PROTECTING YOUR HOUSE FROM THE COST OF NURSING HOME CARE Part 6 Bring on The Medicaid Lien

Cohen & Oalican, LLP discuss: PROTECTING YOUR HOUSE FROM THE COST OF NURSING HOME CARE Part 6 of 7



Bring on the Medicaid Lien


In certain situations, it may make more sense to apply for Medicaid and let the Medicaid lien accrue against the house. Let’s consider a client who has $100,000 and a house worth $400,000. They spend down their funds in a year or so after entering a nursing home. At that point they have two choices. First, they could sell the house and pay privately for their care until the funds are spent down. If the nursing home costs $10,000 a month this will take about three years or so. Another option would be to apply for Medicaid once the funds are spent down. Remember, Medicaid will not count your house as an asset in determining eligibility if you indicate on your application that you intend to return home. Once the application is accepted, Medicaid will place a lien against the house and when the individual dies, the family will have to pay back Medicaid for benefits provided during that person’s life. You may be wondering where is the benefit in this strategy? The benefit lies in the fact that when you repay Medicaid you are paying them based on what Medicaid pays the nursing home which is typically between 60 and 60 percent of the private pay rate. In other words, if you let the lien accrue you would pay back Medicaid at a rate of $7,000 a month compared with the $10,000 a month that you would have paid privately if you sold the house. Of course, if you receive Medicaid benefits over many years, the lien may exceed the value of the house and there would be no benefit to the family. (It’s important to note that regardless of the size of the lien, Medicaid is only entitled to the value of the house.) One other drawback to this strategy is that the Medicaid applicant cannot use their own income to pay for the house expenses (taxes and insurance). The only way to cover this cost is either to rent the house or for other family members to pay the bills.

Consult with one of the attorneys at the offices of Cohen & Oalican, LLP for more information on Medicaid.

This has been Part 6 in a series of 7, brought to you by Cohen & Oalican LLP, Elder Law Attorneys Boston, Raynham, Andover