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Will Medicaid Take My Home?

A common assumption is that if you enter a nursing home, Medicaid will immediately take your house to pay for your care. In reality, that is not exactly true. Here are three common scenarios:

1) If you are married, your spouse is always allowed to stay in the house as long as he or she lives. However, after both spouses die, the State of Ohio will sometimes put a lien on the home. If that happens, the State will make a claim for the amount they have paid out in Medicaid benefits. This claim would then usually be paid from the proceeds of the house sale. With proper legal planning, this can sometimes be avoided.

2) If your spouse dies while you are still living in the nursing home, Medicaid may demand that you sell the home and use the proceeds for your nursing home costs. Again, depending on the circumstances, you can sometimes preserve the family home. Each situation is different. For example, if a son or daughter is living in the home and provided two years of care to the nursing home resident, this child can sometimes be given the home as a gift to avoid a forced sale by Medicaid. This is usually referred to as the child caretaker exception. Unfortunately, the Medicaid caseworker will not always let you know about this rule.  Another exception is if you have have a permanently disabled child. In that situation, the home can usually be given to that child, without adverse Medicaid consequences.

3) If you enter a nursing home and do not have a spouse or child living in the home, Medicaid will allow you to keep the house as long as you intend to return home. Otherwise, you must sell the home before you can attempt to qualify for Medicaid. There are some exceptions to this rule, such as the child caretaker rule. When the home sells, the proceeds must generally be used for your nursing home care. If you die before selling the home, the State of Ohio will usually put a lien on the home. If that happens, the State will make a claim for the amount they have paid out in Medicaid benefits.

The good news however, is that through proper legal planning, you can sometimes preserve the entire value of the home for future generations. Even in cases where Medicaid demands that you sell the home, there are often ways to preserve a portion of the sale proceeds for your family.

Each situation is unique, so you must consult with a qualified elder law attorney to go over your best options.

What Is Division of Assets?

Division of Assets is the name commonly used for the Spousal Impoverishment provisions of the Medicare Catastrophic Act of 1988. It applies only to married couples. The intent of the law was to change the eligibility requirements for Medicaid in situations where one spouse needs nursing home care while the other spouse remains in the community (i.e. at home or in an assisted living facility). The law, in effect, recognizes that it makes little sense to impoverish both spouses when only one needs to qualify for Medicaid assistance for nursing home care.

As a result of this recognition, division of assets was born. Basically, in a division of assets, the couple gathers all of their non-exempt (countable) assets together in a review. See below for a list of exempt assets.

The non-exempt assets are then divided in two, with the community (or at home) spouse allowed to keep one-half of all countable assets up to about $115,920. The other half of the countable assets must be “spent down” until $1,500 remains for Ohio residents and $2,000 for Kentucky residents. The amount of countable assets which the at-home spouse gets to keep is called the Community Spousal Resource Allowance (CSRA).

Each state also establishes a monthly income floor for the at-home spouse. This is called the Minimum Monthly Maintenance Needs Allowance (MMMNA). This permits the community spouse to keep a minimum monthly income ranging from about $1,939 to $2,898.

If the community spouse does not have at least $1,939 in income, then he or she is allowed to take the income of the nursing home spouse in an amount large enough to reach the MMMNA. The nursing home spouse’s remaining income (minus a personal needs allowance) goes to the nursing home. This helps avoid the necessity for the at-home spouse to dip into savings each month, which would result in gradual impoverishment.

Exempt Assets

• The Home up to around $500,000. The home must be the principal place of residence.

• Household and Personal Belongings, furniture, appliances, jewelry and clothing.

• One Vehicle and there may be some limitations on value.

• Burial Plot and Irrevocable Funeral Plans for you and your spouse.

• Life Insurance policies as long as the cash surrender value of all policies combined does not exceed $1,500. If they do exceed $1,500 in total cash surrender value, then the cash value in these policies is countable.

The bottom line is you must seek advice from someone who knows Medicaid law.