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Saving the Home From Medicaid

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Elder Care Resource Planning is committed to helping American families understand and access their Medicaid and Veteran’s benefits successfully.  Our mission is multifaceted and the primary goal is to obtain benefits for those in need of long term care.  This frequently impacts not only the elder’s well-being and finances but often affects the elder’s loved ones, and frequently the home.

We are often asked how one can protect the home of the Medicaid recipient from estate recovery. Following are some facts about how Medicaid treats the home and some suggestions on how other families have successfully dealt with protecting the home from recovery.

If the elderly is single and his or her principal place of residence is their home (or condominium), it is an excluded asset during the Medicaid recipient’s lifetime—subject to a few restrictions discussed below. There are limits to the value of the house owned by a single person. Federal law says the equity interest (fair market value, less mortgage) in the home must not exceed $814,000 to be protected. The states, which run the Medicaid program separately for each state on behalf of the federal government, can reduce this value. If the Medicaid recipient is married and the community spouse remains in the home, the home is excluded regardless of the value. The home consists of the building, the land it sits on, and all contiguous land and outbuildings.

During the life of the recipient, if he or she is single and moves into assisted living or a nursing home but intends to return home, no matter how unlikely, he or she should express his or her intentions by executing an “Intent to Return Home” (a spouse or relative can express intent on his or her behalf) to ensure that the home is an excluded asset. A small number of states disregard the person’s intent and require a doctor’s assessment of the likelihood. If it is determined that there is no likelihood to return home, the home will be treated as a countable asset and will not be exempt.

If the Medicaid recipient is single and decides to sell the home, as long as the sale proceeds are reinvested in another house within three months, the exempt status is maintained. Any cash from the sale not used to purchase another house will be a countable asset. If the Medicaid recipient is married and the house is in the community spouse’s name, it is an excluded asset.

The home is usually exempt as long as the Medicaid recipient is alive, but it becomes subject to estate recovery following the recipient’s death. The goal is to make sure that there is no interest in the home upon his or her death that can be reached by the estate recovery. Therefore, married couples are advised to transfer the home to the community spouse’s sole name during the recipient’s life. The surviving spouse then transfers his or her entire interest into an irrevocable trust and retains a right to live there for his or her lifetime in the document.

Other families have chosen to add a small percentage in a child’s name onto the Deed with the surviving spouse, with right of survivorship. However, if the surviving spouse ever needs Medicaid, the gift he or she made will create a penalty that will affect his own edibility for Medicaid.

According to federal law, all states must seek recovery from the probate estate (items that pass under his or her Will) of a deceased Medicaid recipient or upon the death of a surviving spouse. Only thirteen states limit their recovery to the probate estate. The remaining states use an expanding definition of estate, which includes joint tenancy, tenancy in common, life estate, revocable trusts, and more. [/et_pb_text]

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