What Happens To Assets If You Go Into A Nursing Home?

What Happens To Assets If You Go Into A Nursing Home - How Far Back Can Nursing Home Take Your House - Can A Nursing Home Take Your House

What happens to assets if you go into a nursing home?

In this article, you’ll learn about: 

  • what happens to assets if you go into a nursing home
  • can a nursing home take your assets
  • when is a nursing home able to take your assets
  • how to avoid nursing homes from taking your assets
  • how far back they can take your assets

Let’s dig in. 

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What Happens To Assets If You Go Into A Nursing Home?

Entering a nursing home affects how your assets are treated, which depends on:

  • your situation
  • your country’s rules
  • local regulations 

It impacts your finances, including Medicaid eligibility, estate planning, and asset protection

Here are things that can happen to your assets if you go into a nursing home:

  • Medicaid Eligibility: Medicaid assists people with limited income and assets in covering medical costs. Applying for Medicaid for nursing home expenses has asset and income limits. Assets can be “countable” or “exempt” based on your jurisdiction.
  • Asset Spending: Some may spend assets to meet Medicaid limits. This involves using assets to cover care costs until you’re within those limits. Specific rules define acceptable spending.
  • Asset Protection and Estate Planning: Before entering a nursing home, some plan to safeguard assets from being fully used for care. This involves strategies like trusts, asset transfers, and gifts. Not all strategies are valid everywhere due to legal and ethical factors.
  • Home and Belongings: Often, your primary residence and personal items are exempt from Medicaid eligibility. However, rules can vary. Some places might place a lien on your home to recover Medicaid costs.
  • Spouse and Dependents: If your spouse or dependents live outside the nursing home, asset treatment can differ. Specific rules protect your spouse’s financial well-being.
  • Look-Back Period: Medicaid has a look-back period during which any asset transfers or gifts made prior to applying for benefits are reviewed. This prevents people from giving away assets shortly before applying to qualify for Medicaid. Transfers within this period might lead to penalties.

Read More: Does Your House Have To Be Paid Off To Put It In A Trust

What Happens To Your Home If You Go Into A Nursing Home?

Here are the things that could happen to your home when you go into a nursing home:

  • You Keep Ownership: Moving to a nursing home doesn’t mean you automatically lose your home. You still own it.
  • You Might Rent Or Sell: Some people choose to rent out their home for extra income or sell it to help pay for care.
  • Nursing Home Fees: If you can’t afford the nursing home fees, the government might assess your assets, including your home, to determine if they can help with costs.
  • Medicaid Considerations: If you use Medicaid to pay for nursing home care, after your death, your state might try to recover some costs from the sale of your home. This is called “estate recovery.”
  • Protection For Spouses: If your spouse is still living at home, it generally won’t be sold to pay for your care.
  • Your Home Can Decrease In Value: If no one maintains the home while you’re in the nursing home, its value might go down.

Read More: How To Set Up A Trust Fund For A Child

Can A Nursing Home Take Your House?

No, a nursing home cannot directly take your house

However, let’s say you use Medicaid to pay for nursing home care.

The state may try to reclaim those expenses from your estate after your death. 

This can include assets like your home. 

It’s important to know your state’s specific rules on this matter.

Our estate planning lawyers can help you protect your home.

When Can Nursing Home Take Your House?

Here are the scenarios when a nursing home can take your house:

  • Medicaid Spend Down: To qualify for Medicaid’s long-term care benefits, you must meet certain asset limits. This might require “spending down” or using your assets (which could involve selling your home) to pay for care before Medicaid starts covering the costs.
  • Estate Recovery: After a Medicaid recipient’s death, states can try to recoup some of the long-term care costs paid by Medicaid from the recipient’s estate. Your home, if part of the estate, might be sold to satisfy this debt.
  • Liens: In some cases, a state may place a lien on a home of a Medicaid recipient receiving long-term care. If the home is sold while the owner is still alive or after their death, the state might take a portion or all of the sale proceeds to repay the Medicaid costs.
  • Private Pay: If you don’t qualify for Medicaid and don’t have long-term care insurance, you might need to pay for nursing home care out of pocket. This can be very expensive, and homeowners might need to sell their homes to cover these costs.
  • Transfer Penalties: Transferring ownership of your home to someone else without receiving fair market value in return can result in a penalty. This means a period during which you’re ineligible for Medicaid, forcing you to pay out of pocket for care.

Read More: What Happens To An Irrevocable Trust When The Grantor Dies?

How To Avoid Nursing Home Taking Your House

Protecting assets from nursing home costs takes planning. 

Here are common strategies to protect your or your parent’s assets from a nursing home:

  • Irrevocable Trusts: Putting assets in an irrevocable trust means you or your parents don’t own them anymore. These assets usually don’t count for Medicaid. But, if transferred less than five years before applying for Medicaid, they might.
  • Life Estates: You or your parents can sell their homes but keep the right to live there with a life estate. This protects the home as an asset. Still, the five-year Medicaid rule applies.
  • Gifts: You can give assets away. But if done within five years of Medicaid application, penalties can occur.
  • Long-term Care Insurance: This insurance covers costs like nursing homes. It helps protect assets from being used for care.
  • Personal Care Contracts: You can make a contract with a family member. They give assets in exchange for care. The contract’s details matter a lot.
  • Annuities: Some annuities change assets into regular income. Useful if one person is healthy at home and the other is in a nursing home.
  • Spousal Refusals: In certain states, a healthy spouse can refuse to pay for the other in care. Only the sick spouse’s assets are used for Medicaid. This varies by state.
  • Joint Accounts: Be careful. Medicaid might see all the money as belonging to the person applying unless shown otherwise.
  • Exempt Assets: Some assets aren’t counted by Medicaid. Examples are a home (with equity limits), a car, personal items, and prepaid burial plots.
  • Asset Conversion: Change assets that Medicaid counts into ones they don’t. Like upgrading a home.

