Fact or Fiction: Medicaid is Going to Take My House

New Jersey’s Medicaid program provides essential health care services to residents who meet certain income and other eligibility requirements. We receive many questions, and there seems to be a lot of confusion over Medicaid eligibility and whether Medicaid will take an applicant’s home to cover the costs of their care before becoming eligible.

While every situation is different, the short answer is: Medicaid does not “take” your home. The question becomes whether an applicant must sell their home to become eligible or will the home and other assets be subject to estate recovery when the Medicaid recipient dies.

Medicaid Cost Recovery in New Jersey

Under both federal and state law, New Jersey’s Division of Medical Assistance and Health Services (DMAHS) is required to seek reimbursement of care costs from the estates of certain deceased Medicaid or former Medicaid recipients. An estate includes any property that belonged to the deceased Medicaid recipient at the time of their death, including a house, bank accounts, trusts and annuities, real or personal property and more.

There are some exceptions to the law. Medicaid costs will NOT be sought under the following circumstances:

  1. If it would not be cost-effective to do so;
  2. If the property in the estate provides a sole source of income to one or more of the deceased’s survivors and pursuing reimbursement would cause the survivor(s) to become eligible for public assistance and/or Medicaid benefits;
  3. If a family member has continuously lived in the home prior to and at the time of the recipient’s death and it is their primary residence; however, DMAHS may record a lien against the property; or
  4. If there is a surviving spouse or child under age 21, or a child who is blind or permanently disabled, living in the house. In those circumstances, reimbursement efforts may be delayed until after the spouse’s death, the minor child reaches age 21 and/or the recovery or death of a blind or permanently disabled child.

It’s crucial for Medicaid recipients or their families to understand the rules and consider estate planning to address potential concerns. Medicaid planning now for long-term care later is the best approach.

Medicaid and Estate Planning

Estate planning can help mitigate the risk of Medicaid’s estate recovery by properly arranging and protecting assets. Techniques may include creating trusts, transferring property titles, setting up life estates or making other legal arrangements to ensure that a home or other assets do not become part of an individual’s probate estate upon death. By doing so, assets can potentially be shielded from being claimed by the state to repay Medicaid expenses. It’s important to consult with an estate planning attorney to navigate these options effectively to ensure compliance.

Timothy Rice Estate and Elder Law Firm helps families create estate plans that address the potential for future health care needs, including qualifying for Medicaid benefits. Contact us today.

Medicaid, medicaid planning

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