My mother went from private pay to Medicaid in her nursing home January 1, 2013. She now has zero money and all her Social Security pays the nursing home … Should I sell her home and effectively spend the proceeds from sale for her care or wait until her death, when Medicaid will take the proceeds anyway?
By Stephen K Lehnardt
Moving to a nursing home is a major life transition for the whole family. Many times the adjustment going from familiar home to care facility is difficult. Equally challenging is the issue of whether to keep the home—knowing that the home may ultimately pay for nursing home care either way.
This dilemma was the focus of a recent Q&A in ElderLawAnswers via the question, “Is It Better to Sell a Medicaid Recipient's Home Now or Wait Until Her Death?”
When receiving Medicaid you make certain agreements as to costs the government will pay for. In exchange, the government takes a future interest on the only remaining asset with value—the home. While it is possible to sell the house just to pay for the nursing home care—which eliminates the cost of maintaining and insuring the empty house—selling the home after qualifying for Medicaid also means giving up Medicaid benefits until the sale proceeds have been totally spent on care.
Medicaid will remember if you sell the home and spend down the proceeds or if you keep the home and continue receiving benefits in lieu of such a sale. After the Medicaid recipient loved one passes, Medicaid has a lien on the home and any later sale proceeds (limited to the amount Medicaid paid for the care of the Medicaid recipient). Either way, the home will be subject to pay for nursing home care or to reimburse Medicaid for the cost of care.
Obviously, the answer to the question posed to ElderLawAnswers hinges on more than a few factors. That said, in most cases Medicaid payments will be less than private pay, sometimes a great deal less. Consequently, the resulting lien may be less of a burden than selling the house outright!
Will the value of the family home always be lost to Mediciad? Are there alternatives? Every situation requires some delicacy and planning to ensure the best result.
Reference: ElderLawAnswers (updated October 17, 2013) “Is It Better to Sell a Medicaid Recipient's Home Now or Wait Until Her Death?”