What happens to my house when I am in a Nursing Home?
You will be sitting at your parent’s bedside. The physical and cognitive effects of their illness are too pronounced to ignore. Homecare was hoped for, but circumstances have changed that equation. A family’s decision to pursue nursing home care for a loved one is a difficult one on many levels. Besides the day-to-day impact of moving from a house to a long-term care facility, there are significant financial consequences. Nursing Home Medicaid planning may dictate a change in financial flexibility, especially with respect to one’s home.
Generally, in New York, a person’s home becomes an available resource for Medicaid purposes when they enter a nursing home and no spouse, minor child or disabled person remains in that home. This means that the home’s equity value would adversely impact eligibility. Medicaid regulations do allow an “Intent to Return Home” letter to be executed and submitted by the homeowner so that the home remains an exempt asset for eligibility purposes. This letter informs Medicaid that there is a possibility of the ill person returning to their house after a stay in the nursing home. A time window of approximately six months is granted to the homeowner to see if they return or not. If not, the house’s value will impact eligibility. The six-month window also affords families some time to decide what to do with the home. Should the home be sold the proceeds would trigger a penalty period for nursing home Medicaid. To reduce the length and scope of the penalty, a Medicaid approved Promissory Note can be prepared.
When a spouse still resides in the house, a spousal transfer can be made and that house transfer is exempted from penalties. Other exempt transfers for the home include: a caretaker child who resided at the home for a period of two years and provided enough care for the parent to avoid nursing home care, a child under age 21, a disabled child, or a sibling with an equity interest in the home who has resided there for 1 year prior to the nursing home admission.
If no exempt transfer is possible and a sale with promissory note is not completed, Medicaid has the ability to place a lien on the home to recover their payments to the nursing home. Medicaid may also exercise their right to an estate recovery as a creditor of the estate. These are outcomes that most families will try to avoid.
Planning ahead is the best course of action. Placing a house in an Irrevocable Trust while the owners are still healthy is usually the safest avenue for protecting the house. Contact the professionals at Sloan and Feller today to find out the best ways to protect your home and set up a long term health care plan for you and your family.