If you have more income or assets than required to be Medicaid eligible, you need to embark in estate planning to avoid the nursing home or Medicaid from taking your house. Planning for nursing home care is important especially when a person ages. Nursing home is expensive and usually financed by Medicaid.
If you have a house, you may be eligible for Medicaid since a house is usually not a countable asset for purposes of determining Medicaid eligibility. However, your house can still be subjected to a Medicaid lien. Proper estate planning can help avoid the nursing home or Medicaid from taking your house.
Ways to avoid nursing home taking your house
To know how to avoid the nursing home or Medicaid from taking your house, it important to know at what stage of the process you are in.
First, if no lien has been imposed by Medicaid yet and you are simply planning your estate, then you should transfer your house to a Medicaid Asset Protection Trust 60 months (5 years) prior to applying for Medicaid. If you need help in transferring assets to a Medicaid Asset Protection Trust, you can call us at 718-509-9774 or send us an email at [email protected].
If you transfer your house to a trust within 60 months from applying for Medicaid, you might incur a penalty period that makes you ineligible to apply for Medicaid, depending on the value of the property transferred without consideration. Although you could argue that the transfer was of an exempt and non-countable asset for Medicaid eligibility, state courts may differ in their interpretations and there is no guarantee that your argument will be successful.
On the other hand, if you have already received Medicaid benefits and you fear that a lien may be imposed on your house, the type of Medicaid lien will dictate the strategy you will use to avoid the nursing home or Medicaid from taking your house.
Types of Medicaid liens
A Medicaid lien is a claim over property (usually a house) based on the presumption that the homeowner’s health care costs should be paid for by his assets (the house) before the property can be transferred. There are generally two types of Medicaid liens: a pre-death lien and a post-death lien.
A pre-death lien is usually placed against homes of certain permanently institutionalized living recipients and filed in land evidence records after notice and hearing.
A post-death lien is filed with the estate of the deceased Medicaid recipient, or at times, filed against the house in land evidence records.
Pre-death (or TEFRA) Medicaid lien
A pre-death (or TEFRA) Medicaid lien is imposed only on permanently institutionalized individuals. A permanently institutionalized individual is an inpatient in a nursing facility, intermediate care facility for the mentally retarded, or other medical institution, who is not reasonably expected to be discharged from the medical institution and return home.
Because the inpatient is not expected to reside back in the home, a pre-death Medicaid lien is imposed on the inpatient’s house. However, before this lien is imposed, notice and hearing is required. During the hearing, you can present medical evidence to prove that the nursing home case is only temporary and to rebut the presumption that the placement is permanent. This will stop the lien from attaching to the house. If a TEFRA lien is attached to the house and the alleged permanently institutionalized individual is discharged from the nursing home, you can ask the pre-death lien to be cancelled.
A pre-death Medicaid lien does not interfere with an inpatient’s ownership of the property. However, in case the inpatient decides to sell the property, such as when the inpatient cannot anymore afford to pay maintenance costs, taxes, and mortgage payments, then the Medicaid lien is first satisfied from the homeowner’s equity before any proceeds are given to the homeowner. When the inpatient Medicaid recipient dies with the pre-death Medicaid lien on the house, Medicaid recovery will be part of the estate settlement process.
A pre-death Medicaid lien cannot be used to take your home in the following circumstances:
- A spouse, child under 21, or blind or permanently disabled child of any age.
- A sibling with an equity interest in the home who has lawfully resided in the home for at least 1 year before the recipient’s admission to a medical institution.
- An adult child resides in the home with the recipient as caretaker for at least two years before the recipient became institutionalized and such child provided the care that enabled such recipient to stay at home. See 18 NYCRR §360-7.11(b)(3); SSL §369 (2)(b)(iii)(B).
- A dependent relative residing in the home to whom the recipient provided more than 50% of the relative’s support prior to the recipient’s death. See 92 ADM-53, at Section IV. E.4.c.
- The property produces income and is used in the course of a business. See 92 ADM53, at Section IV.E.4.d.
- DSS failed to comply with the required procedures for filing and serving the notice of the claim. See SSL §104-b(2).
Although a lien can be recorded, estate recovery cannot begin until the surviving spouse dies, the adult child ceases to live in the residence, or the circumstances above are not present anymore. Sometimes, the Department of Social Services (DSS) will waive estate recovery in the above cases.
Post-death Medicaid lien
A post-death Medicaid lien is usually part of the probate process. Post-death Medicaid liens are only imposed in case the Medicaid beneficiary:
- Was age 55 years or older when Medicaid benefits were received;
- Had been determined to be permanently institutionalized, regardless of age; and
- Was not survived by a spouse or certain other dependents deemed to have a deserving claim on the estate.
Although a lien may be placed, states are prohibited from actually executing and recovering in the following cases:
- During the lifetime of the surviving spouse (no matter where he or she lives)
- From a surviving child who is under age 21, or is blind or disabled, no matter where he or she lives. Recovery, however, may take place when the child no longer meets these criteria.
- When a sibling, with an equity interest in the home, lived in the home for at least 1 year immediately before the deceased Medicaid recipient was institutionalized and has lawfully resided in the home continuously since the date of the recipient’s admission.
- When an adult child lived in the home for at least 2 years immediately before the deceased Medicaid recipient was institutionalized, has lived there continuously since that time, and can establish to the satisfaction of the State that he or she provided care that may have delayed the recipient’s admission to the nursing home or other medical institution.
However, when the spouse dies or the adult child moves to another house, the state may begin estate recovery.
Despite these rules, there are still some nuances with regard to Medicaid estate recovery that may prevent the nursing home or Medicaid to take your house. For example, the state cannot institute recovery proceedings from the surviving spouse until such spouse dies and there is no surviving minor, blind or disabled child. However, if the surviving spouse had excess resources at the time of the recipient’s application, even if there was a disabled, blind, or minor child in the household, the surviving spouse’s estate can still be subjected to Medicaid estate recovery.
To recover from the surviving spouse’s estate, the surviving spouse must be a legally responsible relative with assets that could support the Medicaid recipient at the time the recipient was receiving benefits. For example, if the surviving spouse had assets beyond the Minimum Community Spouse Resource Allowance at the time the Medicaid recipient received benefits, then the surviving spouse’s estate could be held liable for Medicaid recovery. If the surviving spouse had no sufficient resources to pay for the other spouse’s medical needs, no recovery can be made from the surviving spouse’s estate.
In some cases, the Department of Social Services (DSS) will waive recovery when the effort to recover assets will be costly because asset ownership is complicated or legally ambiguous. Undue hardship is also one of the reasons to waive recovery. Undue hardship occurs when the estate is the sole income producing asset of the beneficiaries or a homestead of modest value which is the primary residence of the beneficiary or there are other compelling circumstances.
Preventing the nursing home or Medicaid from taking your house can be a complicated process, depending on what stage you are in. If you need assistance in your endeavors, the Law Offices of Albert Goodwin are here for you. We have offices in New York, NY, Brooklyn, NY and Queens, NY. You can call us at 718-509-9774 or send us an email at [email protected].