Many people believe that they will lose their house or will need to sell their home when they apply for Medicaid, but this is not true. With adequate planning, Medicaid will allow you to reside in the safety of a nursing home without losing your hard-earned home. (BUT, keep reading because you may need further action to ensure your home stays protected!)
You can own your home when you apply and continue controlling it throughout your life. Medicaid will not count your house as an asset during the application process if you intend to return to it. If you plan on leaving your house permanently, your spouse or other loved ones may still be able to live there without it being considered an asset, provided Medicaid’s strict categories are met.
Home Equity Exception
Equity interest is how much of the home’s total value you control, minus any debts. Your equity interest in the home must fall within the asset limit of $636,000 (as of 2022). Medicaid may still count your property as an asset if this amount is exceeded.
However, the home equity rule does not apply if you have a spouse, minor, or disabled person living in the home.
What Happens to My Property After I Pass Away?
After your death, Medicaid enacts estate recovery, which is the process of the government reclaiming the money you owe from receiving Medicaid payments.
That means while you’re living in a nursing home and receiving payments from Medicaid for your nursing home expenses, your residential home will remain your property. However, Medicaid keeps a running tab of all of the payments they make on your behalf. After you pass away, Medicaid will try to seek reimbursement from your estate and can force the sale of your home in order to pay Medicaid back.
There are planning options to protect the home from Medicaid estate recovery, but they must be done prior to the Medicaid recipient’s death. To ensure your loved ones receive your house after your death, you must adequately prepare and protect your assets with a Medicaid planning attorney. With a professional legal advisor, you can secure your house so that your loved ones, not the government, are the lawful beneficiaries.
How Do I Protect My Property for My Heirs?
An elder care law firm can help you put a plan in place to protect your home from estate recovery after you pass away. We always recommend that you plan while you’re healthy or set up a power of attorney to have your chosen representative plan for you. The sooner you begin, the easier it will be to protect your property.
Elder law involves estate planning, which offers many options that you can utilize, depending on your unique needs. For example, you can set up a qualified income trust, which will deposit any of your extra income into a restricted funds account each month. This account will be used to pay off your debt after your death so that Medicaid does not need to take your house.
An experienced elder care attorney will discuss all the details of your case and help you determine the best legal arrangement for your circumstances. You have worked hard to earn your money throughout your entire life—you do not need to lose everything to qualify for Medicaid.
At Carolina Family Estate Planning, we help families build better lives by planning for a secure future with estate planning, asset protection, and long-term care planning. If you require estate planning or Medicaid assistance, we can set up a vision meeting to discuss your case. Call us today at 919-443-3035 or fill out our online form to schedule a needs-assessment call. Our office is based in Cary and we serve clients throughout North Carolina. We look forward to helping you.
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