Fill out the form on this page to consult an elder law attorney for guidance on these strategies.

Read More: Does Putting Your Home In A Trust Protect It From Medicaid?

FAQs About What Happens To Assets If You Go Into A Nursing Home

Here are other questions our clients ask us related to what happens to your assets if you go into a nursing home. 

How Far Back Can Nursing Home Take Your House?

Nursing homes don’t directly “take” houses. 

Instead, Medicaid rules come into play. Here’s what you should know:

Medicaid helps cover U.S. nursing home costs. 

To get Medicaid, you must be within set income and asset limits.

  • Look-Back Period: Medicaid checks the last five years before an application. They review asset transfers, sales, or gifts in this time. If you moved assets for less than their worth, Medicaid can deny benefits for a set time.
  • Estate Recovery: After a Medicaid user dies, states can try to get back the care costs from the person’s estate. This can involve the home. But, protections exist. For example, recovery might not happen if a spouse or dependent child lives in the home.

Remember, the house isn’t “taken” due to the look-back period. 

Instead, this period impacts Medicaid eligibility.

States may apply these rules differently. 

Fill out the form on this page to get help avoiding your assets being taken. 

Read More: How To Put House In Trust With Mortgage

Can A Nursing Home Take Your House If It Is In A Trust?

Nursing homes don’t directly “take” houses. 

Instead, Medicaid rules determine if a house in a trust is at risk. 

Here’s a clear breakdown:

  • Irrevocable Trust: If you put your house in an irrevocable trust, you no longer personally own it. If the house stays in this trust past Medicaid’s five-year look-back period, it’s usually safe from Medicaid’s estate recovery.
  • Revocable Trust: A house in a revocable trust (or “living trust“) is still seen as your asset by Medicaid. It could be claimed to pay back Medicaid costs after the beneficiary’s death.
  • Estate Recovery: Medicaid might reclaim costs from the estates of some deceased beneficiaries. Rules differ by state. There are exceptions, like if a spouse or dependent child is still living.

In short, the house’s safety depends on the trust type and Medicaid’s rules. 

An irrevocable trust, beyond the look-back period, can protect a house. 

However, always consult a nursing home planning attorney for specific advice.

Read More: How Much Do Trusts Cost?

What Happens When Medicare Stops Paying For Nursing Home Care?

When Medicare stops paying for nursing home care, several things can happen, depending on the individual’s circumstances and resources. 

Here’s a breakdown of what happens:

  • Self-Pay: If the individual has the financial means, they might pay for the nursing home care out of pocket. The rates for self-pay can be high, so it’s essential to understand the costs involved.
  • Medicaid: Many individuals transition to Medicaid. Medicaid is a state and federal program that pays for nursing home care for those who meet specific financial and health criteria. To qualify, one often has to “spend down” their assets to reach Medicaid’s eligibility thresholds.
  • Long-Term Care Insurance: If the person has long-term care insurance, this insurance might start covering the costs, depending on the policy terms.
  • Transfer or Discharge: If none of the above options are viable and the individual can’t pay, the nursing home may initiate a transfer to a more affordable facility or discharge the resident. Federal law requires that nursing homes give a 30-day notice before evicting a resident and ensure the resident is moved to a safe environment.
  • Family or Community Care: Sometimes, families might opt to care for their loved one at home or seek community-based services as an alternative to nursing home care.
  • Other Payment Sources: Some individuals might have other resources like Veterans Affairs (VA) benefits, pensions, or annuities that can help cover the costs.

Read More: How Much Money Can You Inherit Without Paying Taxes On It?

Do Nursing Homes Take Your Social Security Check?

Nursing homes don’t take your Social Security check directly. 

Yet, if a resident uses Medicaid for nursing home costs, their income, including Social Security, often contributes to their care. 

Here’s a breakdown:

  • Medicaid Contribution: Medicaid-qualified residents might use most of their income, including Social Security, for their care. They can usually keep a small allowance for personal needs. This allowance varies by state.
  • Private Pay: Those paying for care privately or with insurance keep their Social Security check. They decide how to spend it.
  • Automatic Payments: Some homes manage residents’ finances, including Social Security direct deposits. This ensures payment. It’s vital to check that funds are handled correctly.
  • Federal Law: It protects Social Security benefits. Nursing homes can’t force residents to give up their Social Security checks upon admission. But, if on Medicaid, most of their income could go to care costs.

Get Help Planning For Nursing Home Care

If you want help from an elder law attorney, fill out the form below. 

At The Hive Law, we understand the importance of:

  • protecting your hard-earned assets 
  • ensuring your family’s future
  • not losing everything to Medicaid
  • being eligible for Medicaid

We only accommodate a limited number of clients each month.

So don’t miss your opportunity to work with our trust fund lawyers.

Benefits of our estate planning services:

  • Tailored solutions to fit your unique needs and goals
  • Expert guidance in navigating complex tax and legal matters
  • Preservation of your wealth for future generations
  • Streamlined asset distribution according to your wishes

Avoid the pitfalls of inadequate estate planning strategies:

  • Creditors seizing your assets
  • Lawsuits jeopardizing your family’s financial security
  • Family disputes over inheritance
  • Costly and time-consuming probate processes

Talk soon.

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