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Will you lose your home if you can’t pay your nursing home costs?

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Nursing Facilities Don’t Take People’s Homes

A common misconception is that the nursing facility will take a nursing home resident’s home when they can no longer pay the cost of care.

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 pay for the cost of their care. And most private health insurance policies (except special long term care insurance) have limited or no nursing home benefits.

Medicare has very limited nursing home benefits. When you first go into a nursing home, you may qualify for Medicare coverage but only if you meet strict requirements, and then only for a maximum of 100 days. After Medicare (if any) runs out, most people have to pay privately for their own care out of their own funds. This can be a big problem since nursing home costs average around $100,000 a year in Pennsylvania.

When the nursing facility resident runs out of money, they need to find some way to pay for the cost of care. Most people in nursing homes eventually qualify for assistance from the Government Medicaid program to help pay for the care they need. But Medicaid requires that a person only have limited resources – either $2,400 or $8,000 in Pennsylvania – before it will pay for care.  This means that a nursing home resident has to “spend down” their savings and other available resources before Medicaid will help pay for their nursing home costs.

With some exceptions (the rules are complicated), you have to sell your investments, cash in your insurance, list your non-residence real estate for sale, and so on to pay for care before Medicaid steps in. But you don’t have to sell your home, or turn it over to the nursing facility.

Special Protections for Homes

A home of modest value is one of several types of assets that are excluded from Medicaid’s spend down requirements. Medicaid will let a nursing home resident keep their primary residence so long as the resident (or someone acting on their behalf) says that they intend to return home if that ever becomes possible. This means that, in most cases, a nursing home resident can keep their home and still qualify for Medicaid to help pay the nursing facility expenses. The nursing home does not (and cannot) take the home.

Note that special rules apply if the Medicaid applicant owns a home that is worth more than $536,000 (in 2013 in Pennsylvania – the figure is more in some states). Even then, the home will be ignored by Medicaid if the applicant’s spouse or child who is under age 21 or is blind or permanently and totally disabled is residing there.

So, Medicaid will help pay for nursing home care for someone who owns a home, as long as the home isn’t worth more than $536,000, or if the spouse is living there. The home is disregarded on the application for Medicaid benefits and during the nursing home resident’s lifetime. Of course, home related expenses like taxes, insurance, and upkeep must still be paid, which means that some homes still get sold.

Homes can be lost to Estate Recovery

The home is no longer protected after the nursing home resident’s death. A Medicaid program called Estate Recovery seeks to recover the amount of long term care related payments made after the homeowner’s death. Many homes have to be sold due to Medicaid Estate Recovery.  Pennsylvania collects millions of dollars each year through this program.

Nursing home residents may be able to avoid Medicaid Estate recovery in several ways. The best option depends on the individual situation. In Pennsylvania you can consult one of the lawyers at Marshall, Parker & Weber for more information. If the nursing home resident resides somewhere other than Pennsylvania, you find a list of certified elder law attorneys by geographical area at www.nelf.org.

The rules are complex but a qualified elder law attorney can show you how to best protect the home for both the nursing home resident and his or her heirs.

Note that this article is based on Pennsylvania law. Medicaid rules vary from state to state. There are special rules and protections that apply for married couples.

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