The government does not take the home of applicants who need assistance from the Medicaid long term care program. However, without proper planning, there is a potential that the government will not cover the cost of your care or will put a lien on your home during your lifetime or after you die as repayment for care that you received.
Community Medicaid vs Chronic Medicaid
It is important to realize that there are two types of Medicaid to consider when one is seeking assistance with the costs of long term care. One is Community Medicaid, which pays for home health aides to come into your home, and the second is Chronic Medicaid, which is meant to cover the cost of a long term stay in a skilled nursing facility.
Take, for example, a single person who is living at home but eventually requires assistance from a home health aide to stay safely in her home. This is a person who may benefit from the Community Medicaid program. This program will also cover certain other expenses including, transportation to doctor’s appointments, medical supplies and the cost of an adult day program. For this individual, the primary residence is exempt for Community Medicaid eligibility purposes because she is living in it. This means that Medicaid will still provide the care even though she owns her home, but it does not mean the home is completely safe. Upon the death of this person, Medicaid can put a lien on any asset that passes through her probate estate. This means that if she owns her home in her sole name, Medicaid can impose a lien.
How to Avoid Home Liens Due to Medicaid
The good news is that this lien can be avoided if the home is transferred by deed. The home can be transferred to a remainder beneficiary with the Medicaid recipient having a life estate, which means they enjoy all rights and responsibilities of the property for their lifetime. The property transfers to the remainderman immediately upon death – avoiding probate. The home can also be transferred to a Trust which also allows the Medicaid recipient to be in control of the property for his or her lifetime. This transfer of the property is an important step when applying for Medicaid to protect the primary residence for eligibility purposes and from estate recovery after death.
If the property is transferred out of the individual’s name into an irrevocable trust more than five years before needing a skilled nursing facility, then the home is completely protected from a lien being imposed by the Medicaid program. However, if the home is not put into the irrevocable trust in advance, then there will be emergency planning required. Depending on the individual circumstances, the home could still be completely or partially protected.
Plan for the Security of Your Residence and Assets
As you can see, no one is coming to take your home. That being said, careful planning with a professional who is well versed in the area of Medicaid and Estate Planning is probably a good idea to ensure your assets are protected for you and your loved ones.