Part 5: “Managing the Medicaid Maze”
Originally published January 22, 2010 in the Stamford Advocate
Copyright Julie Jason 2010. All rights reserved.
Medicaid steps in to cover long term nursing home costs when you have insufficient resources to do so. Your home is potentially the largest asset you may be able to keep.
Each of the following examples assumes that all other Medicaid eligibility requirements are met, including not having made a “disqualifying transfer” of assets. (If you gave away assets within the “look back” period (currently 47 months; 60 months by February 2011) for the purpose of qualifying for Medicaid, you have made a disqualifying transfer of assets.)
As you read this, keep in mind that you don’t want to take any action without your elder law attorney at your side – it’s just too easy to make a mistake that can prevent assistance and worse, put the assets of your spouse or loved ones in jeopardy.
Stamford elder law attorneys, Sam Starks (Samuel J. Starks Law Offices), Richard Fisher (Cacace, Tusch & Santagata), and Joel Muhlbaum (Law Offices of Joel D. Muhlbaum, LLC), provided the answers.
In the first three examples, the husband (the “institutionalized spouse”) is in a nursing home and the wife (the “community spouse”) occupies the home. The home is worth $2 million; the property has no mortgage, so the total equity in the home is $2 million.
- The house is titled in husband’s name. Is the house excluded? Answer: Yes. Even though the institutionalized spouse’s equity is more than $750,000 (refer to last week’s column), the home is exempt because it is occupied by the community spouse as her primary residence. Having the house in the name of the institutionalized spouse may not be wise, however, for another reason that I will discuss next week (estate recovery).
- The house is titled in wife’s name. Is the house excluded? Answer: Yes.
- The house is titled in “joint name with right of survivorship.”
Is the house excluded? Answer: Yes.
In all three cases, the title is irrelevant to Medicaid eligibility. For married couples, there is no limit on the value of the home or the home equity of the institutionalized spouse, so you can keep the home and still qualify for Medicaid, assuming you meet all other eligibility criteria.
In a fourth situation, the institutionalized person is not married. He owns a home worth $2 million with a $1 million mortgage, so his equity is $1 million. The house is occupied by a nephew. Is the house excluded? Answer: No. A nephew is not a “qualifying individual.”
If this single person had a qualifying individual living in the house, the house would be exempt, namely, a child under 21, or a child who is 21 or older if he is considered blind or disabled under the criteria for Supplemental Security Income (SSI) eligibility. (SSI is a federal income supplement program designed to help the low-income aged and disabled. To find out if you are eligible, go to www.ssa.gov/ssi/ and use the “Benefit Eligibility Screening Tool.”)
In a fifth situation, a single institutionalized person owns a house in his own name alone is worth $700,000 with a mortgage of $100,000 (equity of $600,000). He is not expected to return to his home. Is the house excluded? Answer: No, since he is expected to live out his days in the nursing home, the house is “non-home real property,” and therefore not excludable. However, the answer is “yes” if the house is listed for sale (and any offer that approximates fair market value is not refused).
If that same individual is expected to return home, his house is exempt even if the property is not put up for sale. Why? Two reasons: his intention to return home and his equity being under $750,000, which is the limit in the state of Connecticut. (Other states require the home equity to be no more than $500,000.)
Be sure to talk to an experienced elder care lawyer before taking any action.
Click here to read Part 6.