Medicaid Can TAKE Your HOUSE After Death

[iLander]

I'm sure others here know about this, but this is shocking news to me! It's my understanding that if (let's say your mother) your mother needs to go to a nursing home, and Medicaid pays for it, Medicaid can take the house after her death. It's called the "Estate Recovery Act" and varies Slightly from state to state, but it's on the books. Even if an heir's name is on the deed, it doesn't matter, unless the heir is living in the house and is under 21, blind or disabled.

So, if your parents worked hard, hoping to leave a nice inheritance for their children, it's too bad, Medicaid steps in.

EXCERPT: "In 1993, as Congress was facing budget deficits and spiraling Medicaid costs, it made estate recovery a mandatory program and ordered all states to begin collecting.
Today, Fishman says, most of the programs are small and collect less than 1% of what they spend on nursing home care.
Three states refuse to collect at all: Michigan, Georgia and Texas. Officials in those states say there are no plans to begin collecting.
Florida has an estate recovery program, but the state constitution shields the homestead from creditors. So the state doesn't file claims against homes owned by Medicaid recipients. Yet the issue is so volatile among Florida seniors that Sen. Bill Nelson, D-Fla., vowed in his 2000 Senate campaign to push for repeal of the Estate Recovery Act."

Here's a whole article on it, and if you have elderly parents, I STRONGLY suggest you read it and then google the "estate recovery act" + the name of your state to find out the specifics for your state.
http://www.usatoday.com/news/nation/2002/05/01/usatcov-medicaid.htm

Again, I'm sure this is well-known to others, but it's news to me, so I thought I'd share.

 

[NovemberBride]

iLander, this makes perfect sense to me because Medicaid is for poor people vs. Medicare which is for the elderly. You have to have very few assets to qualify for Medicaid, which is in keeping with the intent of the program. So it makes perfect sense that they could take a home to recover costs, regardless of who it is willed to. I see a home as no different than any other asset when it comes to these types of programs - if you own a bmw and you want Medicaid, you have to sell the car and spend the assets prior to qualifying, you can't keep it because you want to pass it down to someone else. If you have substantial assets, you do not qualify for medicaid and you can't get medicaid in order to preserve your child's inheritance.

 

[merilenda]

I'm a social worker who works primarily with older adults, so this is an issue that comes up a lot for me. Like NovemberBride said, Medicaid is for low-income individuals who are elderly, disabled, etc. In my state, your assets need to be below $1,000 to qualify for Medicaid. If you live in your home, it's exempt, as well as one car. But essentially all of your income needs to go toward medical expenses and you have to have drained your assets all the way down before you'll be Medicaid eligible.

This happens really easily when you need 24 hour care. In my area (the Midwest - so I'm sure it's even much more expensive elsewhere) hiring private duty caregivers in the home costs on average $20/hour. Multiply that times 24 hours/day for an extended period of time, and many people will drain their assets REAL fast. Similarly, nursing homes cost somewhere around $5,000/month around here, so I'd say the majority of residents are on Medicaid. I mean, Medicare doesn't pay for long-term care, so it's the only option for many people.

 

[Circe]

This thread is providing some fascinating insights into our messed-up medical system ....

(Yes, I'm a pinko Socialist who believes in universal healthcare. I know, you're shocked. )

 

[Jennifer W]

Circe, although I'm a fellow pinko socialist, it's only fair to point out that this would happen in many countries with universal healthcare. There's a distinction made between health care (medical/ surgical/ nursing needs) and social or personal care (help with activities of daily living) and in many places, it's only the health aspect of your care that is free. It's the social care that racks up the big bills, too. Day to day care is expensive.

This means that homes are counted as assets against the cost of long term personal care. Assets can be transferred to a Trust to offer some protection, but many people feel that their own assets should be applied to their own wellbeing.

