how can i protect parents home.from medicare

What Can Be Done to Protect the Home?

• Irrevocable Trusts. Another option to protect one’s home is to establish an irrevocable (it cannot be changed or cancelled) trust that holds the title of the home.
• Caregiver Exemption. In most cases, the home cannot be transferred to an adult child without jeopardizing one’s eligibility for Medicaid.
• Sibling Exemption. ...

Full Answer

How can I protect my home if I have Medicaid?

Protecting your home should be considered part of your overall Medicaid strategy, and must take into account your other assets and income. Consulting with a Medicaid expert is crucial, as the above strategies require knowledge of your state's rules governing estate recovery, property deeds, assets, capital gains, mortgages, taxes, and Medicaid.

How can I protect my assets from a nursing home?

As in many of the other asset protection techniques used to protect your money or house from a nursing home, a transfer-for-value rule may apply. There are qualifying factors, but in some circumstances, you can transfer money or a house to your child and it will be protected from Medicaid or a nursing home. But beware.

Is your home protected from Medicaid estate recovery?

However, every state has an "estate recovery" program in which, following death, the value of your home may be used to reimburse the state for the Medicaid funds it provided. In order to protect your home from estate recovery, you will need to employ one of several strategies.

How to protect assets from Medicare and Medicaid?

How to Protect Assets from Medicare 1 Advanced Planning. There are ways to protect your assets, however. ... 2 Property Transfer. Transferring your property to an irrevocable trust can also protect it from Medicaid. ... 3 Asset Protection Lawyer. ...

How long do you have to wait to apply for Medicaid after a parent signs a life estate deed?

In order to avoid the imposition of the penalty as a result of the parent signing the life estate deed, they normally will need to wait at least five years to apply for Medicaid. Thus, they should have funds sufficient to cover nursing home expenses for at least that long. However, as an advance-planning technique it offers a great advantage of protecting the most important asset owned by the parent, the family home.

What happens if a house passes outside of probate?

Therefore, if the house passes outside of probate, then the state is out of luck in these states.

Can you get medicaid while in a nursing home?

If a person qualifies to receive Medicaid assistance while in a nursing home, the patient need only contribute their Social Security and other income, and then the Medicaid program will pick up the balance of the bill. However, upon the death of the patient, the state wants to be reimbursed for every dime it paid to the nursing home on their behalf. In effect, the government has made an interest-free loan and now seeks repayment!

Can you own a home after death?

Since a home is an exempt (non-countable) asset, a person can indeed own a home (even possibly one that is worth more than $500,000) and still qualify. However, following the death of the recipient, the state will want to be repaid through the proceeds of the sale of that home.

Can a parent sign a deed to a house?

This can be accomplished by having the parent sign a deed transferring the house to one or more children, while retaining a " life estate.". As owner of the life estate, the parent continues to have full control over and access to the house (although it cannot be sold without the child (ren) joining in on the deed).

Can you transfer property to an irrevocable trust?

Transferring your property to an irrevocable trust can also protect it from Medicaid. While this can be more flexible than other means of protecting your assets, it’s also more complicated.

Can you come up with a Medicare plan on your own?

These are also plans you should not come up with on your own. An experienced asset protection attorney, who has dealt with Medicare and the surrounding issues, is best suited to look at your individual circumstances, and work with you to develop a plan. An experienced attorney can also help put you at ease if you are worried about paying for long-term care, and keeping your assets.

Does Medicaid cover nursing homes?

Medicaid can help to cover the cost of a nursing home, as most of us will run out of the money needed to pay for these facilities out-of-pocket. However, when the person dies, Medicaid will go after any assets they have in order to pay back what was paid out for the person, in a process called the Medicaid Estate Recovery plan. This can lead to dire situations for spouses or families who may find themselves having just lost a loved one, and dealing with Medicaid attempting to take the house in order to pay off the bill.

Does Medicare cover long term care?

Because Medicare does not generally cover long-term stays in a facility, they will not go after assets like your home. The costs of long-term care can be devastating, financially. This is why planning ahead is so important, even if it is an uncomfortable thing to think about. If long-term care is needed, Medicaid can kick-in, if the person is eligible. This is where things can get a bit confusing.

What does asset protection mean?

Read the Article. Asset protection can mean different things. For instance, if you are a surgeon, or a hedge fund manager, or you just sold your business, asset protection techniques and strategies are different from someone interested in protecting from loss due to a potential future stay in a nursing home.

What happened to the cabin in the nursing home after the father died?

After several years the son used the power of attorney to transfer the cabin to himself. After his father died, the nursing home sued him, saying he misused the power of attorney improperly, and that he should return the value of the cabin to the estate to pay the nursing home.

How long does an asset protection trust save?

Typically, a good asset protection trust Preplan can save around fifty percent of the estate immediately, and one hundred percent of the assets after the five year lookback period That is why people really interested in creating an irrevocable asset protection trust do so sooner rather than later. They want the peace of mind of a backstop. In other words, they are confident they can live for another five years outside of nursing home care. But they’re concerned they might not. So they get the clock running on that five year lookback.

