Protecting Your Home and Assets From MedicaidBy: Roman Aminov, Esq.
I often see clients who are Medicaid recipients and are concerned that Medicaid may try to take their home or other property after their death. It is also a real concern to many elderly clients who are thinking about applying for Medicaid in New York. If you are one of the many people who are unsure of what can happen to your assets after your passing, then please read on. If you are interested in qualifying for New York Medicaid, please read my previous article here.
As I sit with clients to understand their situation, I advise them that the answer to this question is quite complex and depends on many factors including their age, familial situation, and the type of care that Medicaid is providing them. Medicaid is divided into two general categories: (1) Institutional, which includes nursing home and intermediate care facilities, and (2) Community-based which includes all the other services Medicaid provides including home care and insurance. Let us look at what Medicaid can do with your property in each situation:
If you (1) are receiving nursing home care, (2) are deemed a “permanently institutionalized individual (PII)” (meaning you are deemed not to have an intent to return home) , (3) and own your home, Medicaid must place a lien on your home for the amount that they pay out. When the property is eventually sold, the lien must be satisfied before your heirs get the remaining proceeds. There are a few exceptions. First, a lien may not be placed upon your home if certain people are lawfully residing in the home, including a spouse, a child under 18, or a child of any age who is certified blind or certified disabled. Second, if you return home after being a PII, Medicaid must remove the lien. Third, prior to imposing a lien against your home, Medicaid must allow you to transfer the home to the aforementioned individuals, assuming you are able to.
Regardless of whether you are receiving institutional or community-based Medicaid, Medicaid can seek “estate recovery”. Estate recovery is when Medicaid tries to recover the amount it paid for your care from your probate estate. Your probate estate only includes assets which you held in your own name and which do not pass by operation of law or through a beneficiary designation. If Medicaid is providing you with either nursing home care, home care aid services, doctor’s visits, prescription coverage, or hospital visit coverage, they may go after your probate estate to recover their outlay. The operative words here are “probate estate” and much can be done, relatively simply and inexpensively, to remove your home from your probate estate. There are a few caveats and exceptions to estate recovery. First of all, for community-based care, Medicaid can only collect services provided to you since your 55th birthday. Secondly, for either community or institutional care, Medicaid can only recover up to 10 years worth of benefits counting back from the date of death. Third, no recovery may be made during your spouse’s life, or at a time when you have a surviving child who is less than 21 years of age or who is certified blind or certified disabled.
Assuming that the Medicaid agency in New York has not placed a lien on your property, you have the opportunity, with some careful planning, to prevent this from happening sometime in the future. A knowledgeable elder law attorney can utilize different methods such as deed transfers with retained life estates and income only Medicaid trusts along with properly drafted powers of attorney to shelter your home from Medicaid claims. An elder care attorney can also help you prepare a proper estate plan consisting of a will, power of attorney, health care proxy, and a living will. The important thing to know is that the sooner you speak with an estate planning/elder law lawyer, the more likely it is that you can receive the care you need while protecting your home for your heirs.