 

[Circe]

Circe, although I'm a fellow pinko socialist, it's only fair to point out that this would happen in many countries with universal healthcare. There's a distinction made between health care (medical/ surgical/ nursing needs) and social or personal care (help with activities of daily living) and in many places, it's only the health aspect of your care that is free. It's the social care that racks up the big bills, too. Day to day care is expensive.

This means that homes are counted as assets against the cost of long term personal care. Assets can be transferred to a Trust to offer some protection, but many people feel that their own assets should be applied to their own wellbeing.

That's a fair point - I would differentiate social care, as that's presumably something close family members would normally provide ... and if they can't or won't, it seems merited that the state be reimbursed for filling in for them.

I'm still horrified by medical care proper coming into it, though - when I look at the difference between what my medical bills are currently, and what they would be if I didn't have any, I'm always a little taken aback. I had some health issues two years ago, which sucked, but at least they didn't beggar me. Without insurance, I would have been 40K in the hole for 19 run-of-the-mill weeks of pregnancy, and one which culminated in a two-day hospital stay and some aftercare. Yikes. I can barely imagine what it must be like for an older person with no insurance and, say, type II diabetes ....

 

[davi_el_mejor]

That's what happened when my grandmother died a few years ago in California. Her estate (which wasn't much- a beat up truck and some dilapated commercial properry with her trailer on it) went to Medicaid. It was just easier for my Dad to sign the whole thing over to the state than to have to deal with lawyers and all the added expense/headache.

 

[HollyS]

Medicaid is the government "insurance" program that cares for you, paying for your needs, ONLY after you sign over all assets that you own. ALL assets.

Yes, the house belongs to Medicaid.

Not the same thing as Medicare.

 

[megumic]

If the house is in an irrevocable trust, Medicaid cannot take it under Medicaid Recovery. With an irrevocable trust, the property owner changes hands at the instant of death. If you merely will it to another person, it is not theirs until probate has been processed. Estate planning is key when it comes to what the government can and cannot do!


PS -- this is not intended as legal advice!

 

[luv2sparkle]

So interesting and good to know. when my mom died she didn't own a home and had a bit of savings that was used for her assisted living home, plus she had medical insurance from her years of working in the aerospace industry.

we will need to make sure we look at this for ourselves!

 

[fleur-de-lis]

This thread is providing some fascinating insights into our messed-up medical system ....

(Yes, I'm a pinko Socialist who believes in universal healthcare. I know, you're shocked. )

I'm a Centrist with a gentle conservative bent and after studying the issue in depth *I* believe in universal health care too.

(I also like little kids to get schooling, roads to be paved, criminals to get prosecuted, and bridges to be safe to drive across. How's THAT for shocking? Should I get a commie card now? )

 

[Circe]

This thread is providing some fascinating insights into our messed-up medical system ....

(Yes, I'm a pinko Socialist who believes in universal healthcare. I know, you're shocked. )

I'm a Centrist with a gentle conservative bent and after studying the issue in depth *I* believe in universal health care too.

(I also like little kids to get schooling, roads to be paved, criminals to get prosecuted, and bridges to be safe to drive across. How's THAT for shocking? Should I get a commie card now? )

One of us! One of us!

 

[fleur-de-lis]

This thread is providing some fascinating insights into our messed-up medical system ....

(Yes, I'm a pinko Socialist who believes in universal healthcare. I know, you're shocked. )

I'm a Centrist with a gentle conservative bent and after studying the issue in depth *I* believe in universal health care too.

(I also like little kids to get schooling, roads to be paved, criminals to get prosecuted, and bridges to be safe to drive across. How's THAT for shocking? Should I get a commie card now? )

One of us! One of us!

 

[movie zombie]

there are legal ways around it, iLander. look into the laws re medicaid and "gifting". i went through this last year with my parents who were never wealthy but we used those loop holes and moved some property title around....all legal....and their assets are now protected.

MoZo

ps property in a trust is NOT protected. if medicaid is already paying for her care, it may be too late to take advantage of the loop holes.

i also do not have a problem with medicaid recooping its expenditures.....however, so many loop holes exist for those far more wealthy than my parents ever were and i don't see those loop holes being ignored or not used.

