If you are receiving Medicaid benefits, you may have questions about the future of your estate. One of the more common questions we hear is “Will Medicaid or a nursing home try to take my kid’s inheritance?” At The Law Office of Raymond E. Brown, we understand how important it is that you know the implications of Medicaid estate recovery and how it may affect your children’s inheritance after you pass.
While Medicaid can help someone cover their long-term care costs, the program can in fact seek reimbursement from that person’s estate after they’ve passed. This process, known as Medicaid estate recovery, can impact the inheritance left for your children if the proper planning hasn’t been put in place.
If you’re looking to safeguard your family’s financial future, contact experienced Maryland Medicaid lawyer Raymond E. Brown regarding your situation today. He’s here to help you understand the estate recovery process and how you can protect your assets from being reclaimed by Medicaid, even if you’ve benefited from long-term care through the program.
Call (443) 554-9944 or contact us online to schedule an initial consultation with Annapolis estate planning attorney Raymond E. Brown today.
Understanding Medicaid and Nursing Home Costs
As a person gets older, their medical expenses increase, and it becomes more and more likely that they will need to rely on government assistance programs like Medicaid in order to afford healthcare. However, to qualify for these kinds of medical assistance programs, a person must meet strict income and asset requirements, which are set by their state.
In order to meet these requirements, they can “spend down,” which involves reducing countable assets by paying off debt, covering medical expenses, or making permissible purchases. If that person meets the requirements for Medicaid eligibility, then the program can help pay for things like nursing home care, which can be quite expensive. According to seniorliving.org, the average cost for a semi-private or private room in Maryland currently sits between $11,800 to $13,200 per month. That means you can expect to pay around $150,000 per year or more to live in these facilities!
Allowable Medicaid Spend Down Items
Medicaid spend-down items refer to expenses and purchases that individuals can use to reduce their countable assets to meet Maryland Medicaid eligibility. Allowable spend-down items typically include rent, utilities, medical expenses, mortgage payments, home modifications for accessibility, home or car maintenance, funeral and burial arrangements, and debt repayment.
Medicaid Estate Recovery in Maryland
If a Medicaid recipient is receiving benefits from a state Medicaid agency, they will not have to pay the program back during their lifetime. However, due to the high cost of things like nursing home care, most Medicaid programs will seek reimbursement from the individual’s estate after that person dies. This began with the passing of the Omnibus Budget Reconciliation Act of 1993.
Medicaid recovery typically applies to assets that pass through probate, which can impact the inheritance intended for their children, as the state may recover costs from the estate to cover the Medicaid expenses they incurred.
What Assets Can a Nursing Home Take?
A nursing home itself does not directly take assets from residents. However, if someone receives Medicaid coverage for nursing home care, the Medicaid program may later recover costs from the individual’s estate after death.
This can include assets such as real estate, bank accounts, and other property that pass through probate. However, if you’re wondering whether or not Medicaid can take your home after you die, there are exemptions and protections in place to protect real property for certain family members.
For example, in Maryland, Medicaid can’t place a lien on a person’s real estate property if a surviving spouse, child under the age of 21, or a disabled or blind child lives in the house.
How To Protect Your Kid’s Inheritance
Protecting your kid’s inheritance money and assets from the Medicaid estate recovery process requires strategic estate planning measures. Below are some of the best ways to safeguard your assets for your children while remaining eligible for Medicaid benefits.
Establishing a Trust
Creating a trust can protect your child’s inheritance by placing your assets under the management of a trustee. This arrangement keeps assets out of your estate, preventing them from being subject to estate recovery. There are plenty of different types of trusts you can establish based on your specific goals and needs, from a living trust to an irrevocable trust and beyond.
A properly structured trust ensures that your assets are preserved for your children while still allowing you to meet the eligibility requirements for long-term care through Medicaid. A Maryland trust attorney like Raymond Brown can help you determine what kind of trust you need and can ensure that your trust is established correctly and in accordance with Maryland law.
Gifting Assets
Gifting assets to your children or other beneficiaries can also reduce your countable assets for Medicaid eligibility. By transferring ownership of assets ahead of time, you can potentially shield these from Medicaid estate recovery. However, it’s important to consider the five-year look-back period, during which Medicaid can penalize transfers made to qualify for benefits.
Using a Life Estate
A life estate allows you to transfer property to your heirs while retaining the right to live there for the rest of your life. This method can help protect your home from estate recovery while also ensuring you are still eligible for Medicaid. Upon your death, the property automatically passes to your heirs, avoiding probate and preserving their inheritance.
