It’s a no-win scenario: you need long-term care and are eligible for help from Medicaid, but the possibility exists that Medicaid could take possession of your home as part of reclaiming funds after you die. What should you do?
The Medicaid Estate Recovery Program does reclaim funds from estates of people who have received care under Medicaid. In some states, Medicaid is more aggressive than others, and in Texas, there seems to be a particular concern about funds from the homestead, according to The Houston Chronicle’s recent article, “Elder law: Don't miss opportunity to protect your home from estate recovery.” Depending on the laws of your state, there are things you can do to protect your home. You will need to put these plans into effect, sooner rather than later.
The State of Texas can make claims against estates of Medicaid recipients of certain Medicaid services if the Medicaid recipient was age 55 or older when the services were provided. The state figures out the funds spent on the Medicaid recipient daily and tries to recover the funds from the person’s estate.
Some estates are exempt from Medicaid estate recovery, like when there are certain surviving family members of the Medicaid beneficiary. The state can’t start a recovery against the estate if a spouse, a child under the age of 21, or a disabled child of any age survives the beneficiary. If there’s a surviving unmarried adult child of any age at home for at least a year before the Medicaid beneficiary's death, estate recovery can be avoided. Evidence of the exemption must be proven and can include a death certificate listing surviving spouse, a birth certificate listing age of surviving child, or an eligibility letter from Social Security indicating disability onset.
There’s another exception for when recovery would cause an undue hardship on the heirs.
Another way to protect the homestead from an estate recovery claim by Medicaid is by setting up a Transfer on Death (TOD) deed on the home, which also avoids probate. It also allows the owner (the grantor) to transfer an interest in the home, without incurring a Medicaid transfer of assets penalty.
An elder law attorney should be consulted to determine how you can protect the family home, if you or a loved one needs to obtain long-term care through Medicaid.
Reference: Houston Chronicle (July 10, 2017) “Elder law: Don't miss opportunity to protect your home from estate recovery”