Homeownership is the American Dream. People work hard all their lives to own a home, and it is often their most valuable and significant possession. So when health begins to fail and the need for long-term care arises, we often get this fear-filled question from our clients: will they take away my home?
The enormous and on-going costs of nursing-home care are astronomical, on average around $8,500.00 a month depending on location. The joint federal and state Medi-Cal program foot the bill for one in four of around 75 million recipients in this country. This is an enormous drain on government funds. To recoup some of those costs, then, the Medi-Cal rules permit states to take the value of a recipient’s home in some cases, to reimburse the program for funds it has expended.
Yet, because a home is such an essential family possession, the rules treat a primary residence as exempt – that is, its value is not counted as available to pay for nursing home care from the homeowner’s pocket before Medi-Cal kicks in. The home is protected, to a certain extent, for the benefit of Medi-Cal recipients and their close relatives.
That protection can be lost, however. The value of the house can be counted against a Medi-Cal applicant, and benefits denied or curtailed, when:
- A home-owner has no living spouse or dependents, and
- The owner moves into a facility permanently, with no intent to return home, or
- The owner dies.
In other words, as long as the owner expresses the intent to return home, and the owner’s spouse or disabled or blind child lives in the home, the home will not be counted against the owner for Medi-Cal-eligibility purposes.
Once the owner passes, however, the state may place a lien on the home, to secure reimbursement of the value of the Medi-Cal services the owner received. This lien makes it impossible to sell the home or refinance a mortgage, without first paying the state what it may be owed.
As elder law attorneys we know a number of ways to protect homes from this kind of attachment. If you come to us at least five years before you anticipate needing nursing-home care, we can preserve your home or its value such that Medi-Cal will not count it, or lien against it, at all.
Or, if a child moves into the home and cares for an ailing parent for two years, permitting the parent to stay home and out of a nursing home, the house can then be given as a gift to that child without any Medi-Cal penalty or disqualification. Ordinarily, Medi-Cal heavily penalizes giving away property, but this is one exception.
There are other strategies available. The home can be given to a disabled child without penalty or disqualification. Or, you might keep the right to live in the house for your lifetime and deed the remainder interest to others, who will then own the house after you pass. However, each strategy comes with risks that must be fully explored before determining the correct one.
An overall plan that is tailored to suit each individual, and to meet as many contingencies as possible, requires juggling a number of puzzle-pieces. There is no one cookie-cutter solution. The key is to plan before you or your spouse may need nursing-home care.
As one piece in the overall picture of a balanced estate plan, we can help you save your home.
If you have questions or need guidance in your planning or planning for a loved one, please do not hesitate to contact our San Diego, California office by calling us at (760) 642-7072.