Can a Nursing Home Take Your House?
One of the biggest fears seniors and their families have is,"Will the nursing home take my house if I need nursing home care?"
There are so many fears, so many questions, and so much mis-information about what could happen to the family home if a senior has to apply for Medicaid assistance. We aren't lawyers here, so the first thing we always suggest is a consultation with a lawyer in your state who specializes in these kinds of questions.
That being said up front, this is how things usually work when we're talking about a senior's home and Medicaid:
Your aging parent's house is what Medicaid calls an "exempt asset." This means that, with the exception of very high value houses, when someone applies for Medicaid assistance with nursing home care, the value of the home is not counted as an "asset."
If there is a husband or wife who will continue to live in the home, then that is the end of that and no one need worry about the home. It continues to be protected. If a relative has been living in the home for at least a year (check with your individual state for the exact time requirement) and caring for the person going into the nursing home, they may also continue to live there indefinitely without worry.
What happens to the house when a senior lives alone and needs to apply for Medicaid benefits is a little more complicated.
The nursing home certainly does not want the house. They are in the business of providing nursing care to people who need it. They don't want, and have no right to, the real estate. So the nursing home will not take the house. They just want to be paid for the care they provide.
Medicaid is in the "business" of providing financial help to people who need to pay their nursing home for care. The federal government contributes to state Medicaid funds. In order to make their Medicaid dollars go as far as possible, they have mandated that every state taking money from the federal government must stretch the available money by trying to recoup what dollars they can.
So, because they need the federal money, most states will now place a lien on a Medicaid patient's house. When the house is sold, the state will claim the amount they contributed for nursing home care from the proceeds. The heirs receive the balance.
If family members want to keep the house, they have the option of purchasing the house at fair market value (no, you cannot buy the house for $1). The money from this purchase would then be used by the seller, the nursing home patient, to pay for his or her care.
Many families get bad advice about "gifting" the older person's house to an adult child. It can be done, but exposes the senior to several serious risks. If the senior needs nursing home care within five years of making the gift, he or she can be denied Medicaid benefits.
If the adult child were to be divorced, be sued, go bankrupt, or just have a serious disagreement with the parent, there is a great risk that the house could be lost forever and the older person would no longer have either a place to live nor a valuable asset.
If you have a single elderly person going into care, make it a point to visit with a highly trained Medicaid law specialist before you make any decisions about what to do with the house. While you may not be able to completely avoid some financial penalties, a good attorney can almost always save you and your parent from Medicaid liens against the family home if that's your goal.