How Can Medicaid Recovery Considerations Affect Your Estate Plan?
For many seniors, their home is their most substantial asset and carries significant emotional value. Ensuring that your spouse can continue to live in your shared home or passing a family home down to your children or heirs may be an important aspect of your estate plan. However, it is crucial to consider how Medicaid recovery could impact these goals.
Due to the rising costs of long-term care in the 1990s, the federal and state governments began enacting laws and programs to recover taxpayer-funded Medicaid benefits from the estates of individuals who received aid. Because most individuals will require care services during their golden years and must typically rely on Medicaid to pay for these long-term care expenses, creating a plan that protects your home from recovery and safeguards your legacy for future generations is essential. An experienced Ohio elder law attorney can evaluate your situation and determine what strategies may be best for you.
How Does Medicaid Recovery Work in Ohio?
Ohio’s Medicaid Estate Recovery (MER) program seeks repayment for the cost of Medicaid benefits paid by the state for individuals over 55 and those in care facilities. Estate recovery only occurs after the Medicaid recipient has passed away and the following criteria are met:
- The recipient’s surviving spouse has also passed
- Any children of the recipient have turned 21
- No children of any age are considered disabled or blind
Under Ohio Rule 5160:1-2-07, all real and personal property owned by the Medicaid recipient at the time of death is subject to recovery, regardless of whether it passes through probate. This broad definition means typical probate-avoidance techniques like living trusts and joint tenancy may not be effective for safeguarding assets from MER in Ohio. However, there may still be several viable strategies to protect your home.
Will Your Spouse Be Forced to Move Out of Your Shared Home Due to MER?
If your spouse continues living in your home after you enter long-term care, they will be allowed to maintain homeownership after your passing without immediate interference from Medicaid. However, it’s crucial to note that Ohio may still seek recovery after your spouse passes away or requires long-term care themselves. While this aspect of the law provides temporary protection, additional planning is often needed for long-term asset preservation for children or other heirs.
Are There Ways for a Child or Sibling to Maintain Ownership of Your Home?
For Ohio seniors with adult children, the “caregiver child exception” may offer a path to keep the home within the family. If a child has lived with you and provided care that delayed your need for a nursing home for at least two years, your home might be protected from Medicaid recovery if they wish to continue living there. Similarly, if a sibling has an ownership interest in the house and has lived there for at least one year before you enter long-term care, the home may be exempt. These exceptions can be powerful tools, but they require careful documentation and often the guidance of an experienced elder law attorney to ensure all criteria are met.
Will a Trust Protect Your Home From Recovery?
Because Ohio does not differentiate between probate and non-probate assets when seeking MER, most types of trusts will not prevent recovery of your home and other property. However, one variety of trust can be helpful in shielding assets if used carefully: an irrevocable trust.
When you place your home in an irrevocable trust, it is no longer considered part of your estate because you do not have control over its ownership. Once in the trust, the home will remain under your designated trustee’s control until your passing, when it can be transferred to beneficiaries. This strategy requires careful legal structuring to ensure it meets all necessary criteria and doesn’t jeopardize Medicaid eligibility. Working with a qualified Medicaid planning attorney is essential when setting up such a trust. The specific legal language used in the trust is critical for its validity and effectiveness in avoiding MER.
Can You Gift Your Home to a Relative to Prevent Medicaid Recovery?
Gifting your home to your spouse, children, or other family members may be a viable strategy for safeguarding it from recovery efforts. However, this method must be undertaken with caution to ensure that the gift abides by state laws and does not cause larger headaches for your loved ones. Seniors who wish to make gifts of real estate or property as part of planning for Medicaid must be cognizant of the state’s five-year lookback period. All asset transfers made by an applicant or their spouse within the five years preceding a Medicaid application will be carefully scrutinized to ensure that assets were not given away or sold for below fair market value to artificially meet Medicaid’s asset limit.
By engaging in estate planning well before Medicaid assistance is needed, individuals can ensure their strategy will not subject them or their estate to penalties or legal challenges. However, it’s crucial to consider all the pros and cons of gifting your home before making this decision. For example, do you feel comfortable transferring ownership of your home while you still intend to live in it? Can the recipient afford the taxes and upkeep costs? If you determine that this is a good choice for your situation, working closely with an experienced attorney and a tax professional is highly recommended to ensure all transfers are completed correctly and optimized for tax purposes.
Does Ohio Law Provide Any Exceptions to MER?
The state has the ability to waive its right to MER if it would cause undue hardship. The decedent’s estate must request the waiver and prove that their situation meets the strict criteria for undue hardship. The effects of the potential Medicaid recovery are evaluated on a case-by-case basis, but examples of undue hardship for survivors may include:
- Deprivation of basic needs, like shelter, food, or clothing
- Dependence of an individual aged 65 or older on the estate proceeds
- Loss of a survivor’s sole income-producing asset, such as a business, due to MER
How Can Our Firm Help You Safeguard Your Home?
Protecting your home from Medicaid recovery in Ohio requires thoughtful planning and a thorough understanding of state and federal laws. By starting the planning process well in advance of needing long-term care, you avail yourself of the widest range of options and may be able to avoid potential penalties. Our skilled estate planning attorneys at Lawrence Law Office can develop a customized strategy that provides maximum protection for your assets, including your home. To speak to a knowledgeable attorney about your situation and goals, contact our helpful firm today at 614-362-9396.
