Will Medicaid make me sell my home?
In short, Medicaid will not force you to sell your house to become eligible for nursing home benefits. If you know that they accept Medicaid, and the nursing home manager or supervisor says that you need to sell your home in order to pay for services, they are lying to you. Period.
But the house may need to be sold after death due to a DHS program called, “Estate Recovery.” This is a mechanism that is only engaged after the death of the person that has used Medicaid benefits.
So, will Medicaid make me sell my home? It depends on timing—and timing is everything! You’ve already taken the smartest step and contacted the Law Group of Iowa. For this example, let’s assume an unmarried, or widowed individual lives in their home and now needs Medicaid to help pay for a nursing facility. For ease of explaining, let’s call this person Mary. Mary wants to enter the facility in 2020 but she wants to make sure that her kids get the house because she doesn’t have much in the way of assets. The house is worth about $250,000 and is meaningful to the children and grandchildren and has been in the family for generations.
Keep in mind, almost all of Medicaid’s eligibility rules are based on the first of the month in which you are applying. Mary wants to enter a care facility sometime in January and wants to be Medicaid eligible on January 1, 2020. For this example, imagine a snapshot in time of the first of January—Medicaid looks at the “polaroid” of Mary’s net worth on that day and that day only for determining eligibility.
For eligibility, your residence is an excluded asset, so it plays very little role in determining eligibility, assuming your house is worth less than $535,000. So, why is there still a possibility of Medicaid forcing a sale?
Medicaid in Iowa will not look at the home too carefully when determining eligibility, but they will look at the value of the home AFTER Mary has become deceased. A mechanism known as Estate Recovery, is used by every state to recover the funds that they paid out over the course of someone’s care. This is a POST-death mechanism. Therefore, the sale of the house is only an issue for after Mary passes away, if the house is part of her estate.
Now the next question is, will Mary own her home up until the point she does eventually pass away? Strange question, I realize, but it determines what will be in her estate. An estate is the collection of everything you own or would still be in your possession after you died. That’s a hard concept to think about at first. For simplicity’s sake, let’s imagine Mary’s estate if she had already died five years ago. Her estate would include be her house, her car, her bank accounts, her jewelry, her heirlooms, possessions, etc.
But what about her will? Let’s assume she doesn’t have one and therefore, all of her possessions become part of her estate after she dies. So, in this scenario, Mary continued to own her home outright once she entered the nursing home and when she died, it became a part of her estate.
The key word here in estate recovery is “estate.” That agency can only force the sale of possessions within the person’s estate. Therefore, since Mary died without a will, everything goes to her estate and can be sold to help the state recuperate the total cost of her care.
If a nursing home costs $15,000 per month and she lived in it for three years before passing away, Medicaid would have paid out $540,000.
Yikes! If the house is part of her estate, the estate recovery division would ask the executor of Mary’s estate how they planned on paying the state back. Real quick—the limit to what the estate recovery division can take is the estate of the deceased person. If it is not in the estate, estate recovery can’t get to it. In this case, Mary’s estate includes the house and so, Iowa can force a sale of the house. Now, unless the family can cough up the sale value of the house ($250,000), that house will no longer be in Mary’s family.
Would Mary have wanted this outcome? No. How do we prevent it? Contact the Law Group of Iowa!
We work with Iowans every day to make sure their best interests are protected!