Is My Home Protected in Medicaid?

If you own a home in Illinois and are going to need nursing home care or other long-term care in the near future, you may be considering whether your home will be protected when you apply for Medicaid.  Medicaid has certain financial requirements, including total asset value limits and income limits. If you are over the limits, you will not qualify for Medicaid assistance until you are below the limits. A person’s home is usually their largest asset, so having a home and applying for Medicaid worries people, and rightfully so. A home is not automatically exempt in determining Medicaid eligibility.

Medicaid Asset and Income Limits

 In order to qualify for Medicaid, you will have to determine your Modified Adjusted Gross Income (MAGI), unless you are age 65 or older or are disabled. If you fall into one of those categories, then your eligibility will be determined using the Supplemental Security Income (SSI) criteria under Social Security.

Generally speaking, your countable assets cannot exceed two thousand dollars ($2,000). Your countable assets will include your bank accounts, retirement accounts, investment accounts, whole life insurance, annuities, cars, and real estate. But this is not an exhaustive list. As you can see, a person needs to have very minimal assets in order to qualify for Medicaid.

Treatment of a Home in Medicaid

 If you are married and you or your spouse needs nursing home care, but one of you will continue residing at the home, then the home can be exempt from the Medicaid asset limits. However, if you are single or both you and your spouse need nursing home care, then the house will not be exempt. In most circumstances the home will need to be sold and the proceeds of the sale used to pay for the nursing home care until you are no longer Medicaid disqualified.

Solutions to Protecting Assets

 If you have some assets that you wish to gift away in order to qualify for Medicaid, think twice before doing so. If you gift away assets within five years of needing Medicaid, you will be ineligible for a certain term depending on the size of the gift. This includes putting the home into a trust where another person is the primary beneficiary.

There is a workable solution in Illinois known as Half-Loaf or Half-a-Loaf Planning.  This involves obtaining a Medicaid Qualified Annuity with the sale proceeds or other assets, gifting half of the assets away, and using the annuity to pay for nursing home care during the penalty period. At the end of the penalty period the annuity ends and you can qualify for Medicaid. This is a simplified explanation of course, but suffice it to say that there are options available to preserve some of the assets. This solution works best if you are going to a nursing home for physical treatment, but retain the mental capacity to execute estate planning documents and gifting capacity. If you are a child of a person who needs Medicaid and who also lacks capacity due to dementia, then this option is most likely unavailable to you unless you have a power of attorney for property that specifically permits Medicaid planning and gifting. Many powers of attorney for property do not.

Contact the Libertyville Medicaid Planning Lawyers at Johnston Tomei Lenczycki & Goldberg LLC Today

 If you want to preserve some of your assets while qualifying for Medicaid, or if your parent needs Medicaid assistance and you are worried about their assets such as their home, then reach out to our Medicaid planning lawyers at Johnston Tomei Lenczycki & Goldberg LLC today to see what option are available.