How to Avoid Nursing Home Taking Your House in New York

One of the biggest fears for seniors in New York is that the nursing home will take their house to pay for the high costs of care. Fortunately, there are several strategies one can use to protect the home and assets from being seized by a nursing home. Here, we will explore some of the most effective ways to avoid a nursing home taking one's house in New York.

Purchase Long-Term Care Insurance

One effective strategy to protect your home from being seized by a nursing home in New York is to invest in long-term care insurance. With this type of insurance policy in place, the costs of nursing home care will be covered by the insurance company rather than forcing you to sell your house to pay the bills.

Long-term care insurance covers expenses for nursing home care, assisted living, adult day care, and home health care. Nursing home coverage includes room and board, medication management, and personal care assistance, while assisted living coverage includes housing, meals, and help with daily living activities. Adult day care coverage includes supervision, meals, and recreational activities during daytime hours, and home health care coverage includes skilled nursing, physical therapy, and personal care services provided at home.

One drawback of long-term care insurance is the high premiums for older individuals. Premiums can range from $1,000 to $5,000 per year, depending on factors such as age, health, and coverage. Premiums are more affordable when purchased at a younger age, typically in one's 50s or 60s. It's important to note that premiums may increase over time, depending on the policy and insurance company. Some employers offer group long-term care insurance plans with lower premiums, which can be a more affordable option for some individuals.

Sell or Transfer Assets

Another way to avoid a nursing home taking your house in New York is to sell or transfer it before going to a nursing home. However, there are strict rules to avoid Medicaid disqualification. Medicaid imposes a penalty period for gifts or transfers made within five years from the date of the Medicaid application, which is calculated by dividing the amount of the transfer without consideration by the average monthly cost of nursing home care in the state. During the penalty period, the individual is ineligible for Medicaid coverage of nursing home expenses. Certain transfers, such as those to a spouse or disabled child, may be exempt from the penalty.

During the five-year "lookback" period, all asset sales and transfers prior to the application are subject to review. Assets sold or transferred more than five years before the application are generally not considered. It is essential to plan ahead and make any necessary asset sales or transfers well in advance of needing nursing home care. Consulting with an elder law attorney like us can help ensure compliance with Medicaid rules and avoid costly mistakes.

Create a Medicaid Asset Protection Trust (MAPT)

Creating a Medicaid Asset Protection Trust (MAPT) is another way to avoid a nursing home taking your house in New York. To establish an MAPT, an irrevocable trust must be created with the assistance of an elder law attorney like us. A trustee, usually an adult child or trusted family member, is named to manage the trust. Ownership of the home and other assets is transferred into the trust, making the trust the legal owner of the assets and removing them from the individual's estate. The individual retains a life estate and also becomes an income beneficiary, thus, retaining the right to live in the home and receive the net income, if there are any, from the trust.

By transferring the home into the trust, the individual no longer owns the property directly, and the home is not considered a countable asset for Medicaid eligibility purposes. The individual can continue to live in the home as long as they are able, without affecting their Medicaid eligibility. If the home is sold while in the trust, the proceeds remain in the trust and are not counted as assets for Medicaid. The trust can provide for the distribution of the home to the beneficiaries upon the individual's death, avoiding probate. However, to escape from the New York Medicaid estate recovery program, the transfer of assets to the MAPT must be done 5 years prior to applying for Medicaid for nursing home care and 30-months for home care.

Choose Home Health Instead of Nursing Home

In-home care can be more affordable than nursing homes for individuals who require moderate care. The average cost of in-home care is approximately $30 to $33.99 per hour, depending on the type of caregiver and qualifications. In contrast, nursing homes cost an average of $294 per day for a semi-private room and $330 per day for a private room. In-home care allows individuals to receive necessary assistance with daily living activities and medical needs while remaining in the comfort of their own home. In-home care services can be customized to meet the specific needs of the individual, from a few hours per week to 24/7 care. In-home care can be provided by family members, friends, or professional caregivers, depending on the individual's preferences and budget. In-home care may be covered by long-term care insurance, veterans' benefits, or other funding sources, reducing out-of-pocket costs.

Form a Life Estate

Forming a life estate is a legal arrangement that allows an individual, known as the life tenant, to transfer ownership of their property to another person or persons, known as the remainderman, while retaining the right to use and occupy the property during their lifetime. The life tenant has the exclusive right to live in and use the property and is responsible for paying property taxes, insurance, and maintenance costs. The remainderman has a future interest in the property, which means they will automatically inherit full ownership of the property upon the death of the life tenant. The life estate can be created by deed, will, or trust and must be properly recorded with the local land records office to be legally valid. The life tenant cannot sell, gift, or mortgage the property without the consent of the remainderman, as their interest in the property is limited to their lifetime.

However, to save your house from nursing home costs, a life estate must be created at least five years before the life tenant applies for Medicaid coverage. Otherwise, it may be subject to Medicaid estate recovery.

Other Strategies

In certain situations, Medicaid estate recovery cannot be pursued for houses. Recovery is prohibited when the following persons live in the house:

1. If the deceased Medicaid recipient’s surviving spouse is still alive, recovery cannot be made during the spouse’s lifetime.
2. If the deceased Medicaid recipient has a surviving child who is either:
• Under the age of 21. In this case recovery can only be made when the child reaches the age of 21; or
• Certified blind or disabled. In which case recovery cannot be made during the child’s lifetime and can only be pursued when the child dies.
3. If one of the following relatives is residing in the home of the deceased Medicaid recipient:
• A sibling with an equity interest in the home who lived there at least one year before the recipient was institutionalized and has, since then, lawfully resided in the home continuously. In this case recovery can only be made if the sibling no longer resides in the home or if the property is sold; or
• An adult child who has lived in the home for at least two years immediately before the recipient was institutionalized, who provided care that may have delayed the institutionalization, and who has, since then, lawfully resided in the home continuously. In this case recovery can only be made if the adult child no longer resides in the home or if the property is sold.
4. Income, resources and property belonging to an American Indian or Alaskan Native as described in detail in 02 OMM/ADM-3.

Proactive estate planning is critical to protect your home from the high costs of nursing home care and Medicaid estate recovery. Working with a knowledgeable estate planning attorney like our team is vital to develop a comprehensive plan that adheres to complex Medicaid rules and effectively safeguards your assets, allowing you to achieve your long-term goals with peace of mind. Should you need assistance, we at the Law Offices of Albert Goodwin are here for you. You can call us at 212-233-1233 or send us an email at [email protected].