Listen to Lawrence…Is my home an exempt asset from Medicaid?

October 8, 2020
Dear clients and friends,
Here’s the answer to one of the most commonly asked questions:
Question for Lawrence
The only asset I own is my home. Is my home an exempt asset from Medicaid? Thanks, I love your emails.
My Response
Thanks. I started these LISTEN TO LAWRENCE emails when the pandemic began and I have truly enjoyed the ability to connect with my clients and friends during this unsettling time.
By far, the home is the asset that my clients are most anxious to protect. To be eligible for Medicaid, you cannot have more than $15,750 in your name, and that can include the value of your home. You see, it depends on what type of Medicaid you are looking to obtain. If you are asking Medicaid to pay for a nursing home, then the home is not an exempt asset, unless you are married and your spouse is living in the home.  If you are not married, Medicaid will put a lien on your house until they have eaten up all the equity.  Later, upon the sale of the home, the lien must be paid in full from the proceeds of the sale.
To protect their home, our clients often transfer it out of their names, often to an Irrevocable Trust, which is subject to a five-year look-back.
Alternatively, if you are seeking Community Medicaid, such as some type of home care, then your home is an exempt asset. The rule is that as long as you are living in your house, the house is an exempt asset.  By the way, it is exempt in these circumstances, although Medicaid can seek reimbursement from it upon your death, from your probate estate. In these circumstances, we want to make sure we avoid probate or otherwise, simply not own the house at the time of death.
But what is the rule if you transfer your house out of your name to start and then finish your 5-year look-back for Nursing Home Medicaid or to defeat Medicaid’s right to reimbursement? Essentially, what I am asking is, if you transfer the house out of your name for whatever reason, will you be subject to the new 2 ½ year look-back for Community Medicaid? The answer is, we do not know. On the one hand, there is a 2 ½ year look-back so why shouldn’t it apply? On the other hand, why should there be any look-back or penalty for transferring an asset which is exempt from Medicaid if it is still in your name? I will let you know when some regulation or other communication from Medicaid comes out. To be on the safe side, transferring the house now, perhaps to an Irrevocable Trust, will assure its protection after 2 ½ years in the home care setting and after 5 years in the nursing home setting.
I hope this helps! Please forward this information to your friends and relatives.
As always, please send me your questions. If you are thinking about it, others are probably too, so my answers will no doubt help you and many others.
Let’s stay connected.
Stay safe!