One of the most commonly misunderstood elements of Medicaid and the estate recovery program is how it treats a person’s home. I regularly get calls from folks who think that their home or the home of a loved one will need to be sold if Medicaid assistance is provided.
The concern is real – and not completely misplaced. However, it is important to understand how the Medicaid program treats the primary residence of an applicant, because understanding will allow you to identify opportunities to protect that home.
North Carolina’s Medicaid manual, which governs the eligibility requirements for Long Term Care Medicaid assistance (think nursing home) states that the primary residence of an individual applying for assistance is not counted against that individual, provided the individual “intends to return home.” The intent to return home is just that: the person applying says that if they are able they want to go back home. This seems simple enough, but I have had more than one situation where a person or family member, in an effort to be honest, says the person won’t be going back home. In that situation, the home becomes a countable asset and will need to be sold before the individual can qualify for Medicaid. The important thing to remember is to always state that you or your family member intends to return home, even if their current condition would seem to dictate otherwise. Doing so will give you time to decide exactly how you want to deal with the residence.
Where Medicaid’s rights against the home of you or your loved one come in is after Medicaid has been approved. When someone applies for Medicaid assistance, one of the forms that must be signed is titled “Important Notice – Your Estate is Subject to Estate Recovery”. This is the form that explains when Medicaid’s estate recovery program applies. Even though an individual’s home is not counted against that person at the time of application, it will be available to the estate recovery program following the individual’s death for repayment of any amount paid out by Medicaid on that individual’s behalf.
Note that Medicaid’s right of repayment only starts after the person receiving Medicaid assistance dies. Prior to that point, Medicaid has no right to force the sale of an individual’s home or to file any sort of lien against the property. The property continues to belong to the individual receiving assistance until their death, and they are free to manage, use, and dispose of that property as they desire.
Because of this continued free-and-clear ownership, there are still ways to plan to protect that residence from Medicaid’s estate recovery program. Depending on whether the person has applied or will be applying for Medicaid soon, or whether it’s a concern in the future, planning including Lady Bird Deeds, Gift Deeds Reserving Life Estate, and Medicaid Trusts can work to protect a person’s home – along with other assets.
These planning options are only available while the person receiving assistance is living – once they pass away, the door closes and there is very little that can be done to protect the home. Do not wait to ask about what options may be available – book an appointment with me today and I can walk you through the options you have.