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When I run out of money will the nursing home take my home?

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For many of my clients, their home is the most valuable and precious possession. Some have heard that if you need nursing home care and run out of the money, the nursing home will take your home away. This isn’t true. But your home can be lost, especially if you haven’t planned in advance. Let me explain how this works.

A nursing home can’t “go after” a person’s home or other assets. The way it works is that when a person goes into a nursing home they have to find a way to pay for the cost of their care. Most seniors have Medicare. But Medicare provides only limited nursing home benefits and only to people who need skilled care. And most other health insurance policies (except for special “long term care” insurance) have no coverage whatsoever for nursing home care.

So, if you go into a nursing home, you will need to find some way to pay for the cost of your care. The cost is significantly more than most people can afford for long. In Pennsylvania, nursing home costs currently average around $100,000 a year.

Most people in nursing homes eventually qualify for assistance from the Government Medicaid program to help pay for the care they need. Unlike Medicare, Medicaid will cover a long term stay in a nursing home. But Medicaid requires that a person only have limited income and assets before it will start to pay for care. This means that a nursing home resident has to “spend down” their available income and assets before Medicaid will help pay for their nursing home costs.

But there are a number of assets (Medicaid calls them “resources”) that are excluded from spend down under Medicaid rules. One of them is a home of modest value. Medicaid will disregard the nursing home resident’s primary residence as long as the home owner (or someone acting on their behalf) says that they intend to return home if that ever becomes possible. It doesn’t matter that there is little or no realistic chance the resident will ever be able l return home. It’s the intent – not the reality – that protects the home.

This means that, in most cases, a nursing home resident can keep their residence and still qualify for Medicaid to pay their nursing home expenses. The nursing home doesn’t (and cannot) take the home.

Note that special rules apply if the Medicaid applicant owns a home in which he has equity of more than $536,000 (in 2013). For more on this equity limit see my article: Medicaid LTC Home Equity Limit Increasing to $536,000.

So, Medicaid will usually pay for your nursing home care even though you own a home, as long as the home isn’t worth more than $536,000. Your home is protected during your lifetime. You will still need to plan to pay real estate taxes, insurance and upkeep costs. But neither the government nor the nursing home will take your home as long as you live.

Unfortunately, there is a program called Medicaid Estate Recovery that could put your home in jeopardy after your death. It applies to the homes of older people who received Medicaid long term care benefits during their lives.

You may be able to avoid Medicaid Estate recovery in several ways. But, don’t just put your childrens name on the deed – that can have disastrous consequences. Get expert guidance from a qualified elder law attorney. It’s best to plan well in advance of a nursing home admission, but even post-admission planning is possible.

The rules are complex but a qualified elder law attorney in the state where you reside should be able to advise you of your best options. If you live in Pennsylvania you can contact my law firm, Marshall, Parker and Weber. We have been helping seniors protect their homes for over 25 years.

The Medicaid rules do vary somewhat depending on your state. If you live outside of Pennsylvania you can find a list of certified elder law attorneys in your geographic area at www.nelf.org.