Saving the House from a Medicaid Lien

Individuals who get Medicaid benefits to pay for nursing home care are allowed to keep their house as an exempt asset. However, the State is allowed to place a lien on the house to recover any Medicaid benefits paid on the individual’s behalf. Moreover, if there is no lien on the house, the State can make a claim in the individual’s probate estate after that person dies.

However, a lien may not be imposed if a spouse is living in the house, and estate recovery is allowed only after such spouse has died. For a single person in the nursing home, if the state has put a lien on the house, the law states that the “lien shall dissolve upon that individual’s discharge from the medical institution and return home.”

In some instances, family members choose to take a loved one home when that person has reached the end of life to be cared for by hospice providers in the home setting. In that instance, if a Medicaid lien was placed on the house, the law provides that such lien may not be enforced.

In light of such circumstance, a financially savvy family member who holds an appropriate power of attorney can take steps to protect the house from estate recovery by using a life estate deed.

Such planning would have the following result. First, the Medicaid lien will be ineffectual under the law. Second, the life estate deed will allow the property to pass to family members outside of probate. Property that passes outside of probate is not subject to estate recovery.

In this way, the state would be unable to obtain the house notwithstanding that it had placed a lien on the property.

Ensuring that the power of attorney has appropriate provisions to allow for this type of planning is one of the things this office does when working with a client.

Does your power of attorney fit the bill?