Avoiding the Double Whammy

Reva Best

Reva Singh explains the legal options.

Many people come to the Elder Law Clinic worried about losing their homes if they should ever need nursing home care.  Should they be worried?  Yes!  Once a person’s savings get down to the poverty level ($2,000 in savings for an individual), Medicaid pays for most nursing home residents.  The person can own a home while Medicaid pays the nursing home.

Here is the problem, though.  Medicaid law requires that the government be reimbursed out of the person’s estate. This means that first their savings are used up and then all or part of their house value goes to pay back the Medicaid program.  This is called “Medicaid estate recovery.”  It’s a double whammy that few families expect.  Often they will seek out an elder law attorney, to learn the rules and to see what assets they can protect.  Most folks want to hold onto what they have worked for in case they get better and leave the nursing home. They also want to leave something for their spouse, children and grandchildren.

Lisa Roach helped a woman who had been a cosmetologist for more than 25 years.  She wanted to ensure her home went to her three sons.  Like many people, she was confused about Medicaid and thought perhaps she should give her house to her sons now.  Lisa advised her against this, because it would actually make her ineligible for this valuable program.  She also explained that the son who the client appointed under a power of attorney could take steps to protect the home from “estate recovery” if – and only if – the client ever enters a nursing home on Medicaid.  Lisa advised her client to keep the home in her name for now.

There are cases where Medicaid does allow a person to give her home to a child, without causing ineligibility.  One example is the “caregiver child rule.”  Casey Fidler helped a woman whose son has been staying with her for several years.  The client wanted to be sure he could stay there after she passes away.  Casey explored different options with her client, including the possibility that the “caregiver child” rule would apply.  This required getting a physician to document that the woman needed a caregiver living with her and that her son had lived with her for at least two years before the home was transferred to him.

Click here for full newsletter