Can I use Medicaid to pay for nursing home care and save my home?

Your home may be one of your greatest assets as well as a place where happy memories were made. The time may come, though, where you can no longer take care of yourself, and you are facing the prospect of having to move to a nursing home. Nursing home care can be prohibitively expensive. For this reason, many people plan on using Medicaid benefits to pay for nursing home care. To qualify for these benefits, you generally must have few assets and a low income. You may wonder if there is any way you can transfer your home to a loved one while still qualifying for Medicaid benefits.

The five-year look back rule

Medicaid has a five-year “look back” rule. This means that if you dispose of certain assets within five years of applying for benefits for nursing home care, a penalty will be applied that will lengthen the amount of time it takes to qualify for benefits for nursing home care. There are some exceptions to the “look back” rule. You can transfer your home to:

1. Your spouse under certain circumstances

2. A child under age 21 with a disability

3. A trust for the sole benefit of providing for a disabled person under age 65

4. A sibling under certain circumstances

5. A “caretaker child” under certain circumstances

If all elements are met, transfers to these individuals will not be considered gifting for the purpose of the five-year look back rule.

Can you save your home?

There are some ways to protect your home from Medicaid’s estate recovery rules without incurring a penalty. One is to sell the house if you are unmarried and then gifting half the proceeds to the sale to a third party. Another option may be to establish an irrevocable trust and transfer title to the home to the trust. A third option may be to sell the home on a promissory note, converting the home from an asset to a loan. Note that any of these options are complex legal undertakings and while they may protect your home for future generations, they could still be subject to the five-year look back period.

Ultimately, if you want to save your home while still qualifying for Medicaid for nursing home care you will want to make sure you understand all your estate planning options. With the right estate planning tools in place, you may be able to preserve your home for future generations even if you end up needing nursing home care.