The simple answer to the question above is, “yes, it can.” But with proper planning, the loss of your home may be avoided.
Often, people get partial information about government programs for seniors and they proceed based on some misconceptions. In this post, we will look at one of these and help you see the complete picture.
But first, let’s provide the necessary background information for those who may need it.
Medicare and Long-Term Care
If you work and pay taxes for at least 10 years, you will qualify for Medicare when you are 65. You can also qualify on your spouse’s work record. Since this is a form of health insurance for senior citizens, you would assume it would cover expenses unique to elders.
Most seniors require assistance at some point. More than one third will reside in nursing homes. When you hear this, you might surmise that Medicare will pay for long-term care if you need it.
Whether fair or not, Medicare does not pay for custodial care in nursing homes or professional in-home care.
Nursing homes are extremely expensive. The state says the average cost for a day in a nursing home is just under $180, and the average length of stay is one year. But state statistics often fail to paint the full picture. In our experience, the cost for nursing homes is closer to $7,000 a month, and many of our clients have been in nursing homes for 3 to 10 years
In Oklahoma City, the state says the median annual charge for in-home care by a qualified home health aide is $53,196. Again, we have seen costs as high as $10,000 a month. And Oklahoma is one of the least expensive states in the U.S.
Medicaid and Home Ownership
Now that we have set the stage, let’s focus on the point of this post. Medicaid is a government program that pays for long-term care for those with very limited financial resources, currently $2000 for a single person.
Some assets don’t count against this $2,000 cap, including your home, but only for your first 12 months of long term care. There also is an equity limit, which in Oklahoma for 2021 is $603,000.
If your spouse remains in the home when you enter long-term care, the equity limit does not apply and your home remains exempt so long as your spouse is living there.
So the answer to the basic question of whether Medicaid will take your home while you are living is maybe, especially if your are single, but this can quickly change after you pass away.
Medicaid Estate Recovery
The state Medicaid program is required to seek reimbursement from the estates of those for whom it has paid for care. Since you cannot qualify for Medicaid if you own valuable property, typically the home is the only thing left for Medicaid to take.
Medicaid will put a lien on your home if you owned it when you passed. There are some exceptions. If your spouse, a sibling with an ownership interest, or a dependent child is living in the home, it is protected while they are living there.
Five-Year Look-Back and Caregiver Child Exemption
There’s a better solution. You could deed your home (and other assets) into an irrevocable trust and if you do this at least five years before you need care, it will not count when you apply. It would also be protected against state recovery. Timing is key, however, because as noted the funding of the trust must take place at least five years before you apply for Medicaid.
You can also protect your home and avoid this 5-year look-back period if you give the home to an adult child who has been caring for you in your home for at least two years before you enter a nursing home.
Access Our Estate Planning Worksheet
We have an estate planning worksheet you use to gain a better understanding of this important process. It is free, so this is a great opportunity to build on your knowledge.
You can get your copy right now if you head over to our worksheet page and follow the instructions.
Schedule a Consultation Right Now!
If you are ready to take the ultimate step, you can schedule an appointment with an Oklahoma City estate planning attorney right now if you call us at 405-843-6100. There is also a contact form on this website you can use if you prefer to send us a message.