Long-term care can be prohibitively expensive, especially for those living on a fixed income during their golden years. Older adults who need to move into nursing homes or require daily support from home health aides frequently apply for Medicaid benefits to pay for their care expenses.
Medicare does not cover long-term care costs, but Medicaid, provided that those in need of care meet the state’s strict qualification standards. Unfortunately, Medicaid can be difficult to qualify for and also imposes demands on those who have received benefits.
Although the equity accrued in a primary residence does not prevent a Medicaid applicant from qualifying for long-term care benefits, their home equity could be at risk after they die if they do not plan in advance.
Medicaid expects repayment for long-term care benefits
The Medicaid estate recovery program is mandatory under both federal and state regulations. When a recipient of long-term care Medicaid benefit recipient dies, the Medicaid estate recovery program submits a claim for repayment in probate court.
Personal representatives administering an estate may need to use any residual assets to repay the full value of benefits. Recovery efforts can potentially force the liquidation of assets, including the home that the Medicaid recipient owned. Protecting those assets may require taking on a co-owner or transferring the at-risk assets to a trust. Planning at least five years before applying for Medicaid can help protect assets and improve eligibility.
Preparing well in advance makes Medicaid more accessible when it is necessary and helps older adults preserve their legacies even after they pass. People preparing for retirement may benefit from engaging in Medicaid planning before their health declines as they age accordingly.