It is always best to plan in advance to protect assets in the event of catastrophic long-term health care needs. Advanced planning can usually protect most, if not all of an individual’s assets, and affords him/her the luxury of choosing among a variety of planning options.
Unfortunately, many seniors procrastinate, or are confronted with a traumatic health event such as a stroke, and must plan at the eleventh hour. Often, these clients come to our office with the mistaken notion that it is “too late” for planning. Fortunately, this is usually not the case.
It is common for seniors and the disabled to transfer assets out of their names into trusts or to their children, but they frequently forget about the home in which they reside. Medicaid adheres to specific rules regarding the primary residence, sometimes referred to as the “homestead,” but many people are unaware of them or how they affect the average individual.
Prior to 1996, an individual was able to get Medicaid nursing home benefits pending the sale of a home. The law was then revised to eliminate that option. However, a homestead is exempt if an individual expresses his/her intent to return home.
Therefore, even if an individual is not able to return home, he/she will still be eligible for Medicaid benefits as long as the individual’s subjective intent to return home can be shown. If the individual does not return home within 6 months, Medicaid can place a lien on the home to recover the amount that Medicaid spent on his/her care. Recovery is based on the lower “Medicaid rate,” so even if a lien is placed on the home, there is often a significant savings. Please be aware that under new Medicaid rules, the applicant will not be eligible for benefits if the equity in the home exceeds $750,000.
Even if an individual does not intend to return home, the homestead does not count as a resource as long as a spouse, minor or certified blind or certified disabled child continues to live in the home.
Furthermore, a transfer of the home prior to the time Medicaid is needed will not create a penalty period if the home was transferred to a i) spouse; ii) disabled, blind or minor child; iii) adult caregiver child who lived in the home for a continuous period of two 2 years prior to institutionalization and who provided care that permitted the individual to reside at home or iv) sibling with an equity interest in the home who lived in the home for a continuous period of one year prior to institutionalization.
If the Medicaid applicant was not given proper advice and failed to take advantage of these “exempt” transfers, the Medicaid agency that is processing the case must provide the individual with an opportunity to transfer the home to either a sibling with an equity interest who lived in the home for at least one year prior to the applicant’s admission to the nursing home or to an adult caregiver child who resided in the home for at least two years immediately prior to the date the individual became institutionalized.
If the individual elects to transfer the home, the Medicaid agency must allow a reasonable timeframe to accomplish the transfer. Such time is defined as 90 days, or longer if necessary due to difficulty or delay beyond the control of the nursing home resident.
In conclusion, it is important to realize that it is usually not too late to do planning if an individual requires nursing home care. It is important to seek advice from an elder law attorney who is familiar with complex Medicaid statutes and regulations pertinent to these situations.
Ronald A. Fatoullah, Esq., CELA is the principal of Ronald Fatoullah & Associates, a law firm that concentrates in elder law, estate planning, Medicaid planning, guardianships, estate administration, trusts and wills. The firm has offices in Forest Hills, Great Neck and Brooklyn, NY. Mr. Fatoullah has been named a “fellow” of the National Academy of Elder Law Attorneys is a former member of its Board of Directors, and chairs its Public Relations Committee. He chairs the legal committee of the Alzheimer’s Assn. Legal Committee and also serves on the Executive Committee of the Elder Law Section of the New York State Bar Association. Mr. Fatoullah is a co-founder of the Senior Umbrella Network of Queens, and currently serves on its Board of Directors. This article was written with the assistance of Stacey Meshnick, Esq., who supervises the Medicaid Department at the firm. The firm can be reached by calling 718-261-1700, 516-466-4422 or toll free at 1-877-ELDER-LAW or 1-877-ESTATES.
