The rules surrounding the long-term care Medicaid program are complicated. There are rules about medical need, income, and assets. Most individuals are aware that strict rules exist, but the details are lost in translation to the detriment of those that need this program the most. In a series of articles, we will dispel these myths and clarify what gave rise to the myth.
The first myth is that the home will be “taken” away by the state while applying for Medicaid benefits. This is a serious concern for a number of reasons. Perhaps the Medicaid applicant will recover and be able to return home. Maybe a spouse or an adult child is still living in the home and will have nowhere else to go. Because of these concerns, many individuals who are otherwise eligible for Medicaid avoid applying for benefits. Failure to apply for Medicaid leaves family members to either pay for or provide hands-on care.
It is a MYTH that Medicaid will “take” an applicant’s home or force the applicant to sell it while applying for benefits. It is also a myth that the home must be rented out in order to be excluded as an asset. In North Carolina, a Medicaid applicant’s home value (up to a maximum equity value of $560,000 for 2017) is not counted against the applicant if any of the following apply:
- It is the applicant’s principal place of residence;
- The applicant’s spouse or dependent relative lives in the home, even if the applicant is no longer living there and is now in a facility; or,
- The applicant, or the applicant’s representative, signs a written statement indicating a subjective intent to return home. Because the intent is subjective, this written statement will exclude the home even if there is no “realistic” chance that the applicant will recover and return home.
However, while an applicant will not lose his or her home simply by receiving Medicaid benefits, the home may be subject to Medicaid Estate Recovery.
Medicaid Estate Recovery is a program that allows North Carolina to seek reimbursement at death for Medicaid benefits paid out during a recipient’s lifetime. This program gives rise to the myth that the state will “take” a home. For many individuals that received long-term care Medicaid benefits, Estate Recovery means that even though the recipient received Medicaid and the home was not counted as an asset, after passing away the personal representative of their estate must sell the home and use the proceeds to reimburse Medicaid.
Though this process may seem terrifying, Medicaid estate recovery may be waived in certain cases. Those situations include: (1) if the Medicaid recipient was survived by a spouse, (2) child under the age of 21, or (3) blind or disabled child of any age. There are also situations where it would be uneconomical to seek Medicaid Estate Recovery or would cause undue or substantial hardship to a surviving heir, in which case the claim may be waived by the state.
Furthermore, even if one of the waiver situations described above does not apply to you, there are various legal planning techniques and tools that can be implemented prior to the Medicaid applicant’s death that allow the applicant to receive Medicaid and still protect the home from Medicaid Estate Recovery.
Protecting real property from Estate Recovery can be done prior to needing long-term care Medicaid and for those that already receive Medicaid benefits.
If you are interested in learning more about long-term care planning and protecting your home, contact Andrew Atherton and Kathleen Rodberg, McGuire Wood & Bissette’s elder law team, at (828) 254-8800.