One of the most common questions I hear concerns how to protect a homestead when a parent or spouse is in a nursing home and needs to qualify for Texas nursing home Medicaid. The good news is that protecting a home is very often an achievable goal with the right strategy and an experienced Woodlands Medicaid Attorney working for you. The bad news is that with the wrong strategy you could end up losing a home that could have been protected.
Let’s compare two scenarios and see how the right or wrong path can lead to dramatically different outcomes.
Scenario #1 – Going Your Own Way
In this case, your un-married parent wanted to protect their home from nursing home bills so 2 years ago your parent transferred title of their home to you or some other family member at a sales price of $0 or anything less than fair market value. It is now two years after that transfer and your parent’s health has declined to the point where they need nursing home care and they do not have enough money to pay for it themselves. They need nursing home Medicaid eligibility.
The transfer of the house was within the five year lookback period so it is subject to a Medicaid penalty. This Medicaid penalty will disqualify your parent from nursing home Medicaid at a rate of approximately 1 month for every $4,700 transferred. That is almost two years of penalties for as little as $100,000 transferred. How are you going to get your parent Medicaid and protect the house?
What if you gave the house back to your parent when they went in a nursing home?
It sounds like it might make sense but the way the Medicaid regulations are it does not work as you might hope. If you gave the house back following the required procedures you could potentially reverse the Medicaid penalty, however, the value of the home will be a counted asset which is almost certain to exceed the $2,000 Medicaid asset limit. The reason for this is because the regulations have additional requirements to protect a home owned by a Medicaid applicant. Ownership by the Medicaid applicant alone does not meet the requirements for exemption.
So to recap Scenario #1, your parent wanted to protect their homestead from nursing home expenses. They completed a transaction without the guidance of a Woodlands Medicaid Attorney and through that action ended up most likely losing their house. Let’s look at an alternative.
Scenario #2 – Having a Professional
This begins the same as Scenario 1. The biggest difference being that instead of transferring title of the house to you or another family member your parent hires a Woodlands Medicaid Attorney to guide them on how to protect their house. The Medicaid Attorney shows your parent the options they have to successfully protect their home such as a Medicaid Home Protection Deed and other options that do not result in the negative results seen in Scenario #1.
What Did We Learn?
In most cases it is possible to protect a Texas homestead and still create Medicaid eligibility for a parent or spouse with the right strategy and the right Woodlands Medicaid Attorney. On the other hand, without the right attorney and without the right strategy you could actually reduce the amount of protection available to certain assets like a homestead. Contact a Medicaid Attorney today if you need to protect a homestead or other assets from being wiped out by nursing home bills.