In a married couple where only one spouse is on Medicaid, Estate Recovery often can be avoided by making sure all assets in the name of the spouse receiving Medicaid are transferred into the name of the community spouse.
Transferring assets to a secure trust is usually the preferred method of Medicaid asset protection. Transfers to the Asset Protection Trust are treated like other transfers. Once the assets are inside the trust, a trustee manages the assets for later use or distribution.
Medicaid does not count your home is an asset, so long as it is YOUR primary residence (you live in it 24/7). The only time Medicaid may interfere with your home is if you need long-term care. If you do, in some states, Medicaid may keep your home when you pass away to sell in order to recoup some of your care costs.
According to federal and state law, the money that the Medicaid program pays on behalf of a Medicaid member, who was age 55 or older or in a long-term care facility, is a debt owed back to the state.
Many assets (resources) are also exempt (non-countable). Exemptions include personal belongings, such as clothing, household furnishings, an automobile, an irrevocable funeral contract, burial spaces, and generally one's primary home.
Alone among public health care programs, a Medicaid program moves to recover health care expenses after the recipient dies. Specifcally, federal Medicaid law requires recovery against the recipient's assets if the recipient was at least 55 years old when receiving services.
The person you care for can transfer assets into an irrevocable trust to protect them from Medicaid spend-down or penalties, as long as they set up the trust more than five years prior to applying for Medicaid. Any assets in the trust must stay in the trust until after your loved one passes away.
There would be no problem with Medicaid and a jointly owned home in your state if a Medicaid recipient has an interest in a property equal to their financial contribution. For instance, your mother pays a third of the purchase price, and you and your spouse contribute two-thirds.
Bank Account Checks: An Integral Part of Eligibility
Medicaid eligibility in Iowa is largely determined by income and asset limitations. Therefore, bank account checks are an integral part of the process. Medicaid wants to ensure that recipients truly need the assistance.
Medicaid agencies make annual checks to account balances to ensure a Medicaid recipient still meets the right requirements. Still, beyond that, it's up to you to notify your agency if something affects your eligibility.
One such option to protect assets is a Medicaid Trust. By placing some of your assets in an appropriate trust, you can protect them from Medicaid and have them not be counted when you are applying for benefits.
California stands apart from the other states. In CA, Medicaid (Medi-Cal) recipients can gift inheritance, which is considered “income”, the month in which it is received. Furthermore, Medi-Cal recipients have no asset limit, and therefore, can have unlimited assets and still be eligible for long-term care benefits.
A Medicaid lien allows the state to recover expenses paid on behalf of the Medicaid recipient after their passing, potentially impacting the inheritance of heirs. 1. Exempt Transfers: One of the most common strategies is to transfer the home out of the Medicaid applicant's name before applying for benefits.
Assets that are generally exempt from Medicaid estate recovery include: Property jointly owned by the decedent (the deceased) and another person. Life insurance proceeds paid directly to a designated named beneficiary. Assets placed in a trust prior to the death of the decedent.
Neither the nursing home nor the government will seize your home to cover expenses while you are living in care. However, if you run out of funds to pay for the care you need, your estate's assets may be taken after your death to cover those costs.
The state may file a TEFRA lien against one's home if it is believed that their stay in a nursing home is permanent. With a lien, a legal claim is made against the home to collect debt. This does not mean that the home must immediately be sold.
States may also impose liens on real property during the lifetime of a Medicaid enrollee who is permanently institutionalized, except when one of the following individuals resides in the home: the spouse, child under age 21, blind or disabled child of any age, or sibling who has an equity interest in the home.
Once your home is in the trust, it's no longer considered part of your personal assets, thereby protecting it from being used to pay for nursing home care. However, this must be done in compliance with Medicaid's look-back period, typically 5 years before applying for Medicaid benefits.
There are also two state exceptions when it comes to the Look-Back Period – California and New York. There is no Look-Back Period for HCBS Waivers in California, and it's 30 months (2.5 years) for Nursing Home Medicaid, although that will be phased out by July 2026, leaving California with no Look-Back Period.
By setting up an irrevocable trust and transferring into it any assets in excess of the Medicaid financial limits, you can effectively shield those assets from the program's fines and other penalties. One issue here is that assets cannot be transferred back out of the trust, so you have lost control of them forever.
And while a nursing home itself cannot take your home, those relying on Medicaid may have their home seized by the federal government after passing away as the government's means of recouping their investment in your care.