How to Protect the Family Home if Dad Needs a Nursing Home

Nursing Homes Can Be An Expensive Blessing

With increased longevity in our society, it is quite possible that Dad (or Mom, Grandma or Aunt Tillie) may need a nursing home in his or her later years. But nursing homes are expensive. A $100,000 per year price tag is not unheard of. Many homes cost more. How can a family afford the cost? And are there ways to avoid losing family assets, like a home? Here are some steps to take.

Instructions

1. **Consider Your Family's Options,**

   Having a lot of money helps. So does, owning a long term care insurance policy. However, most people do not have either.

   Medicare, the government sponsored health insurance coverage for seniors, (contrary to what many believe) does NOT cover the cost of long term care in a nursing home. Neither do most private health insurance policies.

   As a result, many nursing home residents rely on Medicaid (with a "D") Assistance to pay for the cost of a nursing home. For many families, this may be the only available option, but to qualify, the recipient must have very little in the way of financial assets.

2. **Get to Know Medicaid**

   Medicaid is a government medical insurance program for the poor and medically needy.

   To qualify for Medicaid Assistance, Dad cannot, for the most part, have any assets in his own name, other than a modest bank account for personal expenditures such as magazines, hair cuts, clothing and the like.

3. **Give It All Away, Ahead of Time**

   Dad can give away his assets, including his home, to show the government that he is impoverished. However, if he does so, the government will impose a waiting period of approximately 5 years before Medicaid Assistance will pay for Dad's nursing home care.

   With some advanced planning, Dad can change the deed to his home to his children (or to anyone else for that matter). Five years and one day after the transfer, Medicaid will cover the cost of Dad's nursing home care, assuming Dad has virtually no other assets.

   For reference, the federal law governing transfers of assets in these cases is included in the Social Security Act section 1917 (42 USC 1396p).

4. **Make Provisions for Emergencies**

   If Dad needs a nursing home right away, federal law allows "free" transfers of Dad's home to certain persons. "Free" transfers mean that Medicaid will NOT impose a penalty period before Dad can qualify for nursing home care paid for by the government.

   A "free" transfer of a home can be made to:

   a) Dad's spouse (although a lien may be placed on the home if the home is still in Mom's name at the time of her death).

   b) A child who lived in the home with Dad for 2 years before dad entered the nursing home and has helped provide care to Dad so he can stay at home.

   c) A blind or permanently disabled child.

   d) Dad's sibling who has some "equity" interest in Dad's house and resided with Dad for one year prior to Dad's entering the nursing home.

   e) A minor child.

   f) A special trust for the benefit of any disabled person under 65.

5. **Get Professional Advice**

   Since the Medicaid rules are complicated, and the transfer of assets has tax consequences and raises liability issues, it is best to consult with a lawyer and tax advisor before any changes in title to Dad's home is made.

Tips & Warnings

• Thanks to my sister, the lawyer, for contributing this important article.