Protecting Your House When Moving Into a Nursing Home

The biggest concern that most have when they are in need of long-term nursing home care is that their primary residence will not be protected. This may or may not be true. There are special rules surrounding the home that are different from other types of assets. To understand this fear, it is important to understand how one becomes eligible for Medicaid to assist with nursing home costs.

What Determines Eligibility for Medicaid Long-Term Care?

Applicants are permitted to have countable assets in the amount of $32,396, retirement assets in any amount—so long as the retirement account is set up for a monthly distribution—and a pre-paid irrevocable burial.

Applying for Medicaid also involves a five-year lookback. This requires the applicant and spouse to provide full financial disclosure for the five-year period immediately prior to institutionalization. The purpose of the lookback is to see if the applicant or spouse transferred any assets out of their names. If transfers were made, there will be a legal presumption that this was done for the purpose of applying for Medicaid, and a penalty will be assessed. The penalty will result in a time of ineligibility for services.

However, there are certain transfers that are exempt and will not draw a penalty, this includes transfers of any assets to a spouse or to a blind or disabled child. Specifically for the primary residence, transfers are exempt when made to a spouse, blind or disabled child of the applicant, a sibling with an equity interest in the home, or to a caretaker child.

What is a Caretaker Child?

A caretaker child is defined as a child who has resided in the primary residence with the Medicaid applicant for the two years immediately prior to institutionalization and who, during that time has provided some level of care support to the individual who requires nursing home care. Medicaid will closely scrutinize the transfer and ask for supporting documentation to prove residency for the caretaker child.