Your home is the largest asset a couple can keep while still qualifying for Medicaid. It is also usually the main target of estate recovery. For many people who need Medicaid benefits for longer term care, the home makes up most of their life savings. Often, it’s all a couple has to pass on to their children.
You may not know that your home is an exempt asset according to Medicaid and continues to be exempt as long as the spouse lives there. However, after both spouses pass away, the property may no longer be protected.
What is Estate Recovery?
According to the Omnibus Budget Reconciliation Act of 1993, the state has the right to take back whatever it paid for the care of a Medicaid applicant. When this law passed, each state established an Estate Recovery Unit (ERU) to go out and find what assets they can take back from those that received Medicaid benefits. Because the home is the largest asset a couple can keep while still qualifying for Medicaid, in most states it is also the main target of estate recovery.
After both spouses pass away, the state’s estate recovery unit has the authority to take just about any property that the Medicaid recipient had their name on which is usually the primary home.
Strategy for Protecting the Family Home from Recovery
According to federal law, a married Medicaid applicant is allowed to transfer the home to his or her spouse without any penalty. Once the transfer is made, the spouse still living in the home can make changes to the asset. In some states the home spouse can even gift the house away. That sort of gift, of course, would create a period of Medicaid ineligibility if the home spouse needs nursing home care within the 5 year look back period.
The family home remains one of the most difficult assets to protect because of timing, but there are proven strategies that make it possible to protect your home from Medicaid Recovery. You should consult an attorney to determine your options to protect your home.