What percentage of people age 65 want to stay in their current home?

The National Institute on Aging has a great article on aging in place if you’re not familiar with this concept. But you probably are, because according to the AARP “ 87 percent of adults age 65+ want to stay in their current home and community as they age.

Is there a home based Medicaid program in Maine?

In the state of Maine, or New York, states where I practice, there are home-based Medicaid programs. You should consult with an Elder Law Lawyer if you want to know the details. Number 8 on the Top Ten Ways to Protect Your Stuff from Medicaid or a Nursing Home list means staying home as long as possible.

Do you have to know ahead of time who is going into a nursing home?

In the annuity plan, if you recall, it is important to know ahead of time who is going into the nursing home. Similarly, with the divorce or refusal to pay, it is important to know who needs nursing home care. Single people have lower resource and income limits.

Can you get credit for nursing home after being with your kids for years?

If you must go into a nursing home after being with your kids for years, your kids may be able to get credit for that care

What happens if you gift a property to a medicaid beneficiary?

In other words, if the consequences of a Medicaid penalty outweigh the advantages of gifting the property, the title is changed back into the name of the Medicaid beneficiary in order to allow that person to receive Medicaid benefits.

What happens if a nursing home spouse dies?

When the Nursing Home Spouse Outlives the Community Spouse. If the community spouse dies prior to the nursing home spouse, under state intestate laws, the nursing home spouse will inherit the home. If the home is solely in the name of the community spouse, then the home is not considered a personal residence by the nursing home spouse and ...

What is the tax exclusion for gifting a home?

Gifting a personal residence prior to death or to sale by an owner who has resided in the home for at least two of the last five years results in a loss of significant tax breaks. If the personal residence is sold while the owners are alive, a lifetime capital gains exclusion of $250,000 for a single individual or $500,000 for a couple applies to the sale. Thus, if a portion of the exclusion has not been used previously, either $250,000 worth of equity or $500,000 is excluded from capital gains taxes of 15%. As an example suppose that a couple has established a basis in their home of $50,000 based on their original purchase price plus improvements and adjustment of any depreciation claimed for business use. Suppose that the home sells for $400,000. Without the capital gains exclusion, the couple would have to pay a capital gains tax of 15% of the difference between their basis and the selling price -- $350,000. This amounts to $52,500 in taxes. With the couples' exclusion there is no tax.

What happens when you sell your home while you are alive?

Selling the home while the owner is alive takes advantage of the capital gains exclusion and reduces or eliminates the taxes owed on capital gains

Can a spouse recover from Medicaid if they are alive?

In many states, if the community spouse is alive after the Medicaid beneficiary dies, the state will not attempt recovery even after the death of the community spouse. The home is always protected from recovery as long as the community spouse is alive whether he or she lives in the home or not. In those states that attempt recovery, ...

Can Medicaid go after a house?

There are a number of strategies that can be used. In those states that go after probate property only, anything that keeps the house out of probate will suffice. In other states, some common strategies include the use of irrevocable trusts or transfers before death.

Can you keep a house out of probate?

In those states that go after probate property only, anything that keeps the house out of probate will suffice. In other states, some common strategies include the use of irrevocable trusts or transfers before death. Most of these strategies involve giving away ownership of the home. This creates a penalty either for a potential Medicaid ...

What to do if your house is over $560k?

But if the house was over the $560K limit, an option would be to sell the house to the children (remember, if an asset is sold for fair-market value, it is not a Medicaid “gift” subject to the Medicaid penalty period) and then shelter the money using a number of Medicaid-planning strategies (personal services contract, special needs trust, spend down, etc..). Another option would be for the homeowner to obtain a reverse mortgage (essentially pulling equity out of the home) and then sheltering the excess cash.

Can a non-lawyer plan for Medicaid?

Elder law attorneys who engage in Medicaid planning can save their elder law clients hundreds of thousands of dollars fora very reasonable fee. Don’t be , as they say, “penny-wise and pound-foolish.”Pay a lawyer to do this correctly the first time.

Is paying off a mortgage a good strategy?

In fact, paying off a mortgage is a very productive and valuable spend down strategy . If someone has $300,000 of equity in a house worth $500,000, they can then take $200,000 worth of cash and pay off their mortgage!

Does Medicaid look at the equity in a home?

In fact, Medicaid only looks at the equity in the home – since the house has a$200,000 mortgage on it, Medicaid essentially only looks at the house as a$300,000 asset (still below the $560,000 limit). In fact, paying off a mortgage is a very productive and valuable spend down strategy.

Introduction

• Although it may be your most valuable asset, owning a home will not disqualify you from receiving Medicaid. You do not have to sell it to pay for medical care prior to receiving Medicaid. However, every state has an "estate recovery" program in which, following death, the value of your home may be used to reimburse the state for the Medicaid funds ...

See more on familyassets.com

How Does It Work?

Who Is It for?

How Can I Take Advantage?