Can Medicaid Take My Home After I Die?

Here at The Law Office of Raymond E. Brown, a common question asked by many of our clients and their families is whether Medicaid can seize their home after they pass away. Understanding Medicaid Estate Recovery and its potential impact on assets is vital for effective long-term care planning.

In this blog, our Annapolis Medicaid planning attorneys hope to provide clarity and peace of mind to our clients, empowering them to protect their assets and plan for the future with confidence. To learn more, call (443) 554-9944 or reach out online to schedule a consultation with one of our experienced Medicaid planning attorneys today. 

What is Medicaid Estate Recovery?

Medicaid Estate Recovery is a process used by Medicaid programs to recoup the costs of long-term care services provided to individuals receiving Medicaid benefits at the time of their passing.

Essentially, when a Medicaid beneficiary passes away, Medicaid may seek reimbursement from their estate for the expenses incurred during their care. However, there are exemptions and protections for nursing home residents and other recipients, including Medicaid’s asset limit, which allows certain assets, such as the primary residence, to be excluded from recovery under specific circumstances. 

Understanding the Medicaid Estate Recovery Program (MERP)

Understanding the Medicaid Estate Recovery Program (MERP) is essential for individuals preparing for long-term care and applying for Medicaid benefits. Once again, MERP is designed to recover expenses from the estates of deceased individuals who received long-term care benefits through Medicaid during their lifetime.

During this process, Medicaid will file a claim against the deceased person’s estate, including property, bank accounts, and valuable possessions, to collect repayment for the costs of care provided. 

Can Medicaid Take Your House?

One common concern among Medicaid beneficiaries is whether Medicaid can seize their home or if Medicaid can take their inheritance, in general. Although Medicaid can seek to collect reimbursement from the estate of a Medicaid recipient under certain conditions, Medicaid rules vary by state, and there are often exemptions to protect certain assets, such as the primary residence, from being targeted for recovery. 

Medicaid Payback Rules

To fully understand Medicaid payback rules, the beneficiary and their family should be familiar with what assets Medicaid can target when collecting reimbursement. Following a Medicaid recipient’s death, Medicaid can target the following assets to recover costs:

• Real estate, such as homes, land, and other properties
• Bank accounts, including checking, savings, and certificates of deposit
• Investments, such as stocks, bonds, mutual funds, and retirement accounts
• Personal property, including valuable possessions like jewelry, artwork, and vehicles
• Life insurance policies with cash value
• Any other assets owned by the deceased individual that could be liquidated to reimburse Medicaid for the costs of care provided

However, there are certain circumstances where estate recovery is not pursued. In cases involving a surviving spouse, children under 21, or a disabled or blind child, Medicaid will exempt certain assets to protect vulnerable family members’ well-being and financial stability. This exemption often extends to the primary residence, ensuring that the living spouse and/or disabled child are not left without a home due to Medicaid claims. 

How To Protect Your Home From Medicaid Estate Recovery

Protecting your home from Medicaid recovery requires understanding the legal strategies and tools available, particularly when the home is the only asset of substantial value. Below, our Annapolis estate planning attorneys will explain various legal tactics to help ensure your home remains within your family, shielding it from estate recovery efforts. 

Estate Planning Strategies

Estate planning offers several legal methods to protect a home from Medicaid recovery, each tailored to specific circumstances and goals. One strategy involves using irrevocable living trusts, which can remove the home from your personal assets so that it isn’t considered for recovery upon your death.

Life estate deeds are another option, as they allow you to retain the use of your home during your lifetime while naming a remainder beneficiary who will automatically receive the property upon your death, bypassing the estate recovery process.

Additionally, certain transfers to family members, such as to a caretaker child or a sibling with an equity interest, can also protect your home from recovery.

Each method comes with its own rules and potential implications for both Medicaid eligibility and tax responsibilities, making it essential to consult with an experienced estate planning attorney like those at The Law Office of Raymond E. Brown.

Transferring Ownership

Transferring ownership of your home through trusts, joint ownership, or life estates can be an effective way to avoid estate recovery. Establishing an irrevocable trust can protect your home by transferring ownership out of your estate, thus shielding it from claims after your death.

