Medical Assistance and Your Homestead

For many people, their homestead is their most valuable asset. However, many people do not realize the impact of medical assistance on their homestead. This article will provide a general overview through hypotheticals.

Hypothetical: Mary is 75 years of age and she lives alone in her homestead. She does not have long term care insurance. She decides that she wants to move to assisted living for the community aspect of assisted living. So, she moves out of her home and moves into assisted living. She then sells her home.

Analysis: Mary’s home was an exempt asset for medical assistance purposes until she sold the home. By selling the home, Mary converted an exempt asset into a non-exempt asset. The consequences are that Mary will need to spend down her assets lawfully in order to be eligible for medical assistance if she has to move into a nursing home.

Hypothetical: Margaret is 80 years of age and Bruce is 85 years of age. They are married. Bruce has Alzheimer’s and needs to go into a memory care nursing home and needs Medical Assistance for Long Term Care. Margaret continues to live at the home. She never needs Medical Assistance. Bruce then passes away. Margaret then formally becomes the sole owner of the property.

Analysis: The home is exempt from Medical Assistance claims until Margaret passes away. At that time, Medical Assistance will file a lien. The entire home is subject to the Medical Assistance lien even though when Margaret passed away, she was the sole owner of the home. With proper pre-planning this result could have been avoided.

Hypothetical: Madeline is 89 years of age. She does not have long term care insurance. She gifts her granddaughter the home. One year later she needs to go into a nursing home, which was not expected at the time she gifted her granddaughter her home. She does not have any assets besides $2,000 in her checking account because she receives $2,000 per month in social security. She applies for Medical Assistance.

Analysis: Madeline will not be immediately eligible for Medical Assistance because the gift to her granddaughter of the home is considered an uncompensated transfer for Medical Assistance purposes and will create a penalty period of ineligibility. Madeline has to move in with her granddaughter until the penalty period has passed as there are no other options to pay for her care. Her granddaughter is not happy because she does not want to take care of her grandmother who needs constant care at that time.

Spangler and de Stefano, PLLP assists business owners and individuals with their estate planning and planning for medical assistance.

The material contained herein is for informational purposes only, and is not intended to create or constitute an attorney-client relationship between Spangler and de Stefano, PLLP and the reader. The information contained herein is not offered as legal advice and should not be construed as legal advice.