 

[diamondseeker2006]

I agree that smart estate planning is essential. My parents also were not wealthy but they wanted to be sure at least the house was left as an inheritance for their children. They saw an elder law attorney 10 years ago and put the house in a life estate (as well as making power-of-attorney, new wills, etc.). However, my mother has had a stroke and is in assisted living at this time, and we are selling the house so that all her monthly income can go toward assisted living. And even though we (the children) will get some of the proceeds from the house sale, we hope to have enough money to have her make it the rest of her life without ever going on Medicaid, and if not, hopefully through the 5 year Medicaid look back period.

 

[charbie]

This is a major part of what I do for a living....I am the admissions director at a nursing home.
The discrepency in cost of what Medicaid reimburses the nursing home vs. benefits received is quite great....so I wouldn't exactly go knocking the state trying to recoup some of the loss. I understand that families want to leave something behind for their kids, but the cost of care is high, think of how many staff members it takes to run a quality nursing home? Someone has to get paid to do it! And that money doesn't fall from the sky....the taxes taken from my paycheck go to care for the residents I take care of, does that mean I should be able to have the Medicaid/Medicare taxes given back to me? Gosh, I wish!

There typically is a 5 yr lookback as ds06 pointed out. This means any money transferred, property transferred, etc. in the past 5 yrs will be looked at with a Mediciad application. If your parents transfer there home to you, you sell it, you use that money, and two years later a catastrophe happens, you are liable for the cost of the home before they are Mediciad eligible.

Ds06 also makes another important notes: assisted living is NOT typically covered by Medicaid. This is a privately funded level of care. Insurance, Medicare, will not pay the cost of an assisted living. My state has an assisted living waiver, where you can live in an AL on Mediciad, but not many waivers are available, and not many facilities are approved to accept the waiver.

*this is directed at the general population....no one here, as i think everyone here makes valid points re:estate planning and its important....!* If you don't want to pay for your family to live in a nursing home, take care of them yourself. Oh wait, you probably can't. It takes skilled workers, who can lift, clean, bathe, feed, monitor, and do the dirty work no one else wants to do for a minimal amount of money. You think teachers make crappy money? Watch what a nursing assistant does in a nursing home. For $10/hr.

Sorry if this comes off a little crass. My mind just is baffled and jaded because of what I do for a living and the situations I see families put themselves into. The fraud, the people who are living off mom or dads social security check....and then yelling at ME when the ocial security wants it returned...ugggh! I would be more than happy to answer any questions someone may have about elderly care though, including funding. Its a passion of mine that I've had since age 15, and I majored in Geriatrics/Gerontology.

 

[bk123]

As a Canadian this is astonishing to me. I can't believe the government takes away your house for needing help. In Canada depending on your situation I am pretty sure the government pays up to 70% of the cost of care. When you go into supportive housing they ask that you sell your house within six months they don't take it from you. My grandfather was recently diagnosed with cancer the surgery, follow up appointments, physiotherapy, and much of the cost of the medication was all paid by OHIP. I can't imagine losing your house because you're sick and can't look after yourself that's a really flawed system. I'll take higher taxes any day.

 

[charbie]

As a Canadian this is astonishing to me. I can't believe the government takes away your house for needing help. In Canada depending on your situation I am pretty sure the government pays up to 70% of the cost of care. When you go into supportive housing they ask that you sell your house within six months they don't take it from you. My grandfather was recently diagnosed with cancer the surgery, follow up appointments, physiotherapy, and much of the cost of the medication was all paid by OHIP. I can't imagine losing your house because you're sick and can't look after yourself that's a really flawed system. I'll take higher taxes any day.

