If you or a family member needs skilled nursing care, you have plenty of issues to tackle regarding medical care, costs, and protecting assets. What to do with the house when the elderly enter a nursing home is often a primary concern. When you are facing the issue of an elderly person moving into a nursing home you must be careful and proactive in planning.
Property Issues When the Nursing Home Is Paid Out of Pocket
If you are paying out of pocket for nursing home care, you have certain benefits. First, you have the freedom to choose (or have your power of attorney choose) what to do with your property. Your home is your asset. That does not change based on where you live when you are not receiving Medicaid to help pay for the nursing home. People commonly choose to:
- Leave the home as-is with another resident (spouse, adult child, etc.) still living there,
- Rent the home out,
- Sell the home, or
- Allow a relative or friend to live in the home rent-free for a short period as they adapt to the nursing home and ensure it will be their long-term home.
If the government—through Medicaid—is not involved in paying for your nursing home care, you can do as you please with your home.
But what about situations where a person owns a home but needs Medicaid to help pay for nursing home care? The issues become more complex.
Consequences of Nursing Home Medicaid Assistance for Property Ownership
If Medicaid is paying for your nursing home costs, you still may be able to keep your home. It is a misconception that you always have to sell your home to receive Medicaid coverage for nursing home care.
You can keep your house if:
- Your spouse or other dependent relative lives there or
- Your home equity interest is less than $500,000 (under federal law).
New York provides additional protection in allowing an individual to have equity up to $814,000 and still be eligible for long-term care services funded by the state.
The equity in your home and laws regarding this issue change over time. Therefore, before you make any decision, you probably will need some solid legal advice. Contact a law firm that knows how to devise a plan that will protect you under the law.
Can an Elderly Person Moving into a Nursing Home Transfer Their Property to Be Eligible for Medicaid?
In most states, transferring your house to be eligible for Medicaid for nursing care may lead to a Medicaid transfer penalty. Here is how it works under Section 1917(c) of the Social Security Act:
- The government reviews assets for 60 months before the first month of nursing care;
- This review includes the determination of whether the individual or their spouse transferred assets during the look-back period; and
- If so, and it was for less than fair market value (or to a trust), a transfer penalty may be imposed.
The penalty can be harsh. If this happens to you, you may have to pay back funds to Medicaid. You may also be ineligible for coverage for nursing home care for quite some time. The length is based on the district where the nursing home is located.
However, there are exceptions to the transfer rules. You can transfer your home without incurring a penalty when the transfer is to:
- Your spouse;
- To a child who is under age 21 or who is blind or disabled;
- Into a trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medicaid applicant, under certain circumstances);
- To your sibling who has lived in the home during the year preceding your move to a nursing home and who already holds an equity interest in the home; or
- To a “caretaker child,” who the government defines as your child, who lived in the house for at least two years before you went to a nursing home and who during that period provided care that allowed you to avoid a nursing homestay.
Even in these circumstances, you must take care as the government will heavily scrutinize these transfers. As you can see there are a lot of conditions and circumstances to consider in analyzing an asset transfer. You will need an established trusted elder law specialist with experience in the various ways to transfer assets to make sure you follow the rules and don’t incur any penalties.
Can an Elderly Person Moving into a Nursing Home Sell Their Property?
No law prohibits you from selling your home if you are in a nursing home and receiving Medicaid. However, here are the possible consequences:
- The proceeds from the sale may make you ineligible for Medicaid and
- You may have to apply the proceeds of the sale to your nursing home bills.
Let a lawyer with experience in long-term care and eldercare analyze why you want to sell and address the possible implications of the sale with you.
When Your Elderly Relative Passes Away While in a Nursing Home
The state may seek repayment monetary Medicaid benefits if they were spent on your relative’s nursing care. The Medicaid Estate Recovery Program tries to recoup money by filing claims against any assets a Medicaid recipient held an interest in at the time of their death, such as a home.
Dealing with what to do with the house when an elderly person enters a nursing home or addressing issues with the estate of one who passed away in a nursing home both present challenges. There are many puzzle pieces involved and the stakes are high. This is why you should always consult a seasoned elder legal matters attorney to plot out the best course of action.
Andrew M. Lamkin: A Lawyer Focused on the Rights of the Elderly
Andrew Lamkin understands the anxiety, frustration, and fear that can accompany handling transitions to nursing home care. He helps ease the strain by preparing individuals and their families for this step. He knows how to protect assets against the ever-increasing costs of long-term care.
Andrew M. Lamkin has extensive experience in elder law. The bar associations of New York and New Jersey provided him with memberships to practice law in their states. Contact the Law Office of Andrew M. Lamkin, P.C., either online or by calling 516-605-0625, and let him help you with your plans.