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Elder Planning Isn't Just For The Elderly

Protecting the home from risk by Medicaid

A large number of Americans will ultimately need long-term care financed through Medicaid. Their Medicaid planning should assure that one of them can continue to live in their home and safeguard their ownership. Medicaid is a federal and state health insurance program that gives benefits to needy individuals and is the biggest payer for long-term costs such as nursing home care. An individual and their spouse must meet financial eligibility requirements.

Some assets are excluded from the calculation of assets for financial eligibility. A primary residence that has an equity value below $585,000 in 2019 is excluded if a spouse still resides in the home. Even though the home is an excluded asset, changing its ownership from joint ownership to the sole ownership of the spouse who remains helps prevent the state from placing a lien on it. This may also assure that the spouse who stays in the home can keep all the sale proceeds if it is sold.

A home is not counted as an asset if the minor child or a child with disabilities lives there. If it is owned by an unmarried person, it is excluded if that person is expected to return there. Jointly owned homes are also excluded if the co-owner is unwilling to sell the home. Rental property is not included in asset calculation if the rent is enough to cover its maintenance costs. A house held in a revocable trust should have its ownership changed and removed from the trust.

Generally, assets that are transferred for less than market value five years before applying for Medicaid disqualifies a person from eligibility. The transfer of a home to a child who lived with the person for at least two years before they moved to a nursing home or other facility, however, is excluded if the child gave care that allowed the person to stay home.

Other transfers may go to a sibling with an equity interest in the home and lived there for at least a year before the person moved to a care facility. Assets can be directly transferred to a child with certain disabilities or to a special needs trust for a person with disabilities. Federal and New York rules may be complicated. An attorney can help meet their eligibility requirements and protect a family's financial resources.

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