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You generally do not have to sell your home to qualify for Medicaid for nursing home coverage. However, it is possible for the state to file a lien against your home after you die. So, you may want to take steps to protect your house.

If you get help from Medicaid to pay for the nursing home, the state must pursue estate recovery. This is an attempt to recoup from your estate whatever benefits it paid for your care. The only property of substantial value that a Medicaid recipient is likely to own at death is their home. If at all possible, consult with our elder law attorneys before you enter a nursing home (or immediately afterward) to discuss ways to protect your home.

In New York State, Medicaid will not count your house as an asset when you are applying for Medicaid if the equity of the home is under $1,071,000 in 2024. Also in New York State, you may keep your house with no equity limit if your spouse or another dependent relative lives there.

Transferring a Home to Your Children

In New York State, transferring your house to your children, any other person (except your spouse), or irrevocable trust, will result in a penalty (or waiting) period for institutional (nursing home) Medicaid, if the application for institutional Medicaid is made within 5 years (lookback period) of the transfer. The length of the penalty period depends upon the value of the house that is transferred.

Depending on your circumstances, it can be legal to transfer a house, however. Consult an attorney before making any transfers. You may freely transfer your home to the following without incurring a transfer penalty:

• Your spouse
• A child who is under age 21 or who is blind or disabled
• A trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medicaid applicant, under certain circumstances)
• A sibling who has lived in the home during the year preceding the applicant’s move to a nursing home and who already holds an equity interest in the home
• A caretaker child of the applicant who lived in the house for at least two years prior to when the applicant moved into a nursing home and who, during that period, provided care that allowed the applicant to avoid a nursing home stay

Medicaid Liens for Estate Recovery

Except in some of the limited circumstances listed above, Medicaid may put a lien on your house for the amount of money spent on your care. If the property is sold while you are still living, you would have to satisfy the lien by paying back the state. The exceptions to this rule are cases where a spouse, a disabled or blind child, a child under age 21, or a sibling with an equity interest in the house is living there. In this situation, the state cannot file a lien for reimbursement of Medicaid nursing home expenses. However, once your spouse or dependent relative dies or moves out, the state can try to collect. Again, this is known as estate recovery.

Work With an Elder Law Attorney

To learn more about your options, talk to the elder law attorneys at Kommer Bave & Ciccone LLP.

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Many seniors may need the services of a nursing home or at-home care at some point in their lives. You might assume that government assistance or health insurance will step in and cover the cost if you cannot afford these services. Unfortunately, neither health insurance nor Medicare covers long-term care. Long-term care insurance is an important option that should be fully explored, but if it is too expensive, or a person can no longer qualify, then Medicaid could become your only option.

Understanding Medicaid Qualification

Medicaid coverage is not a given. If you have assets or recently transferred assets, Medicaid may determine you do not qualify for coverage until a certain amount of time has passed. If this happens, you and your family can face significant medical bills. If you cannot pay, nursing homes may take you to court to get reimbursed.

What steps can you take to avoid this? First, before applying for Medicaid, get a better understanding of the timelines in your state — known as lookback periods — that can affect your eligibility. Then you can engage in proper Medicaid or asset protection planning in advance of these timeframes. A good age to begin planning is around age 65, although everyone’s situation is different.

Individual states run Medicaid programs, and every state has different rules regarding Medicaid eligibility. These programs were designed as a payor of last resort — in other words, to qualify, you must meet strict requirements. There are two primary types of Medicaid benefits: home care and nursing home care.

Lookback Periods

You must submit an application to your local Medicaid office to qualify for benefits. As part of this process, the state will look at any money or property you may have transferred within a certain lookback period. In New York State, although there is currently a law on the books that calls for a 30 month lookback for Medicaid home care, it has not been implemented and the earliest it may be implemented is currently estimated for sometime in 2025. However there is a 5 year/60 month lookback period for nursing home (Institutional) Medicaid.

Lookback periods can have serious consequences. If you have not engaged in appropriate asset protection planning, you may not be able to qualify for nursing home care for a significant period of time. The result is that many elderly individuals must then spend down their savings and liquidate their assets to pay privately for their nursing home care before they receive Medicaid coverage. If a person has transferred assets and is subject to a penalty period at the time they need nursing home care, family members may have to step in and bear these costs on their own.

So, what can you do? The answer is to start planning as soon as possible.

Options to Explore

Speaking with our elder law attorneys can help you and your loved ones explore options to limit your financial exposure for long term care costs.

• Medicaid Asset Protection Trust — One common approach is placing assets in a Medicaid Asset Protection Trust. You may be able to use this to shelter various assets such as stock accounts, savings, a home with unprotected equity, and much more.
• Long-Term Care Insurance — Long-term care insurance can cover nursing home bills, assisted living fees, and in-home care, providing financial support if you require assistance with daily living when you get older.
• Promissory Note and Gift Planning — This is another option you may explore if no planning has been done prior to an admission to a nursing home. Promissory note and gift planning allows one to protect approximately fifty (50%) percent of their assets if properly implemented.
• Spousal Planning — Your spouse may also have options that can help you qualify for Medicaid. One such option includes exercising a right of spousal refusal — a process available in some states allowing the income and assets of your spouse to be removed from consideration for Medicaid eligibility.

Finally, an attorney can help you understand if certain transfers are permissible under Medicaid rules without triggering a penalty period.

Without proper planning, individuals with assets and income exceeding specific state-set thresholds would have to spend this income and their assets on their care or exempt items before they can receive Medicaid benefits. For assistance in Medicaid planning, consult with the elder law attorneys at Kommer Bave & Ciccone LLP.

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