Avoiding Medicaid Estate Recovery

Medicaid can help pay for expensive long term care costs. In fact, Medicaid is the largest payer of long term care for the elderly in the United States. However, if not planned for properly, Medicaid may be able to take your home after you pass away. This is called Medicaid Estate Recovery. But with proper planning ahead of time, it’s possible to avoid Medicaid Estate Recovery. Avoiding Medicaid Estate Recovery is an important consideration families should take into account when long term care planning so they don’t lose their home and life savings. In this article, we will talk discuss the Estate Recovery Program and a proven solution to protect your home from Medicaid.

avoiding medicaid estate recovery

Medicaid Estate Recovery Program

Even though Medicaid can go a long way to help pay for long term care, after a nursing home resident’s death, Medicaid expects repayment for the money it spent on the deceased person’s long term care. State governments enforce the repayment requirement through the Medicaid Estate Recovery Program (MERP). To recover the costs, Medicaid can force the sale of a person’s home. Medicaid Estate Recovery creates a serious problem because most people’s largest asset of value is their house and they would like to leave it as an inheritance to their children or other beneficiaries. However, all is not lost as there are ways to avoid Medicaid Estate Recovery.

Avoiding Medicaid Estate Recovery Is A Growing Concern

According to the U.S. Department of Health and Human Services, approximately 70 percent of people aged 65 and above will eventually need some form of long term care. Despite all indications that they will need some type of care in the future, many older adults avoid planning ahead of time. When a health crisis arises, this failure to plan usually comes back to haunt them. With limited payment options for long term care, an emergency can devastate a family, financially, physically, and emotionally. That’s because whether at home, in a nursing home, or an assisted living facility, long term care assistance is very expensive.

In fact, the average cost of a long term care facility in Michigan is about $108,000 per year, or $8,000-$9,000 per month. Paying these costs out of pocket can rapidly deplete a family’s funds and may force them to sell some of their largest assets, like the family home, just to pay for the cost of care for a loved one. 

These are real concerns for many families with aging parents or family members who need the assistance of a skilled nursing facility. Paying these costs out of pocket can be avoided by doing Medicaid Planning with the help of an experienced Elder Law Medicaid Attorney. Proper Medicaid Planning can help you pay for the expensive costs of long term care while also avoiding Medicaid Estate Recovery.

Why You Should Avoid Medicaid Estate Recovery

Losing a loved one is painful. However, it may become worse if your loved one was a Medicaid beneficiary and didn’t take the steps ahead of time for avoiding Medicaid Estate Recovery. As we mentioned earlier, the state is obligated to try to recoup Medicaid payments it made for the recipient’s long term care expenses, including:

  • Nursing home care services
  • Home and community-based services
  • Hospital and prescription drug services provided in nursing homes or at home
  • Any other Medicaid covered services as determined by the state agency

Typically, to qualify for Medicaid, an applicant can only have $2,000 in countable assets. However, a house is a non-countable or an exempt asset. This means that generally the applicant can maintain ownership of their home and still qualify for Medicaid.

As a result, for most Medicaid beneficiaries their house is the only remaining asset they have when they pass away. This is why the state will seek to recover its money by selling the home if the beneficiary didn’t plan ahead of time for avoiding Medicaid Estate Recovery.

Generally, Medicaid Estate Recovery can create difficulty for your family or heirs after you pass. However, through adequate Medicaid Planning, a Medicaid recipient can get Medicaid to pay for long term care while protecting their home from the state so they can pass it as an inheritance to their family after their death.

Using Medicare To Avoid Medicaid Estate Recovery

Because the rules that govern Medicaid are complex, some people ask if they can use Medicare as an alternative option for avoiding Medicaid Estate Recovery. We won’t address all of the differences between Medicaid vs Medicare, but we will discuss their differences with respect to paying for long term care.

Medicare is the primary health insurance program for people age 65 and above. A common misconception people have is that Medicare will pay for long term care so they don’t have to worry about avoiding Medicaid Estate Recovery. This is not true.

Why the confusion?

Because Medicare does pay for SOME skilled nursing care.  But it only pays for 100 days if the stay in the skilled nursing facility is an extension of a previous hospitalization that Medicare paid for.

What does this mean?

Imagine that your elderly mom had a fall that required her to be hospitalized. Medicare will cover her hospitalization. But let’s say the hospital determines she needs to be placed in a skilled nursing facility so she can get specialized rehab services to make a full recovery. Medicare will pay for the stay at the skilled nursing facility up to 100 days because the stay is related to the initial injury that required her to be hospitalized.

But what if your parent has an ailment like Alzheimer’s or has a stroke which will require constant care and a much longer duration in a skilled nursing facility that is more than 100 days?

