If you are going to qualify for Medicare when you reach the age of 65, you may feel as though Medicaid is not relevant to you. After all, you have planned for retirement, you expect to have savings and income, and you own your own home. Medicaid is a program that is only available to people with virtually no financial resources, right?
This is true, but Charlotte elder law attorneys counsel many people about a key Medicaid benefit. The reason why a significant percentage of seniors ultimately seek Medicaid eligibility is because the program will pay for a stay in a nursing home. Medicare will not help.
Nursing homes are very expensive by any barometer. Here in our area, the median annual charge for a private room was over $92,500 in 2018, and a 4% per year increase is anticipated over the next five years.
Medicaid Home Ownership Rules
Since Medicaid is intended for people that presumably cannot afford to pay for health care insurance on their own, the asset limit is just $2000. This can naturally lead you to believe that you will never be able to qualify if you own residential property. On this score, we have some good news to pass along.
According to Medicaid regulations, your home is not considered to be a countable asset. However, there is an equity limit. It is adjusted slightly on an ongoing basis to account for inflation, but right now in North Carolina it is $585,000.
Unfortunately, you are not quite in the clear if you retain the home with the intent to pass it on to your heirs after your death. If you were enrolled in the Medicaid program as a nursing home resident, the law requires Medicaid to seek reimbursement from your estate during the probate process. There are a few different exceptions to this rule, though.
A healthy spouse has some property rights under Medicaid rules when a married person is applying for Medicaid to pay for a stay in a nursing home. In Medicaid lingo, the healthy spouse is called the “community spouse.” If the community spouse is remaining in the home, Medicaid will not enforce the equity limit in determining eligibility.
There is also a five-your Medicaid look-back period in place to prevent people from giving away assets to qualify for Medicaid shortly after they realize they need nursing home care. However, this does not apply to the transfer of your home to your spouse. You could transfer sole ownership of the home to your spouse without incurring any penalties. Under these circumstances, you would not own a home at the time of your passing if you do predecease your spouse. As a result, the Medicaid program would not be able to go after the home.
Another exception involves transferring ownership of the home to someone who qualifies as a caregiver child under the rules. If you have a child that has lived in the home with you for at least two years acting as a primary caregiver, ownership of the home could be transferred to the child even within the five-year look-back period. For this exception to be available, the child would have to prove that the level of care that was being provided prevented you from entering a nursing home.
In some circumstances, a home could also be transferred to a blind or disabled child without violating the 60 month look-back provision. Plus, if there is a sibling that has an equity interest in the home, and that individual has lived in the house during the year that preceded entry into a nursing home, your interest in the property could be transferred to your sibling without penalty.
These transfers have all kinds of potential ramifications for taxes and family relationships (and Medicaid ramifications if not handled properly) so it is highly advisable to seek counsel from an elder law attorney before trying any of these. State law may provide other options as well, depending on the state.
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To learn more about Medicaid planning and other important elder law and estate planning topics, attend one of our upcoming seminars. The sessions are offered completely free of charge, but we do ask that you register in advance so we can reserve your seat. To do just that, visit our seminar schedule page and follow the simple instructions to register for the session that works for you.