We are going to look at Medicaid and home ownership in this post. But before we focus on this subject, we will explain why Medicaid should be on your radar if you will qualify for Medicare.
Long-Term Care Costs
The United States Department of Health and Human Services tells us that 70 percent of seniors will require some type of living assistance eventually. Over 30 percent of the oldest old have Alzheimer’s disease, and elders with this condition often require nursing home care.
When you add in the fact that there are people that reside in nursing homes for other reasons, you can see that you may need this level of care at some point. Overall, the average length of stay is one year, but 13 percent of elders that are getting paid care receive it for at least five years.
According to Genworth Financial, the median cost for 12 months in a private room in a Hartford nursing home in 2020 was $167,900.
The Truth About Medicare
A lot of people think that all of their healthcare concerns will go out the window when they reach the age of 65, because they will qualify for Medicare. In fact, there are out-of-pocket costs for treatments that are covered, and there is one gaping hole in the coverage.
Medicare will cover limited convalescent care after an injury or illness. However it will not pay for the long-term custodial care that you would receive in a nursing home, and it does not cover in-home care that is provided by a professional health aide.
Medicaid and Home Ownership
Now that we have provided the necessary background information, we can address the subject at hand. Medicaid is a jointly administered federal/state government health insurance program that will pay for long-term care if you can qualify.
Since it is intended for people with a significant level of financial need, there is a $1600 asset limit in Connecticut. That’s the bad news, but the good news is that some things do not count, including your home.
It is not a countable asset, but there is an equity limit that is adjusted annually to account for the cost of living. Last year, it was $893,000, and it is $906,000 this year in our state. We should point out the fact that there is no equity limit if a healthy spouse is remaining in the home.
Medicaid Estate Recovery and the Five-Year Look-Back
There is another important piece to this puzzle. Medicaid is required to seek reimbursement from the estates of people that were enrolled in the program after they pass away.
A home is the only piece of property with significant monetary value that a benefit recipient could possibly own, so this would be the primary target.
A Medicaid lien can be placed on the property during the recovery phase if you are in direct possession of the home when you pass away, but there are exceptions. If a spouse, a minor child, or a permanently disabled or blind child is living in the home, it would be protected.
There is also a provision that would protect the property if a sibling was living in the home for at least one year before the owner qualified for Medicaid and moved into a nursing home.
You could act in advance with future Medicaid eligibility in mind and convey your home into an irrevocable trust, and it would not be in play during recovery efforts. However, the funding must take place at least five years before you submit your application for coverage.
There is one way around the five-year look-back rule. You can give your home to an adult child if the child has been living in the home and acting as your caregiver for at least two years before you enter a nursing home.
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You can see the schedule if you head over to our seminar page, and when you identify the session you would like to attend, follow the simple instructions to register.
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