However, every state has an "estate recovery" program in which, following death, the value of your home may be used to reimburse the state for the Medicaid funds it provided. © 2018 FamilyAssets Group LLC, All Rights Reserved, Learn about home care and hospice services, Protecting Your Home From Medicaid Claw back. First, the transfer would be considered a "gift" for Medicaid purposes, and any gift you've given over the "lookback period" (the 5 years prior to Medicaid application) is subject to a Medicaid "penalty period," which delays your Medicaid eligibility. His wife is preparing to sell the couple's home and move to a … The spouse may sell the couple's home and use all the money from the sale of the house to purchase another home or pay rent on an apartment, without any lien being enforced. If you are planning to live with your child, one way of protecting your home's value is by selling it and using the money towards your child's home, either by purchasing life estate in your child's home or by purchasing joint interest in your child's home. In order to protect your home from estate recovery, you will need to ensure that you have no "interest in the home" (ownership under your name) at time of death. We do not claim For instance, if you want to buy your father’s house and you believe that the appraisal over-valued it due to poor conditions, there are a few options. Note that only one home is a "non-countable" asset (not counted when applying for Medicaid). This is because once your home has been sold, it is no longer an exempt (non-countable) asset. But the Medicaid application examiner wont just take your word for it, they will ask for proof. The states must remove the lien when the Medicaid enrollee is discharged from the facility and returns home. As part of our series on what assets the Medicaid rules do and don’t allow you to keep, I want to talk today about farm land. This transfer of home to a caretaker child is exempt from the gift penalty only if (1) the home was the child's sole residence for the past two years and (2) the child provided care to you that otherwise would have necessitated your being in a nursing home. However, this is problematic for a number of reasons. As long as your residence is in the state where you apply for Medicaid and you are planning to return to your home, it is protected up to a value of $595,000 although some states have adopted an upper limit of $893,000. The "right to sell" stipulation means that the transfer is not considered a gift to your child, because you can still sell it to someone else, which would then revoke your child's right to ownership. Protecting your home should be considered part of your overall Medicaid strategy, and must take into account your other assets and income. An alternative strategy is to transfer your home to a trust, which comes with the same "gift" caveat as a transfer to child, as well as its own tax considerations, but avoids the complications of ownership described above. This can be an effective option with advanced planning and a "caregiver agreement," which documents the care service. In order to protect your home from estate recovery, you will need to employ one of several strategies. As an elder law attorney who focuses on Medicaid planning, most of my clients are interested in saving their home. Another reason not to sell the house: If mom applies for Medicaid now, and qualifies, the nursing home will be paid the state "Medicaid reimbursement" rate, which is always a good bit lower than the private pay rate. "Transfer on Death" deeds like the Lady Bird Deed are particularly useful for unmarried or widowed Medicaid applicants who have few assets aside from the home. States may not recover from the estate of a deceased Medicaid enrollee who is survived by a spouse, child under age 21, or blind or disabled child of any age. States may impose liens for Medicaid benefits incorrectly paid pursuant to a court judgment. Caregiving is not required. Medicaid has a five-year look back rule. Can I Sell My House While on Medicaid? Let's say you bought your house in 1980 for $50,000. The word "child" is used here simply because adult children of the Medicaid recipient are typically the people involved, but it could be any person or number of people. Rather, the proceeds from the sale will be counted towards Medicaid’s asset limit, which is generally $2,000. You can verify that you are attempting to sell the real estate by providing your listing agreement with a real-estate broker, MLS listing, newspaper listing, etc... You also must be reasonable. The rest of the money is taxed at 3.8% and counts toward subsidy income (that tax, a Medicare tax, was created by the ACA and applies only to dollars over the exclusion amount; it is owed to the federal government for the year you sell the property along with the standard capital gains tax on dollars over the exclusion amount). This website and its contents are for informational purposes only. A transfer of home to a resident sibling is exempt from the gift penalty only if (1) the home was the sibling's sole residence for the past one year and (2) the sibling has an existing "equity interest" (partial ownership, even 1%) in the home. With the Lady Bird Deed strategy, you transfer the home to your child but keep the life estate rights, including the unlimited