred with the goal that Medicaid benefits will not need to be applied for within five years, thus the transfer will not fall within the five-year look-back period. Assets in a Medicaid Asset Protection Trust are then protected and exempt from Medicaid, while also allowing an individual to preserve their assets for their family and loved ones.

Medicaid-compliant retirement/gift/supplemental needs trust fund

And even if there is no way to allow a tax-free transfer or keep your home to qualify for Medicaid benefits, you can keep the proceeds from the sale of your home for your additional care and needs. Proper planning measures, including Medicaid-compliant annuities, gifts to family members, and establishing trusts for additional needs, can allow for immediate eligibility for Medicaid benefits and asset preservation.

Diploma

It is important to remember that each person’s individual circumstances are unique and there are a wealth of additional considerations when using any of the above methods as part of planning for Medicaid to cover long-term care costs. Therefore, it is important to meet with a qualified elder law attorney to discuss your options regarding ownership and eligibility for Medicaid long-term care benefits.