You have 13 months to put your home on the market in my state if you are going on Medicaid for long term care. The money received from the sale of your home is then used to pay for your care, i dont understand how that isnt fair or correct? Medicaid is not a public health plan as some people assume. It is for those who cannot afford Medical care, and if you can afford the asset of a house, why should you be exempt from paying for your nursing care?
Also, if you are married, you are allowed to keep your home and a car. If you have had a family member living in your home for 2 years (in my state) as your primary caregiver, the home is also not counted as an asset.

 

[ksinger]

As a Canadian this is astonishing to me. I can't believe the government takes away your house for needing help. In Canada depending on your situation I am pretty sure the government pays up to 70% of the cost of care. When you go into supportive housing they ask that you sell your house within six months they don't take it from you. My grandfather was recently diagnosed with cancer the surgery, follow up appointments, physiotherapy, and much of the cost of the medication was all paid by OHIP. I can't imagine losing your house because you're sick and can't look after yourself that's a really flawed system. I'll take higher taxes any day.

You have 13 months to put your home on the market in my state if you are going on Medicaid for long term care. The money received from the sale of your home is then used to pay for your care, i dont understand how that isnt fair or correct? Medicaid is not a public health plan as some people assume. It is for those who cannot afford Medical care, and if you can afford the asset of a house, why should you be exempt from paying for your nursing care?
Also, if you are married, you are allowed to keep your home and a car. If you have had a family member living in your home for 2 years (in my state) as your primary caregiver, the home is also not counted as an asset.

I agree with you Charbie. This is about the attempts by HEIRS to protect parental assets they feel are entitled to, not care versus not care for the very poor, sick elderly.

I can certainly understand a child being unable to pony up large sums for mom/dad's care, but to put the burden of preserving what some child thinks they're owed by their parents, on the back of the taxpayer is insupportable on several levels, IMO.

 

[bk123]

What I was saying was the government pays for your medical care and you pay that other 30 to 100 pecent. It doesn't expect to recoup the costs of your care through your assets, you get that care because you are a citizen. The nursing home is obviously getting paid.

 

[charbie]

What I was saying was the government pays for your medical care and you pay that other 30 to 100 pecent. It doesn't expect to recoup the costs of your care through your assets, you get that care because you are a citizen. The nursing home is obviously getting paid.

Understandable, since it is a public health care system. How do they determine if you are going to pay 30% or 100% (or whatever it may end up being between)? And what happens if you cannot afford the 30%? I'm just curious- I'm very interested in learning more about how public systems work.

I agree that everyone should have the opportunity to have affordable healthcare, don't get me wrong. What's frustrating to me and a major flaw of the US system is that MANY of the people who are receiving our public healthcare are those who are not paying into the system to begin with. When you see drug addicts who have no interest in helping themselves receiving Medicaid and basically looking at a nursing home as public housing and trying to sell their pain meds out their windows for cash, it just becomes a bit of a joke.

 

[movie zombie]

i personally expect and do not want anything from my parents. my life style is economically much greater than theirs ever was. personally, i hope they spend every penny and have a quality of existence greatly enhanced by what they managed to do in their life times. my dad will be taken care of by the veterans' administration....but my mother really has nothing to fall back on and the veterans' administration will not cover her. what we've done is mostly to protect her should my dad pass before her. yes, she'd be allowed to stay in the house after his death but should she go in and out of a facility it could become difficult. her family is VERY long lived and the idea is to keep her economically steady rather than at the mercy of a system that in this country is not kind to the elderly.

so many adult "children" of the elderly are only out to get what they can and actually cheat their parents....and steal from them as well once those "gift" papers are signed. and then the elderly parent is left w/o any financial recourse. very sad.

MoZo

 

[charbie]

i personally expect and do not want anything from my parents. my life style is economically much greater than theirs ever was. personally, i hope they spend every penny and have a quality of existence greatly enhanced by what they managed to do in their life times. my dad will be taken care of by the veterans' administration....but my mother really has nothing to fall back on and the veterans' administration will not cover her. what we've done is mostly to protect her should my dad pass before her. yes, she'd be allowed to stay in the house after his death but should she go in and out of a facility it could become difficult. her family is VERY long lived and the idea is to keep her economically steady rather than at the mercy of a system that in this country is not kind to the elderly.

so many adult "children" of the elderly are only out to get what they can and actually cheat their parents....and steal from them as well once those "gift" papers are signed. and then the elderly parent is left w/o any financial recourse. very sad.

