Early planning may help prevent Medicaid estate recovery

| Sep 21, 2019 | Medicaid Planning

As you create your estate plan, you will likely start planning for the high cost of nursing home care. Should you need to go to a nursing home, you want to qualify for Medicaid’s asset and income requirements. 

Fortunately, your house is usually exempt from Medicaid’s asset requirements. But when you pass away, Medicaid can use estate recovery to place a lien on your home. Medicaid then recovers the cost of your nursing home care from the sale of your home. This can take your largest asset away from your family.

Medicaid Estate Recovery Program

The Medicaid Estate Recovery Program became law in 1993, requiring states to recover Medicaid debts for anyone over the age of 55. The goal of the program is to recoup some of the Medicaid expenditures made on behalf of the Medicaid recipient. 

Estate recovery negatively affects families

When Medicaid takes someone’s house after they pass away, the action obviously  affects the loved ones left behind. For example, a child may have moved into the house and expected ownership to pass into his or her name due to instructions left in a will. Or children may have planned to use the sale of the home to cover funeral costs and pay bills.  The house may have sentimental value, passed down through generations of the same family. These survivors do not expect Medicaid to place a lien on the home shortly after the passing of a loved one.

Planning can help you protect your house from estate recovery

Your house is probably your largest asset. When you pass away, you don’t want it lost to cover the cost of Medicaid. Starting early with estate planning may help you to make sure it stays in your family. An attorney can help you draft a plan that protects your assets from the cost of nursing home care.