Medicare would not be a solution to pay for long term care.

Instead, you would need to apply for Medicaid which means you will need to consider avoiding Medicaid Estate Recovery.

Gifting The Home To Avoid Medicaid Estate Recovery

A common question is with respect to avoiding Medicaid Estate Recovery is if you can just gift your home to your children prior to applying for Medicaid so that the state can’t come for the home after you die. This sounds harmless, but it could have serious financial consequences. Medicaid sets a look-back period where they review any asset transfers for gifting or sales under fair market value. In Michigan, this period is 5 years. This means that from the date you submit your application, Medicaid will look back 5 years to see if you gifted or transferred any assets. If you have, you will be assessed a penalty. This means that you will have to pay for long term care out of pocket for months, even years, until the penalty period is over. This is a big risk considering the average monthly cost of a nursing home is between $8,000-$9,000. But don’t worry, there are proven strategies that can be implemented to pay for long term care while avoiding Medicaid Estate Recovery.

A Proven Solution For Avoiding Medicaid Estate Recovery

Medicaid is complicated and it changes often. Whether you are experiencing a Medicaid Crisis that requires benefits in the immediate future, or you would like to pre-plan, you should do Medicaid Planning with the help of an Elder Law Medicaid Attorney.

With Medicaid it is a general rule that you shouldn’t apply until you have a plan to qualify. Applying too early can mean a longer wait than necessary, while applying too late can mean having to pay for months of care you may not have otherwise been forced to pay. Lastly, filling out an application inaccurately and not having your assets structured properly can cause a Medicaid denial.

An Elder Law Medicaid Attorney can help you in the following ways:  

Apply And Qualify For Benefits Fast, Or Appeal If You've Been Denied

  • Time is critical so you don’t lose money. Also, eligibility for Medicaid is extremely complicated. Even the smallest mistake can lead to a denial that can take months or years to fix. An Elder Law Medicaid Attorney is a trained professional who can make sure the application process is followed correctly in accordance with the law so you get approved for benefits quickly.

  • Working with an Elder Law Medicaid Attorney speeds up the application and review process and reduces stress because you know a professional is leading the way.
  • If you applied for benefits before and were denied, all is not lost. A Medicaid Lawyer can help you with a Medicaid appeal so you can get the benefits you need to pay for your loved ones care.

Qualify For Benefits By Legally Structuring Your Income And Assets According To Medicaid's Rules

  • You may not be eligible for Medicaid without the help of an Elder Law Attorney who can legally structure your income and assets in a way that makes you eligible for Medicaid benefits.

Get Benefits Quickly During A Financial Medicaid Crisis

  • An Emergency Medicaid Crisis occurs if your family member is in a nursing home, or will need to be soon, but doesn’t have the financial resources to pay for care. An Elder Law Medicaid Attorney can help you structure your assets and quickly apply for benefits so you can get the care you need – ASAP.

Avoid Medicaid Estate Recovery

  • An Elder Law Medicaid Attorney can help you ensure that Medicaid or the nursing home won’t take your family’s house just to pay for your care. This helps preserve your assets so your family can inherit them.

Make Sure The Healthy Spouse Has Money To Survive

  • Situations where only one spouse is applying for long-term care can be VERY complicated to plan for. A Medicaid Planning Attorney can help maximize the amount of assets the non-Medicaid applicant spouse is able to hold on to and the monthly income that can be transferred from the applicant spouse to the non-applicant spouse so they can survive and pay the bills.

Preserve Wealth And Plan For Incapacity

  • An Elder Law Medicaid Planning Attorney can help you create Estate Planning documents to protect your assets and preserve your wealth so that you can pass your legacy on to your children.

  • A Medicaid Lawyer helps you plan for incapacity with documents like Financial Power of Attorney, Medical Power of Attorney, and Living Will so that designated family members can manage the finances and care of their loved one receiving long-term care.

Protect Your Home And Life Savings From Nursing Home Costs While Getting The Benefits
You Need To Pay For Care

Book A Free Consultation With A Medicaid Attorney Today

Determine Your Medicaid Eligibility Risk Free

Get Help Qualifying For Medicaid Long Term Care Benefits

Call Us Now (248) 613-0007

Because every Medicaid Planning situation is different, we offer a free initial consultation with a Medicaid Planning Attorney to help you determine if Medicaid Planning is right for you.

The initial consultation gives you the opportunity to help you understand your current Medicaid eligibility. It also gives us a better understanding of how we can help you plan to protect your home and life savings from nursing home costs while getting you the benefits you need to pay for care.

To book your free consultation, call us now at (248) 613-0007 and tell our friendly receptionist that you would like to book a consultation for Medicaid Planning. She will book you for the time that works best for your schedule.

We look forward to hearing from you!

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