The laws, considerations and consequences involved in paying for long-term care are complicated. No matter how well-meaning “friends who’ve been through it,” facility business offices and agencies intend to be, the laws change often, and misconceptions abound. This is the second article of a three-part series on Misconceptions about Paying for Long-term Care.
Misconception #2: “The nursing home takes my residence if I want Medicaid”
The personal residence is considered an exempt resource for Medicaid purposes as long as the Medicaid applicant expresses an intent to return to that residence and the equity value of the residence does not exceed $595,000.00 (2020), or the applicant’s spouse or dependent relative lives in the residence and the equity value is below the maximum amount. An exempt resource means that the value of the residence is not included in the amount of countable resources that an applicant or applicant and applicant’s spouse can keep and still qualify financially for Medicaid.
However, the personal residence is at risk if the spouse receiving Medicaid passes away with the personal residence in that spouse’s individual name. Pennsylvania has a Medical Assistance Estate Recovery Program. This Program permits the Commonwealth of Pennsylvania to be reimbursed for services provided through Medicaid during the recipient’s lifetime. This includes long-term care facility services and home and community based services provided for persons that are age 55 or older. A claim can be placed against the personal residence when it is in the Medicaid recipient’s name alone at the time of the Medicaid recipient’s death, meaning the house is in the probate estate. That claim cannot exceed the amount of Medicaid benefits paid on behalf of the recipient. If there is any remaining equity in the residence, that equity would go the Medicaid recipient’s beneficiaries as named in the Last Will and Testament.
As an example, Bob and Sue are married. Bob applies for and received Medicaid to pay for his stay at the nursing facility. Bob and Sue’s jointly owned home is an exempt resource, meaning the value of the residence ($200,000.00) does not count towards the amount of money that Sue can keep as her protected spousal allowance. Sue dies unexpectedly in a car accident. Bob can continue on Medicaid, owning the residence. However, when Bob dies, the Commonwealth of Pennsylvania has a claim against the residence for up to the amount Pennsylvania paid for Bob’s care. If that amount is $100,000.00, the state is entitled to that amount. The remaining $100,000.00 will be distributed to Bob’s heirs under his Will.
If you believe you or your loved one will need Medicaid to pay for long-term care, get expert legal advice instead of embarking on a do-it-yourself path.