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Wondering how to avoid nursing homes from taking your house?
In this article, you’ll learn about:
Let’s dig in.
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To avoid a nursing home taking your house, start planning early.
Create an irrevocable trust and transfer your home into it.
This means you no longer own the home, but it’s protected.
Consider setting up a life estate.
This lets you live in the home while giving ownership to someone else.
Buy long-term care insurance.
It can cover nursing home costs and keep your assets safe.
If married, learn about spousal protections.
Medicaid has rules that can protect homes for the healthy spouse.
Finally, talk to an estate planning attorney.
They can help you find the best strategy for your situation.
Read More: How To Protect Parents’ Assets From Nursing Homes
Nursing homes themselves can’t take your house.
However, let’s say you use Medicaid to pay for nursing home care.
The state can try to recover those costs from your estate after you pass away.
This recovery process might include claiming your house if it’s part of your estate.
There are ways to protect your house, such as placing it in an irrevocable trust or using a life estate.
It’s important to plan early, as Medicaid looks back at financial transactions made five years before you applied for assistance.
A nursing home can’t directly take your house.
However, let’s say you have unpaid bills at the nursing home and you’ve applied for Medicaid to cover the costs.
There are scenarios where your house could be at risk.
If you’re single and not living in your home, Medicaid might count your house as an asset.
This might make you ineligible for Medicaid or force you to sell your home to cover nursing home costs.
Even if Medicaid pays for the nursing home, after your death, the state can attempt to recoup costs from your estate, which includes your house.
This is called estate recovery.
Let’s say you’re married and your spouse still lives in the house.
Federal law usually protects the house from being counted as an asset or subject to estate recovery.
Read More: What Happens When Medicare Stops Paying For Nursing Home Care?
Nursing homes themselves can’t take your house.
However, Medicaid can seek repayment for nursing home costs under certain conditions.
If you transfer your house to someone else within five years before applying for Medicaid, it might count as a gift.
This is known as the “five-year look-back period.”
Let’s say Medicaid finds out you gave away your house or sold it for less than the market value during this period.
You could face penalties, like:
These penalties might delay your eligibility for Medicaid.
In some cases, Medicaid might also try to recover costs from your estate after you pass away, which could include your house.
Read More: Does Putting Your Home In A Trust Protect It From Medicaid?
When you move into a nursing home, you can choose to sell your home or keep it.
If you keep it and pay for the nursing home yourself, nothing happens to your home.
If you can’t pay and need Medicaid to cover the nursing home costs, the state looks at your assets, including your home.
Sometimes, your home is not counted as an asset if a spouse or dependent relative lives there.
If you qualify for Medicaid, they pay for the nursing home.
After your death, the state may try to take your home to repay the costs.
This process is called estate recovery.
Planning early, like transferring the home to a trust, might protect it from estate recovery.
Talking to an estate planning lawyer can help you understand the options for your specific situation.
Read More: How To Put House In Trust With Mortgage
Yes, a nursing home can take your house if it is in a trust, but it depends on the type of trust you use.
If you place your house in a revocable trust, Medicaid might count it as an asset.
This makes it vulnerable to nursing home costs.
But, if you use an irrevocable trust, the house is generally safe.
Once you put the house in an irrevocable trust, you no longer own it.
The trust owns it.
This means that Medicaid usually does not count it as your asset.
However, you must set up the irrevocable trust at least five years before applying for Medicaid.
This is because Medicaid looks back five years to see if you transferred assets.
Setting up an irrevocable trust in time helps to protect your house from nursing home claims.
This is also known as a Medicaid asset protection trust.
Let’s look at some strategies on how to avoid having a nursing home take your house.
Using an irrevocable trust is a strategy to protect your house from nursing home costs.
Here’s how it works:
This strategy helps ensure that your house stays in the family and isn’t sold to pay for nursing home costs.
Using a life estate is a strategy to protect your house from nursing home costs.
In this setup, you grant ownership of your house to someone else, often a family member, while keeping the right to live in it for the rest of your life.
When you create a life estate, you’re dividing ownership of the house.
You own the right to live in it, and someone else owns the remainder interest.
This means that upon your death, full ownership passes to the other person automatically.
It’s essential to set up the life estate at least five years before applying for Medicaid.
This avoids the Medicaid look-back period that could disqualify you from benefits.
However, keep in mind that once you set up a life estate, you lose full control over the property and can’t sell it without the other person’s consent.
This strategy can be effective for keeping your house out of Medicaid’s reach, but it’s important to understand the implications and responsibilities involved.
Long-term care insurance helps you pay for nursing home care.
Buy a policy before you need care.
This insurance reduces the need to spend your savings on nursing home costs.
When you don’t drain your savings, you can keep your house safe from Medicaid claims.
Pick a policy with coverage that matches the average cost of nursing home care in your area.
Pay your premiums on time to keep the policy active.
Once you need care, use the insurance benefits to pay for the nursing home.
This way, your house stays as part of your estate, and you avoid selling it to fund your care.
Spousal protections can help save your house if one partner needs nursing home care.
First, know that Medicaid has special rules to protect spouses still living at home.
These rules ensure that the at-home spouse isn’t left with nothing.
One rule is the Community Spouse Resource Allowance.
This allows the at-home spouse to keep a certain amount of assets, including the house.
Another strategy is spousal refusal.
This means the at-home spouse refuses to use their assets to pay for nursing home care.
Medicaid then may cover the nursing home costs.
But, it’s important to remember that Medicaid might try to recover these costs later.
To use these protections effectively, it’s a good idea to create a plan with the help of an estate planning attorney.
Here are other questions clients ask related to avoiding losing their homes to nursing home costs.
A nursing home can take payments from various sources.
It is important to understand the payment options and eligibility criteria for government programs to plan appropriately.
Yes, nursing homes often take your Social Security check.
Here’s how it works:
When you enter a nursing home, you might qualify for Medicaid to help pay for the care.
Medicaid is a government program that helps with medical costs if you have limited income and resources.
If Medicaid pays for the nursing home, it usually requires you to spend almost all your income, including your Social Security check, on your care.
Medicaid lets you keep a small amount of your income for personal needs.
Your Social Security check goes to the nursing home, and Medicaid pays the rest of the costs.
This way, your Social Security check helps pay for your care in the nursing home.
When you enter a nursing home, you use your assets to pay for the care.
If your assets run low, you might qualify for Medicaid. Medicaid helps cover nursing home costs, but it has rules.
They check your income and assets.
If you pass the test, Medicaid helps pay for your stay.
But, Medicaid can claim back costs from your estate after you die.
This means they might take some assets, like your house, to recover the money they spent on your care.
Planning ahead can help protect assets.
Consulting an estate planning lawyer can give you strategies to safeguard your assets while following the law.
Read More: What Happens To Assets If You Go Into A Nursing Home?
Yes, you can sell your house if your spouse is in a nursing home.
However, it’s important to consider a few things:
Medicare does not take your home for nursing home expenses.
Medicare primarily covers short-term care, such as hospital stays and rehabilitation.
When it comes to nursing home costs, Medicare may cover a limited stay after a hospital visit, but it does not cover long-term care.
It’s Medicaid, not Medicare, that sometimes seeks reimbursement from an estate, which can include the home, for long-term care expenses.
However, Medicaid has specific rules about when and how it can claim assets.
To protect your home from being taken to cover nursing home costs, it’s important to understand and plan around Medicaid rules and regulations.
If you want help protecting your house from nursing home costs, fill out the form below.
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