If a parent is transferring to a nursing home, you may ask if her home must be sold. Seniors Matter’s article entitled “If my mom moves to a nursing home, does her home need to be sold?” says that if your mother has assets in her name, but not enough resources to pay for an extended nursing home stay, this can add another level of complexity.
If your mother has long-term care insurance or a life insurance policy with a nursing home rider, these can help cover the costs.
However, if your mom will rely on state aid, through Medicaid, she will need to qualify for coverage based on her income and assets.
Medicaid income and asset limits are low—and vary by state. Homes are usually excluded from the asset limits for qualification purposes. That is because most states’ Medicaid programs will not count a nursing home resident's home as an asset when calculating an applicant’s eligibility for Medicaid, provided the resident intends to return home.
However, a home may come into play later on because states eventually attempt to recover their costs of providing care. If a parent stays in a nursing home, when her home is sold during lifetime or at death, the state will make a claim for a share of the home’s sales proceeds. If the home is sold prior to applying for Medicaid, the proceeds must be used before qualification will occur.
Many seniors use an irrevocable trust to avoid this “asset recovery.” However, there can be many consequences to using such trusts and they must be done prior to the parent needing the care so as not to create a period of ineligibility. Trusts can be expensive to create and require the help of an experienced elder law attorney. As a result, in some cases, this may not be an option.
Transferring the home to an adult child right before the parent goes into a nursing home would also not avoid the state trying to recover its costs. This is because Medicaid has a look-back period for asset transfers occurring within five years of applying for Medicaid benefits. Therefore, the parent would not be eligible for Medicaid if such a transfer occurred within the look back period.
There are some exceptions. For example, if an adult child lived with their parent in the house as her caregiver prior to her being placed in a nursing home. However, there are several other requirements for this to qualify.
It is important to talk to an elder law attorney on the best way to go, based on state law and other specific factors.
Reference: Seniors Matter (Feb. 25, 2022) “If my mom moves to a nursing home, does her home need to be sold?”