Community Medicaid and Your House
Question: I am currently paying for caregivers to come to my house and assist me with day to day tasks. My friends tell me that I should apply for Community Medicaid but I own my home. Does the equity in my home disqualify me for Community Medicaid?
Community Medicaid BenefitsThe answer is technically that you can own your home and qualify for Community Medicaid benefits. However, the complete answer is more complex than a simple yes or no. Medicaid is a needs-based benefit that you must qualify for with certain asset and income limits. While it is correct that the primary residence is exempted from the resource calculation for an applicant for community-based Medicaid, there are certain precautions that should be taken to ensure that the house will remain protected under all circumstances. An applicant for community Medicaid is permitted to own a home, have liquid non-retirement assets that do not exceed $15,450.00, retirement assets in any amount, so long as a monthly distribution is being taken, an irrevocable pre-paid funeral and one car. Provided that the Medicaid recipient remains at home receiving services the home in considered an exempt asset meaning that it cannot be counted towards the resource level. It is imperative to realize is that when the Medicaid applicant passes away and the house is owned individually by the recipient, in order for the ownership of the home to pass to its intended beneficiaries, a probate proceeding in Surrogates Court will have to be commenced. Although the house was an exempted asset during the lifetime of the Medicaid recipient, under New York State law, costs of services provided under Medicaid to an individual over the age of 55 are subject to estate recovery at the time of the Medicaid recipient’s death. For the purpose of Medicaid estate recovery, an estate is defined as the decedent’s real and personal property and all other assets passing under the terms of a valid will or intestacy. Because the house would pass through the estate there would be an opportunity to recover against the value of the house.
Estate RecoveryIn order to prevent estate recovery, the Medicaid recipient should engage in proper estate planning during his or her life. At the time of the Medicaid recipient’s death, if the house is owned by a Trust in the name of the recipient, the house is able to be transferred to the intended beneficiaries without the need of probate; thereby, avoiding Medicaid having an opportunity to recover against the house. Either a Revocable Living Trust or an Irrevocable Living Trust will avoid probate and the possibility of Medicaid recovery; however, for most of our clients an Irrevocable Trust is more appropriate. If the house is transferred to an Irrevocable Trust, the five-year look back will begin to run in the event that the Medicaid recipient might need nursing home care in the future.
To best understand your options, you should consult with an Elder attorney in your area.