MoZo

- your post is an example of what people should do...become educated on what could happen to their elderly parents depending on various situations. I don't see anything wrong with protecting what your parents have, and doing whatever possible to preserve their home or at the very least their independence.

and yes, it is pathetic to see what some people will do to get their parent's money. seeing a family put a patient on hospice who would rather receive therapy because it will help them die faster...yeah, it makes me sick.

 

[iLander]

I guess I was just appalled at the thought of the government making poor people even poorer. I have an emotional attachment to my home, and if I was poor and it was all I had left, I would want to leave something to my children to help them get ahead a little. To see what I had worked and paid for all my life, get taken away just because I was sick? That would break my heart.

I don't have any parents left, so no, not looking out for a future inheritance.

 

[megumic]

there are legal ways around it, iLander. look into the laws re medicaid and "gifting". i went through this last year with my parents who were never wealthy but we used those loop holes and moved some property title around....all legal....and their assets are now protected.

MoZo

ps property in a trust is NOT protected. if medicaid is already paying for her care, it may be too late to take advantage of the loop holes.

i also do not have a problem with medicaid recooping its expenditures.....however, so many loop holes exist for those far more wealthy than my parents ever were and i don't see those loop holes being ignored or not used.

Yes, it depends when the trust was established and what kind of trust it is. If it is REVocable, Medicaid can likely reach it since the property is still within your control. If it's IRREVocable, and created timely, then likely not.

 

[zipzapgirl]

My grandmother is in just such a situation. She has Alzheimers and owns a house and a car. For the past few years, she has been declining enough so that she needs supervision every day to make sure she eats and doesn't do anything harmful like turn on the stove and walk away. My family looked into all sorts of options from home care to assisted living (both not covered by Medicaid) to a nursing home. She is just a little bit too wealthy on her pension to qualify for Medicaid, but earns nowhere near enough to cover the $4-6k monthly costs of assisted living or home care. So she is currently stuck in a gap where family members have to step in and help with their time and/or money to make it work.

I did a lot of research about this and basically learned the following:

- By the time you reach these issues, you are probably too late to the game to preserve assets or any type of inheritance. Transferring assets and creating trusts are activities that must be done several years prior to bad health setting in. Also, a medical and financial power of attorney needs to be in the works while the senior is still able to comprehend the results of signing the documents. Bythe time dementia is diagnosed, its already a grey area.

- The five year lookback means that what was best for the senior at the time (like, selling a car that was not being driven) can have definite effects on eligibility for Medicaid. Children of the senior have to be so careful to document expenses paid for the senior, living expenses and how the proceeds of any asset sales are used. If there are questions as to how money was used, the children may be forced to pay this money back to the government.

- Until my grandmother goes into a nursing home, she has extremely limited options for affordable care. Until then, it is her children who are responsible for her well-being. It's caused a lot of conflict weighing different family members' ability to help monetarily, time-wise, not to mention their level of closeness to my grandmother. My grandmother also resents their help and doesn't want them there, so it's tough for everyone. To say that this could tear a family apart is an understatement.

This is going to be a HUGE issue in the next 20 years as the baby boomers start to decline. I've learned so much about why estate planning and discussing your wishes for your own care are important conversations to have while you are still healthy, financially independent and of sane mind. Just wish that things weren't so tough on my family these days.

 

[Dreamer_D]

What I was saying was the government pays for your medical care and you pay that other 30 to 100 pecent. It doesn't expect to recoup the costs of your care through your assets, you get that care because you are a citizen. The nursing home is obviously getting paid.

