Medicaid document on a table

Ask an Attorney: How Can I Protect My Home From Medicaid?

Over 72 million Americans currently participate in Medicaid, a federal program designed to provide medical coverage for qualifying seniors, children, pregnant women, low-income individuals, SSI recipients, and patients with disabilities. Some states also fund expanded Medicaid programs for residents.

Many patients need the long-term coverage Medicaid offers. Those who receive it, however, could face unwanted costs because of Medicaid Estate Recovery Programs (MERPs). Found in all 50 states and the District of Columbia, MERPs can impact patients who receive extensive Medicaid coverage.

These programs are designed to recover payment from a patient’s estate at the time of death, and this could include any assets of significant value, such as a home. When is your house at risk, and what can you do to protect this asset and pass it along to intended beneficiaries?

How MERPs Work

The Omnibus Budget Reconciliation Act of 1993 mandated that all states and Washington, D.C., develop MERPs. Attempts to recover costs for Medicaid coverage affect patients aged 55 and over who receive long-term care.

This could include community-based care (adult day care, assisted living services, etc.), nursing home care, or in-home care. It could also affect Medicaid patients under the age of 55 who receive nursing home care.

Attempted reimbursement via MERPs typically only occurs after the patient in question is deceased — unless the patient is single and enters a nursing home without providing a statement of “Intent to Return” home. 

However, once a qualifying patient passes, Medicaid could go after assets in the decedent’s estate, such as a home, potentially selling it or forcing a sale to recoup costs.

Who Is Exempt

Rules for MERPs vary from one state to the next, but they tend to have similar provisions for patients who qualify, as well as cases that are exempt from recovery. For starters, most programs will not seek recovery if a deceased patient has a surviving spouse or a child under the age of 21, as these assets will naturally pass to the spouse or children.

Patients with surviving children who are blind or disabled are also exempt, regardless of the age of the child. In addition, there are statutes of limitations for Medicare to file a claim. One year is typical, but it could range from just a few months to several years.

How to Protect Your Home

If you’re in a category that could be susceptible to a MERP claim, the first thing you need to understand is that different states have different rules. For example, Florida allows for asset recovery from a remaining spouse after their death. This is not the case in California, however, unless the remaining spouse also received qualifying Medicaid coverage.

If you’re worried that your assets may be vulnerable to seizure by a MERP, as in cases where there is no surviving spouse or young children, the surest solution is to empty your estate of assets. That said, you don’t want to sell your home, as the income could make you ineligible for Medicaid coverage.

A better option is to place your home and other valuable assets in a trust for beneficiaries. A trust will ensure that the most valuable portions of your estate avoid probate. It could offer opportunities to reduce estate taxes as well, depending on how it’s set up.

Keeping Your Home in the Family

A home often constitutes a person’s largest asset, so it’s natural to want to pass it along to a loved one, whether it’s a surviving spouse, children, or another relative or friend. Creating a trust is among the best ways to continue enjoying your assets during life and pass them on to intended beneficiaries after death, avoiding claims against the estate in the process.

If you’re ready to discuss Trusts and Estate Planning services with a qualified attorney in Orange County, CA, contact the caring and experienced professionals at OC Wills & Trust Attorneys today.

Brian Chew, the managing partner of OC Wills & Trust Attorneys, has extensive experience in the areas of estate planning, asset protection planning, business succession planning, long-term care planning, and veterans’ benefits. By devoting his practice to estate planning matters, he has founded a firm that strives to provide exceptional service to their clients by working closely with individuals and their families to create comprehensive and customized estate plans. For the past twenty five years, Brian has served thousands of clients in the matters of estate planning, wills and trusts. If you have any questions about this article, you can reach Brian Chew here.