A common question asked by elderly clients and their families is “When planning for Long-Term Care (LTC), is it possible to protect their home after mom moves into a nursing home?”
A very “lawyerly” answer is “Yes and No.”
This is why people love talking to attorneys so much.
Nursing home costs and expenses are steep, and unfortunately, many elderly individuals run out of money, but they still need nursing home level care. It is important to distinguish between what a nursing home wants and what Medicaid may requires.
How would the Government (Medicaid) “Take” My Home
Medicaid is the Federally-funded, State run program that currently pays for the majority of all LTC expenses of the elderly in nursing homes.(1) It is a broken, under-funded government program. It provides insurance for the “poor” and LTC for the “aged, blind, and disabled.” It is a “means-tested” program. This means that there are limits on income and “countable resources.” Countable resources are assets that Medicaid deems spendable toward medical expenses – LTC and otherwise. These must be used prior to Medicaid paying your nursing home cost.
When a person moves into a nursing home, Medicaid assumes the former residence is no longer needed. It will want a declaration the home is to be sold or rented, that a Fair Market Value (FMV) price is charged, and to be notified when the house sells or rents.
How Would a Nursing Home “Take” My Home
Similarly, a nursing home will ask about property, including a prior home, upon admission with an expectation that the home will be sold to private pay for the LTC. It is important to understand, it is in a nursing home’s best interest to have you private pay as long as there are dollars available. A nursing home may charge upwards of $9,000/month in our area – there are less expensive and there are more expense facilities. When Medicaid pays a person’s nursing home fee, Medicaid pays substantially less. That is one reason why many facilities have a limited number of “Medicaid beds.” A nursing home will review all of an elderly person’s assets – and if married, the spouse’s assets – to determine what can be used to private pay for care before (if ever) Medicaid is applied for.
So, can the nursing home or Government/Medicaid take your home. No, but both will assume and, in a matter of speaking, encourage a family to sell the home to private pay the nursing home cost.
Does an Elderly Person Seeking Long Term Care Have to Sell a Home?
(See, it can be easy to talk to an attorney)
BUT (most attorneys have a big “but” with their Yes’s and No’s), in order to control whether a home, other real estate, or property in general needs to be sold, a well-thought out plan must be designed and executed in timely fashion.
When Should a Person Start to Plan to Control What Happens to an Elderly Person’s Home?
After you visit a nursing home is not the best time to start planning . There are some things that may still be able to be done to control some spending. However, the nursing home and Medicaid hold far more control at that point.
If there is a Long Term Care possibility, it is best to have a conversation with an Elder Law Attorney about concerns, assets, income, wishes, and options. I suggest you find an Elder Law Attorney who is willing to provide this initial consultation for no charge or a very limited fee. You want to understand the unique needs for your situation and the planning options to consider. It is possible there are some planning techniques you may consider implementing sooner to maximize your spending control. However, you also want to understand thresholds of care that warrant pursuing LTC. An Activities of Daily Living scale defines for the government whether a person needs long-term care. It is also the scale a long-term care insurance company uses to start its coverage.
An Elder Law Attorney can explain options that might be available in-home that may allow an elderly person to stay in his or her home longer. This is usually the preference.
What Can Really Be Done? Can I Just Put the Home in a Family Member’s Name?
There are several specific techniques that may be implemented to protect all or a portion of the value of a home, including purchases of a life estate, personal loan, joint purchases, personal service contracts, and post-pay to a family member for in-home care.
Each of these require specific planning in design and execution. They require commitments from the elderly person and the participating family member or friend. Every technique is not appropriate for every situation. Hence, find an Elder Law Attorney willing to provide a free consultation to talk to you about your specific situation and the options that are comfortable for those involved. There is information below about how you can meet with me for your free consultation.
By the way, One bad “planning” technique is putting the home in another person’s name. People do this – and people still tell others this works. It is important to understand, Medicaid is the government. They have access to a lot of information about you. They create a “penalty period” equal to the value of the transfer that could have been used to pay the nursing home. See “The Double Penalty of the Penalty Period.”
Just When You Think You Understand Protecting the Home – Estate Recovery Pops Up
It is one of those “You can pay me know or you can pay me later” situations.
You have implemented and properly executed a plan that keeps the home from being sold and used to pay for a nursing home. However, if Medicaid does end up paying for a portion of your nursing home care, the State can file a claim against your house after the person dies.
Estate Recovery allows the State to make a claim against your estate to be paid back. It can only make a claim for what it spent, which would be substantially less than a similar period of private pay. For example, private paying a nursing home for six months, may cost close to $50,000 ($8,000 x 6). However, Medicaid would pay less than $5,000/month during the same six months. Medicaid has a set reimbursement (<$5,000, less Social Security and less other income paid to the nursing home). So, the State could make a claim for much less than $30,000. That could still be substantial. However, a proper plan should have provisions to reduce what is available to be available for Medicaid to file its claim against.
Good, properly timed planning is the answer!
Accordingly, before you consider entering a nursing home, you should consult with an experienced Elder Law & Estate Planning Attorney. With advanced planning, you can find ways to preserve some or all of the value of the home.
What Should All of this Planning Cost?
At CCSK Law, we strive to lower hurdles between our clients’ legal issues and questions and the solution. One big hurdle is a fear of cost. It is a legitimate concern. The reality is some attorneys charge $5,000 to $15,000 for “Medicaid Planning.” Many may charge an additional fee for the actual Medicaid application process. In some cases, extensive planning is warranted. In some cases, it may not be. Learn more about my approach to the planning process and fees. If you do not understand what is being charged and why it is pertinent to your situation, you ask for a clearer explanation. Some things do not work for everyone. In addition, most planning techniques require precise timing, execution, and a commitment from people other than the person in need of care.
Valparaiso Elder Law & Estate Planning Lawyers
One of the biggest assets that many elderly people own is their home. However, what happens to the home if they must enter a long-term care facility can be worrisome. Thus, it is important to review the options available to protect your home and to plan accordingly. Because deciding what method is unique to each person, it is important to understand what will work best for you. It is can be complicated. It is important to consult an experienced Indiana Elder Law and Estate Planning Lawyer, like me, RG Skadberg. I can advise you of any options you might have, and the consequences of each. And I’ll do it in a way that you will understand what and why the options work for you. Call me, RG Skadberg the Indiana Elder Law and Estate Planning Lawyer at Carr, Chelovich, Skadberg, & Kazmierczak, LLC today at (219) 200-3902. Or, click to learn more about RG Skadberg and to schedule your 30 minute free consultation.