Seniors Matter’s recent article entitled “If my mom moves to a nursing home, does her home need to be sold?” says that if your parent has assets in their name, but not enough resources to pay for an extended nursing home stay, selling their home may become a complex issue.
It is common in a parent’s later years to have the parent and an adult child on the deed, with a line of credit on the house. As a result, there’s very little equity. If a parent is transferring to a care facility, you may ask if her home must be sold.
In the best case scenario, your mom or dad has long-term care insurance or a life insurance policy with a nursing home rider, these can help cover the costs. However, if your parent will rely on state aid, through Medicaid, they will need to qualify for coverage based on their income and assets.
Medicaid income and asset limits are low—and vary by state. Homes are usually excluded from the asset limits for qualification purposes. That is because most states’ Medicaid programs will not count a nursing home resident's home as an asset when calculating an applicant’s eligibility for Medicaid, provided the resident intends to return home
However, a home may come into play later on because states eventually attempt to recover their costs of providing care. If a parent stays a year-and-a-half in a nursing home—the typical stay for women— when her home is sold, the state will make a claim for a share of the home’s sales proceeds.
A Trust Can Help
Many seniors use an irrevocable trust to avoid this “asset recovery.” Trusts may be expensive to create and require the help of an experienced elder law attorney, such as Vick Law, P.C. As a result, in some cases, this may not be an option. If there’s not enough equity left after the sale, some states also pursue other assets, such as bank accounts, to satisfy their nursing home expense claims.
An adult child selling the home right before the parent goes into a nursing home would also not avoid the state trying to recover its costs. This is because Medicaid has a look-back period for asset transfers occurring within five years. However, some exception may apply. For example, if an adult child lived with their parent in the house as her caregiver prior to her being placed in a nursing home. However, there are other requirements.
Contact Vick Law, P.C. today to discuss the best options for you and your family based on state law and other specific factors.
Reference: Seniors Matter (Feb. 25, 2022) “If my mom moves to a nursing home, does her home need to be sold?”
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