The State of Louisiana is required by the Federal Government pursuant to OBRA 1993 to seek reimbursement from a Medicaid recipient’s estate for long-term care assistance provided by Medicaid. Typically, the family home is not counted when applying for Medicaid and is part of the Medicaid recipient’s estate. Upon the Medicaid recipient’s death, the State of Louisiana may seek recovery for the total amount of nursing home expenses paid by the state. Because the family home is often part of the Medicaid recipient’s estate, recovery is applied against the family home. The state may file a lien against the home to enforce recovery rights.
Protecting Your Home From Louisiana Medicaid Estate Recovery
Your home is not counted as an asset so long as you intend to return to your home after a stay in a nursing home. After your death, your home may be subject to estate recovery, but estate recovery may not occur during your or your spouse’s lifetime. Therefore, your home is an exempt asset for your lifetime and the lifetime of your spouse. Your home is also exempt if you have a surviving child under the age of 21 or a child who is blind or disabled as defined by the Social Security Administration. Often, the home is the sole asset in the estate of a Medicaid recipient. The State may attach a lien to the home to recover Medicaid payments as mandated by federal law. Planning options include transferring the home to a trust, to one or more children, or retaining a lifetime usufruct. Additional planning options may also apply. The right option depends on your situation.
In some circumstances the family decides to sell the family home because the owner will not be able to return home. For example, the home may be falling into disrepair, a vacant home may not be insurable, or no family members are near to help maintain the home. Over time the home may significantly depreciate in value. To make matters worse, estate recovery will occur upon the death of the homeowner. All of these concerns may cause the family to decide to sell the home. The proceeds from the sale will be considered a countable resource to the Medicaid recipient. Without proper planning the proceeds will be spent-down on the nursing home. Alternatively, special planning strategies would allow approximately half of the proceeds to be protected from spend-down.
Click here to download John’s Long-Term Care and Medicaid Planning Checklist.
Read John’s book, Louisiana Retirement and Estate Planning, for more information about long-term care and Louisiana Medicaid planning.