“Many clients planning for long-term care are anxious about the consequences of using the Medicaid long-term care program to finance their long-term care, and rightfully so.”
Many people in Texas are afraid that if they access benefits, the Medicaid Estate Recovery Program will automatically take their home when they die. It is true that the Medicaid Estate Recovery Program really pushes to reclaim funds from the homestead at the time of death, for monies paid out for the Medicaid recipient's care. But the Houston Chronicle says in “Elder law: Don't miss opportunity to protect your home from estate recovery,” that with proper planning, the home can be protected from Medicaid estate recovery. Your state may have a similar law in place.
The State of Texas can make claims against estates of Medicaid recipients of certain Medicaid services, if the Medicaid recipient was age 55 or older when the services were provided. The state figures out the funds spent on the Medicaid recipient daily and tries to recover the funds from the person’s estate.
Some estates are exempt from Medicaid estate recovery, like when there are certain surviving family members of the Medicaid beneficiary. The state can’t start a recovery against the estate if a spouse, a child under the age of 21, or a disabled child of any age survives the beneficiary. If there’s a surviving unmarried adult child of any age at home for at least a year before the Medicaid beneficiary's death, estate recovery can be avoided. Evidence of the exemption must be proven and can include a death certificate listing the surviving spouse, a birth certificate listing the age of surviving child, or an eligibility letter from Social Security indicating disability onset.
There’s another exception for when recovery would cause an undue hardship on the heirs.
Setting up a transfer on death deed on the home avoids probate. It is a common and efficient way to protect the home from an estate recovery claim. This may protect the home from a potential Medicaid estate recovery claim and lets the grantor transfer an interest in the home, without incurring a Medicaid transfer of assets penalty.
Reference: Houston Chronicle (July 10, 2017) “Elder law: Don't miss opportunity to protect your home from estate recovery”
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