An Annapolis estate planning lawyer at our law firm can help you establish a life estate and ensure your property can pass to your child without fear of Medicaid making a claim on your property after you pass.
Purchasing Long-Term Care Insurance
Long-term care insurance can cover the costs of nursing home care, reducing the need to rely on Medicaid later on. By planning ahead and purchasing a policy, you can protect your assets from being spent down to qualify for Medicaid, thereby preserving your estate for your children’s inheritance. This proactive approach can provide financial security and peace of mind for your family.
The Importance of Early Planning for Long-Term Care
Early planning for long-term care is crucial to ensuring financial stability and protecting assets for future generations. By addressing long-term care needs well in advance, you can explore and implement strategies like the ones provided above, such as establishing trusts, gifting assets, and purchasing long-term care insurance, to ensure that you have a say in where your own money and property goes after you pass.
A well-established asset protection plan allows you to make informed decisions about the future of your estate while granting you the ability to adjust plans as circumstances change. Engaging with a Maryland asset protection attorney early on ensures that all legal and financial options are considered, and your wishes are documented and enforceable, ultimately protecting your family’s future and maintaining control over your assets.
Frequently Asked Questions
Is Inheritance Considered Income?
In the context of Medicaid, inheritance may be considered income and can increase your countable assets, which could cause you to lose Medicaid coverage. If you are a Medicaid beneficiary and you are worried about losing Medicaid eligibility as a result of inheriting assets from a loved one, contact an estate planning attorney as soon as possible.
Can You Own a Home and Be On Medicaid?
Yes, you can own a home and still be on Medicaid, as long as it is your primary residence and its value does not exceed certain limits set by Medicaid. Medicaid recipients can also utilize a life estate, which would allow them to live in their home for a certain amount of time, before the property transfers to the designated beneficiary.
Will Medicaid Take My House if I Go Into a Nursing Home?
Medicaid will not take your house while you are alive, but it may seek to recover costs from your estate after your death, potentially affecting the house if it is part of the estate. However, there are exemptions and protections for surviving spouses and certain other dependents.
Can a Nursing Home Take Your Life Insurance Policy?
A nursing home facility cannot directly take your life insurance policy, but the policy’s cash value may be considered an asset when determining Medicaid eligibility. If the policy’s value exceeds Medicaid’s asset limits, it might need to be liquidated or adjusted to qualify for benefits.
Does a Nursing Home Take Your Pension and Social Security?
A nursing home does not take your pension or Social Security benefits directly. Instead, these incomes are typically used to cover the cost of care, with Medicaid often covering the remainder if eligible.
Can a Nursing Home Take Your Disability Check?
A nursing home cannot take your disability check, but if you are in a nursing home where Medicaid is covering part of your expenses, your disability benefits may lower or stop.
What are Medicaid’s Look-Back Exemptions?
Medicaid’s look-back exemptions typically include certain transfers or expenditures that do not count against an individual’s eligibility for their state’s Medicaid program. These often include things like payments for medical care, housing improvements, or transfers to a disabled child. These exemptions aim to prevent undue hardship while ensuring fair access to Medicaid benefits.
Can I Sell my House to My Children to Avoid Medicaid Estate Recovery?
Technically yes, but it may not have the intended effect in some cases. Medicaid has a five-year look-back period, meaning that sales or transfers made within 5 years of applying for benefits can affect Medicaid eligibility.
If you are not eligible for Medicaid, then you won’t have to worry about estate recovery, but that may not be beneficial for you during your lifetime. A qualified elder law attorney can advise you on the best plan of action for your situation.
Call a Qualified Elder Law Attorney at Our Anne Arundel County Law Office Today
Call an experienced attorney at The Law Office of Raymond E. Brown today to ensure your estate plan protects your assets and your loved ones’ inheritance. Whether you are a current Medicaid recipient or the family member of a deceased Medicaid recipient, Attorney Raymond E. Brown is here to help ensure that your assets remain protected.
By consulting with our team, you’ll gain clarity on how to best protect your assets from Medicaid estate recovery and other potential challenges. We understand the importance of proactive planning and will work closely with you to create a comprehensive estate plan tailored to your specific needs and goals. Don’t wait until it’s too late–call our law firm at (443) 554-9944 or contact us via our website to schedule a consultation with an experienced attorney on our team today.
