Protecting Your House After You Move Into a Nursing Home

While you generally do not have to sell your home in order to qualify for Medicaid coverage of nursing home care, it is possible the state can file a claim or a lien against your house for the amount expended on your behalf while on Medicaid, so you may want to take steps to protect your house.  If possible, you should consult with your attorney before entering a nursing home, or as soon as possible afterwards, in order to discuss ways to possibly protect your home.

The home is not counted as an asset for Medicaid eligibility purposes if the equity is less than $878,000 (in New York).  However, if you are deemed eligible for Medicaid in order to pay for your nursing home costs, upon your death, the state must attempt to recoup from your estate whatever benefits it paid for your care. This is called "estate recovery," and given the rules for Medicaid eligibility, it is often the case that only property of substantial value that a Medicaid recipient is likely to own at death is his or her home.

Transferring a Home
In most states, transferring your house to your children (or someone else) may lead to a Medicaid “penalty period,” which would make you ineligible for Medicaid for a period of time. However, transferring your home to the following individuals will not result in such a transfer penalty:

- Your spouse

- A child who is under age 21 or who is blind or disabled

- Into a trust for the sole benefit of a disabled individual under age 65

- A sibling who has lived in the home during the year preceding the applicant's institutionalization and who already holds an equity interest in the home

- A "caretaker child," who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant's institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay.

While you can sell your house for fair market value after you have entered the nursing home, doing so may make you ineligible for Medicaid and you may have to apply the proceeds of the sale to your nursing home bills.

Lien on Home
Except in certain circumstances, the state may put a lien on your home for the amount of money spent on your care through Medicaid. If the property is sold while you are still living, you would have to satisfy the lien by paying back the state. The exceptions to this rule are cases where a spouse, a disabled or blind child, a child under age 21, or a sibling with an equity interest in the house is living there.

Estate Recovery
If your spouse, a disabled or blind child, a child under age 21, or a sibling with an equity interest in the house, lives in the house, the state cannot file a claim against the house for reimbursement of Medicaid nursing home expenses. However, once your spouse or dependent relative dies or moves out, the state can try to collect.

Consult with an Elder Law attorney to find whether it is possible to protect your home from potential long term care related expenses.