Joint ownership, particularly with the right of survivorship, allows the property to pass directly to the co-owner without going through the estate, effectively bypassing estate recovery. Life estates permit the original owner to occupy the home for life, with the property automatically transferring to a predetermined beneficiary upon their death.

Each of these plans not only helps protect your home from estate recovery but also facilitates smoother and faster transfer of property to your heirs. However, they must be set up correctly to comply with Medicaid rules and avoid consequences.

Spousal Protections

Medicaid regulations provide several protections for surviving spouses to ensure they are not left without a home or financial resources when their partner, the Medicaid recipient, dies. These protections include the spousal impoverishment rules, which prevent the complete spend-down of assets by allowing the healthier spouse to retain a certain portion of the couple’s assets and income.

Specifically, if one spouse requires long-term care and qualifies for Medicaid benefits, the rules protect the home from being considered an available asset for estate recovery as long as the surviving spouse is living there.

Certain property transfers to the living spouse are also exempt from Medicaid recovery. These measures are designed to provide financial security and stability to surviving spouses during a challenging time, ensuring they are not unduly burdened by the costs associated with long-term care.

Hardship Exceptions

Heirs or beneficiaries of Medicaid recipients may apply for hardship exceptions to prevent the estate from being subject to reimbursement if enforcing recovery would cause significant financial distress. Hardship exceptions are considered on a case-by-case basis and typically apply when estate recovery would result in the loss of a family home, endanger the livelihood of the survivors, or render them unable to meet basic living needs.

To apply for a hardship exception, beneficiaries must provide compelling evidence of their financial situation, including documentation of income, assets, and other financial obligations. The process requires timely submission of a formal application following the death of the family member, usually within a specified deadline set by the state’s Medicaid agency. 

More Medicaid Recovery FAQ’s

Does Medicaid Have To Be Paid Back?

Medicaid does not typically require repayment from recipients during their lifetime. However, under certain circumstances, states can seek repayment through the estate recovery process after the recipient’s death for nursing home costs, community-based services, and related hospital and prescription drug services provided to individuals aged 55 or older. 

Can Medicaid Take a Jointly Owned Home?

Medicaid generally cannot take a jointly owned home with rights of survivorship when one of the owners passes away, as the property automatically transfers to the surviving owner without becoming part of the deceased’s estate. However, if the home does not automatically transfer or is sold during the Medicaid recipient’s lifetime, Medicaid can place a lien on the recipient’s interest in the property to recover costs after their death.

Can a Nursing Home Take Your House if it’s in a Trust?

If your house is placed in an irrevocable trust, a nursing home generally cannot take it because the trust’s assets are no longer legally owned by you; they belong to the trust. This arrangement protects the home from being used to cover nursing home costs or being subject to estate recovery.

How Long Can a House Stay in a Trust After Death?

A house can remain in a trust indefinitely after the original owner’s death, as trusts are legal entities designed to manage assets across multiple generations or until specific conditions are met. The terms of the trust dictate how and when the property is to be distributed, which could be immediately upon the owner’s death or at a later date specified within the trust agreement.

How Can I Leave My House to My Child After I Die?

You can leave your house to your child after you die by drafting a will that specifies your child as the beneficiary of the property, or by setting up a trust with your child as the designated beneficiary. Another method is to use a transfer-on-death deed, which automatically transfers ownership of the home to your child upon your death, bypassing the probate process.

What Assets Are Exempt from Medicaid Estate Recovery?

Assets that are typically exempt from Medicaid estate recovery include the primary residence if a spouse, minor child, or disabled child is residing there, personal belongings, household furnishings, and certain types of income-producing assets. Life insurance policies and retirement accounts may also be exempt, provided they have designated beneficiaries other than the estate.

Speak With an Annapolis Medicaid Planning Attorney at The Law Office of Raymond E. Brown Today

If you need help with Medicaid planning and want to protect your assets, consult with an Anne Arundel County Medicaid planning attorney at The Law Office of Raymond E. Brown ASAP. Our experienced legal team is dedicated to providing knowledgeable guidance and reliable strategies to secure your financial future.

Don’t wait to start planning; call (443) 554-9944 or contact us online to schedule a free consultation with one of our experienced Medicaid planning attorneys today.