right to sell the home. What you can and can’t keep with Medicaid: Farm Land – Part A. Transcript: Hi, I’m Wes Coulson and this is your Elder Law Minute. State Medicaid programs must recover certain Medicaid benefits paid on behalf of a Medicaid enrollee. responsibility for its accuracy. Medicaid can put a lien on the new house. . An official website of the United States government. A Lady Bird Deed is an "Enhanced Life Estate Deed" or a "Transfer On Death (TOD) Deed" that allows you to transfer your home without penalty while still maintaining your rights to it and sheltering it from estate recovery. As of 2017, the act has been passed by 13 states (Alaska, Hawaii, Illinois, Nebraska, Nevada, New Mexico, North Dakota, Oregon, South Dakota, Texas, Virginia, Washington, West Virginia) plus Washington D.C., with legislation pending in 3 more states (Connecticut, Tennessee, and Utah). If you DO sell it, however, the proceeds are not exempt. If you own a home and want your family to retain its value following death, then one of the above strategies will likely benefit you. Additionally, if you have a child who is under age 21 or is blind or disabled, signing the home over to him or her is exempt from the gift penalty as a transfer of home to a minor, blind, or disabled child. If it finds assets, the program will go after them to pay for your care. There are several different types of trusts that are used when dealing with Medicaid … This strategy works well in North Carolina and Colorado. You could put the house on the market at the appraisal value to show that no one will buy it at that price. It can be a powerful strategy if your state allows it (see "Lady Bird Deed" section above). Contact your state's Medicaid agency immediately if a nursing home violates this rule. 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If a sibling lives with you, you may also be able to transfer the home with no gift penalty. These state laws are constantly evolving, so professional advice from a Medicaid expert with knowledge of your state is necessary. Below are some potential strategies to protect your home. I can give away only $14,000 per year under Medicaid rules. There is seldom a reason to do this. Example: Mr. Jasinski has been in a nursing home for two years. Each state determines its own estate recovery rules, and each strategy comes with its own benefits and caveats. The optimal strategy will depend largely on your state of residence. I live in nu, 11 years ago my mother died in a hospice facility, she was on Medicaid . If you sell your house and immediately purchase a new one which is your principal residence you are converting one exempt asset for another. You could go back to the appraiser and explain why there should be an adjustment. Wesley J. Coulson, Coulson Elder Law, LLC, Important information regarding Coulson Elder Law and the Coronavirus, Handling the Difficult Conversation about Facility Placement Series, Medicaid Look-Back Rule and Transfer Penalties Series, What You Can and Can’t Keep with Medicaid Series, Click to share on Facebook (Opens in new window), Click to share on Twitter (Opens in new window), Click to share on Pinterest (Opens in new window), Click to share on LinkedIn (Opens in new window), Click to share on Reddit (Opens in new window), What you can and can’t keep with Medicaid: Cars and Trucks, What you can and can’t keep with Medicaid: Life Insurance. You give it to your children in 2017. And since your child becomes the sole owner after your death, the home at that point will no longer be part of your estate and therefore not subject to estate recovery. The most obvious solution to this would be an outright transfer to child, in which you simply sign over your home to one of your children. The actual amount the nursing home must accept varies from nursing home to nursing home, so there is no general guideline. Stated differently, the money from the sale of the home will count towards Medicaid’s asset limit. The Half-a-Loaf strategy, in which a portion of your home is transferred to a family member, can also be an effective strategy to protect at least part of your home's value from estate recovery. The hospice facility did not accept Medicaid as a payor source, we promised the facility we would pay them out of the sale of her house, the house was sold for 169,000 2 months after her death. Professional advice from a Medicaid expert is essential. If they sell it in 2025, for $300,000, they will pay capital gains tax on the difference, or $250,000. Once you qualify for Medicaid, the program looks back to see if you’ve sold, given away, or gotten rid of during the previous five years. Medicaid is for individuals and families living on a limited income; many seniors use it to pay for long-term care in nursing homes. Safely & accurately apply, submit & stay on top of your Medicaid application with FamilyAssets. The article discusses the circumstances in which one’s house can remain or become an exempt asset (i.e. They would immediately disqualify you for Medicaid benefits and you would need to spend the proceeds down before you would again qualify. Consulting with a Medicaid expert is crucial, as the above strategies require knowledge of your state's rules governing estate recovery, property deeds, assets, capital gains, mortgages, taxes, and Medicaid.