Understandable, since it is a public health care system. How do they determine if you are going to pay 30% or 100% (or whatever it may end up being between)? And what happens if you cannot afford the 30%? I'm just curious- I'm very interested in learning more about how public systems work.

I was interested in the answer to this so I looked it up for my province: "Effective January 2010, residential care clients will pay a monthly charge of up to 80 per cent of their after-tax income." http://www.health.gov.bc.ca/hcc/rcr.html The government pays for medical care and medications. The client pays for the other aspects of care/room and board. The maximum charged is $2900 and the minimim is $275 per month. "No one who needs residential care services will be turned away - a hardship review is available through health authorities on a case-by-case basis for clients who believe the rate will cause serious financial hardship. "

No mention of assets, I believe they do not take that into account -- except to the extent that you earn income off your investments.

The government also considers nursing homes a last resort. For years before you enter a home, the gov't provides in home supports for clients, including meals, visits from care workers, social workers etc. They also offer in home palliative care for terminally ill patients; a nurse will visit 2-3 times a day to care for the ill person, and sometimes stays longer. My grandfather died at home and did not spend one day in the hospital, yet recieved excellent care from people who came to our home. We did not pay one penny.

It is also interesting to note that in Canada most people do pay a small health insurance subsidy, which varies by province. In Ontario you do not pay, but in BC you pay a subsidy. I think for my family of three it would be $144 per month. My benefits from my work pays this for me. It is waived for low income families. It was not a welcome addition to the health plan in my province Still, it is small potatoes when compared to the US.

 

[megumic]

My grandmother is in just such a situation. She has Alzheimers and owns a house and a car. For the past few years, she has been declining enough so that she needs supervision every day to make sure she eats and doesn't do anything harmful like turn on the stove and walk away. My family looked into all sorts of options from home care to assisted living (both not covered by Medicaid) to a nursing home. She is just a little bit too wealthy on her pension to qualify for Medicaid, but earns nowhere near enough to cover the $4-6k monthly costs of assisted living or home care. So she is currently stuck in a gap where family members have to step in and help with their time and/or money to make it work.

I did a lot of research about this and basically learned the following:

- By the time you reach these issues, you are probably too late to the game to preserve assets or any type of inheritance. Transferring assets and creating trusts are activities that must be done several years prior to bad health setting in. Also, a medical and financial power of attorney needs to be in the works while the senior is still able to comprehend the results of signing the documents. Bythe time dementia is diagnosed, its already a grey area.

- The five year lookback means that what was best for the senior at the time (like, selling a car that was not being driven) can have definite effects on eligibility for Medicaid. Children of the senior have to be so careful to document expenses paid for the senior, living expenses and how the proceeds of any asset sales are used. If there are questions as to how money was used, the children may be forced to pay this money back to the government.

- Until my grandmother goes into a nursing home, she has extremely limited options for affordable care. Until then, it is her children who are responsible for her well-being. It's caused a lot of conflict weighing different family members' ability to help monetarily, time-wise, not to mention their level of closeness to my grandmother. My grandmother also resents their help and doesn't want them there, so it's tough for everyone. To say that this could tear a family apart is an understatement.

This is going to be a HUGE issue in the next 20 years as the baby boomers start to decline. I've learned so much about why estate planning and discussing your wishes for your own care are important conversations to have while you are still healthy, financially independent and of sane mind. Just wish that things weren't so tough on my family these days.

I'm sorry to hear about the issues you're facing with your grandmother. It's so difficult to be on that cusp where you're fortunate to have enough to not need help, but it's not enough to cover your needs.

To the bolded, yes. Absolutely. 100%. Alzheimer's rates are sky rocketing. By 2050, as many as 16 million Americans will have Alzheimer's and it will cost us $1.1 trillion (in today's dollars). (http://www.alz.org/documents_custom/2011_Facts_Figures_Fact_Sheet.pdf) It's going to be a giant problem for our country and the world of healthcare...