Here’s a common situation. Dad has died Mom has been living in the home with help of the children. She refused to leave and live with her daughter. Then she had a bad fall, broke her hip and she could not return to home so she had to stay in a nursing home. The kids had to apply for Medicaid after her savings ran out. Now oldest daughter spoke to another family at the nursing home and they told her
“Medicaid will get your house after your mother dies.”
Is it true? YES. Medicaid will require sale and payback for what Medicaid paid.
OR: Mom and Dad have been getting Medicaid assistance in home including payment of hospital, doctor and pharmacy bills. They are in their 60’s and not in a nursing home. They heard Medicaid will want payback after they die. The family could lose their home to pay the bills
Is it true? YES. Depending on your state, your Medicaid program may require payback from the “estate” of all recipients over age 55 after they die.
Even now, can we save the home from Medicaid? In many states, “Yes.” In some states “Maybe.”
Caution: This is a very complicated subject because the rules vary depending on when and where you live. Our mission then is to give you hope that not all is lost. The following commentary is thoughts for you to pursue further. You must consult with an experienced local elder law attorney on these questions. Each state is different and each state’s Medicaid program can be changed without notice.
All states: All states must hold off estate recovery while a spouse, minor or disabled child lives in the home and if a sibling co-owner lives in the home. After the condition expires the state may go ahead.
Michigan: I’m in Michigan, so here are some ideas for fellow residents. First Michigan Medicaid estate takes place only through probate. So avoid probate, avoid losing the house. Can Mom sign a deed, or has she given someone “power of attorney” to do it for her? If so, the most common safe method is the “Lady Bird Deed.” Joint deeds signed after entry into the nursing home at this stage are subject potential Medicaid transfer of assets (divestment) penalties (loss of coverage for a long period of time). Trusts are not an option since putting a home in trust causes the home to lose its exempt asset status and will be counted the same as money in the bank.
What if Mom cannot sign a deed and there is no power of attorney? Then probate will be unavoidable. But wait, all may not be lost! In Michigan, Medicaid waits until YOU open an estate, they don’t do it. So, can you wait? Yes. Under current probate procedure if nobody has opened a probate estate within three years of the recipient’s death, then whomever opens an estate afterward does not need to notify any creditor, including the state of Michigan Medicaid. The home could then be sold or transferred to a child and the state of Michigan will not get anything.
Caution again: do check these comments out with a local elder law attorney. Rules do change and may have changed.
Will this hold-off probate work in other states? Perhaps. Check with your local elder law attorney.
Other States: Some states’ recovery programs are not limited to probate. They have “expanded estate recovery” which means Medicaid can pursue any property that the recipient had an interest in. This includes jointly owned property.
Some states have “TEFRA Liens.” That means the Medicaid agency places records a lien at the county/state property office while the recipient is still alive and receiving Medicaid long term care services. The State must release the lien if the recipient is discharged and returns home.
Removal from Nursing Home – Hospice Care: Dissolution of the lien upon leaving the nursing home brings up a “Hail Mary” option. If the home is very valuable, and Medicaid’s claim would be very large, and if family can support her, then perhaps she could return to home or a child’s home on hospice care. Medicare would supply a hospital bed and the hospice benefit could provide other needed equipment and medications. That would remove the TEFRA lien. The home could be transferred to children or sold since Medicaid services are not being used. Then the remaining issue would be Medicaid estate recovery, which may be avoided if there is NO property in her name at death. I’m sure you can see this is a high-stakes situation and I know you would not undertake the Herculean effort without local elder law counsel.
Conclusion and Moral: See a local experienced elder law attorney to explore your options. “It is never too late.”