Medicaid: Protect Your House

Introduction – Protecting Your Home From Medicaid

Previously, we discussed what Medicaid covers and the financial eligibility requirements. Today, I want to get a bit more specific. In particular, I am going to discuss the largest asset most people own: their home. Depending upon the circumstances, the primary residence can present significant problems as it relates to Medicaid. Fortunately, however, there are planning techniques available to address these issues.

The Home Is Exempt From Medicaid…At Least Initially

Under the Oklahoma Medicaid rules, an applicant’s primary residence up to $572,000 is exempt. This means that so long as a Medicaid applicant’s home is valued at less than that amount, it will not be counted when determining the applicant’s eligibility for long-term care benefits. Consequently, the home is not initially a concern for most people who need Medicaid.

But Medicaid Won’t Let You Have Your Cake And Eat It Too

While the primary residence is exempt for purposes of the initial Medicaid application, a couple different things can happen once the individual is a nursing or assisted living facility. First, the home may lose its exemption. The Oklahoma Medicaid rules provide that the primary residence loses its exemption (and becomes a countable resource) if the individual receiving long-term care cannot return home after a period of 12 months. What happens then? Either the home must be sold and the proceeds spent down or the Oklahoma Health Care Authority places a lien on the property.

How To Protect The Family Home From Medicaid

For many families, the home is worth so much more than its market price. The memories, the history, even the struggle…these are all things that cause a home to have sentimental value. The last thing a family dealing with Alzheimer’s disease or another incapacitating illness needs is to lose their home. What can you do?

The best course of action is to plan in advance. Irrevocable trusts are one option. These are special types of trusts designed to shield the home from the expenses of long-term care. Another possibility is special insurance products that pay a portion of the daily cost of a nursing or assisted living facility.

But what if you do not plan in advance? The techniques mentioned above are either unavailable or have limited effectiveness. In such situations, the use of life estates, annuities and promissory notes or family transfers might be prudent.

Conclusion – Talk To An Elder Law Attorney About Medicaid

By now, you hopefully know that the Medicaid rules are very complex. If you or a loved one are faced with the prospect of needing Medicaid to pay for long-term care, you should consult with an elder law attorney. Elder law attorneys specialize in issues affecting older adults, like Medicaid. While it may seem that nothing can be done and your family is going to lose everything, this does not always have to be the case.