Protecting and preserving property when paying for long-term care

“I have to sell my house to pay for my nursing home care.” This is a common misconception among persons requiring skilled nursing home care and/or their family members. Oftentimes a person requiring long-term care in a nursing home will require Medicaid benefits to pay for that care as nursing homes costs can average anywhere from $10,000 to $15,000 monthly. Selling one’s home and using the proceeds to pay the nursing home is not the only option in these cases.

A proper long-term care and asset protection plan, even if your only asset is your home, can protect the value of your property for your loved ones and/or for your supplemental needs and care.

Exempt property

If you require nursing home care, your home will remain as an exempt asset (meaning it will not count towards your available resources for Medicaid) if you have an “intent to return home.” If a person plans to return to their home after receiving care or rehabilitative treatment in a nursing home, his or her home will remain an exempt asset for purposes of qualifying for Medicaid to pay for long-term care.

Additionally, if a person’s spouse, minor child or disabled child reside in the home after a person moves to a nursing home for skilled care, the property will remain an exempt asset for Medicaid.

Transfer to caregiver child or disabled child

If a person’s child has resided in the home with them for a minimum of two years and provided care to the parent that allowed the parent to remain in the home, instead of being in a nursing home, the property can be transferred to that child as a “caregiver child.”

Typically, any transfers of property within five years of requiring Medicaid to pay for long-term care in a nursing home would then result in a penalty period. A penalty period means that there would be a portion of time that Medicaid would not pay for your care in the nursing home due to a transfer of your asset(s). A transfer to a caregiver child is considered an exempt transfer and would not result in any penalty period.

Similar to a transfer to a caregiver child, a person can also transfer their home to a disabled child. This type of transfer is also exempt for Medicaid and would not result in any penalty period or impede a person’s receipt of Medicaid benefits for long-term care.

Medicaid Asset Protection Trust

There is also planning that can be done five years prior to an application for Medicaid benefits. This type of planning allows for the transfer of assets, such as a home, to a Medicaid Asset Protection Trust. The asset is transferred with the objective that Medicaid benefits would not need to be applied for within five years and thus the transfer would not fall in the five-year lookback period. Assets in a Medicaid Asset Protection Trust are then protected and exempt from Medicaid, while also allowing a person to preserve their assets for their family and loved ones.

Medicaid Compliant Annuity/gift/supplemental needs trust

Finally, even if there is no method of allowing for an exempt transfer or retaining your home to qualify for Medicaid benefits, you can still preserve proceeds from the sale of your home for your supplemental care and needs. Proper planning measures involving Medicaid Compliant Annuities, gifting to family members and creating supplemental needs trusts can allow for immediate qualification of Medicaid benefits and preservation of assets.  

Conclusion

It is imperative to remember that each person’s individual circumstances are unique and there is a plethora of additional considerations in utilizing any of the above methods as part of planning for Medicaid to cover long-term care costs. As such, it is important to meet with a qualified elder law attorney to discuss your options in regards to property and qualification for Medicaid benefits for long-term care.

Client alert authored by Christine A. Barone (312 855 4348), principal.

This Chuhak & Tecson, P.C. communication is intended only to provide information regarding developments in the law and information of general interest. It is not intended to constitute advice regarding legal problems and should not be relied upon as such.