Can I Sell My House Despite Medicaid Estate Recovery?

 In Long-Term Care Planning

Question:

I have been receiving Medicaid benefits for ten years and had no idea until recently that the state could seek money for medical expenses they paid for after I turned 55. I am 65 and am planning to sell my house in a few years and move out of state to retire. Can they seek money from the sale of the house? If I die in another state, will they go after my estate, leaving less money for my heirs? Does the state seek the original amount of the medical expense or one increased for many years of inflation?

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Photo by Eric Muhr on Unsplash

Response:

There’s good news and bad news. First, the good news: You can sell your house without reimbursing the state for the Medicaid benefits you have received to date. The state can only put a lien on your house if it’s paying for nursing home care for you.

Now, the bad news: The state’s claim for reimbursement against your estate applies no matter where you live. However, many states only seek recovery against the beneficiary’s probate estate and you may be able to avoid the claim by using a trust, joint ownership, or a life estate to hold title to your new home and other assets. (Here’s an explanation of the difference between probate and non-probate property.) A local elder law attorney can advise you on what steps make the most sense in your situation and in your new state. You can find one at www.elderlawanswers.com.

And the not-so-bad news: In calculating the amount of recovery, Medicaid agencies use the actual amount paid out without interest or any adjustment for inflation.

 

Related posts:

What are the Tax Consequences if I Transfer Real Estate into Trust?

What Should I Do with My Uncle’s Accumulated Income So He Can Be Eligible for Medicaid?

How Can I Protect Out-of-State Property from Medicaid Estate Recovery?

When to Transfer Mother-in-Law’s House When Applying for Medicaid

Showing 8 comments
  • Lorraine Krug
    Reply

    I live in nu, 11 years ago my mother died in a hospice facility, she was on Medicaid . The hospice facility did not accept Medicaid as a payor source, we promised the facility we would pay them out of the sale of her house, the house was sold for 169,000 2 months after her death. We paid the facility for her care at closing, we paid a government agency $20000 for work she had done on her house, we paid any debt she had. I thought because medicaid did not pay for her hospice care, we did not have to pay Medicaid anything. A long time later, I found out medicaid put a lein on my home for $160 000, The lawyer handling the case said he doesn’t have the records, it cost me $500 to find that out, the hospice agency doesn’t keep records after 7 years, the state agency was able to provide proof, we paid the money out of sale. My mother lived on social security for about $600, i supplemented her income since I was 18, my father died when I was 15, my mother stayed with me for 7 years before her death, she would sometimes go home a weekend, if my brother could stay with her, her Hope was to get stronger and be able to go home , that never happened. My husband and I bought our home, a humble home a town away from my mother so I could care for her it was one town away, less than 5 minutes in a car, I always cared for my mother, physically, and financially, This is so unfair, that we have a lein on our house, I have always done the right thing by my mother and my husband supported me in that, my husband is medically retired for 7 years, I need to retire, I am 67 and in remission for cancer. I am trying to resolve this before I retire. Are you able to help me? The only savings I have, is my employer saved money for all employees, I did not contribute, my husband condition is worsening as his memory is declining. I hope you can provide guidance, I did present documentation to nj estate recovery, they were considering my case. , however the worker went out on disability then covid hit. I am really trying to resolve as I need to retire.

      • Harry Margolis
        Reply

        I’m a little confused by the discussion of two homes. I can see why Medicaid would have had a lien on your mother’s home, but not yours. In normal circumstances, the lien would have been paid at the closing. Are they saying that that’s what should have happened and since it didn’t happen, they are asserting a claim against you?

        I would recommend consulting with a local elder law attorney who can assess the facts and advise you on how to proceed. Often an attorney will be able to advise you on arguments and strategies to counter the state’s claim and perhaps be able to settle any claim, depending on the circumstances. You can find a qualified attorney at http://www.elderlawanswers.com. (I know attorneys are expensive, but you have a lot at stake.)

      • Mike
        Reply

        Father in law has been approved for Medicaid. Is receiving some in home Medicaid supportive care services currently. Only asset is 75k house. No car, 1k in savings. We have covered 15-20k in expenses for him over the last 4 yrs without repayment.
        Can we purchase the house, pay ourselves back for the loaned money used for taxes and upkeep over the past 4 yrs, and require him to pay rent moving forward to us as long as he lives in the home, before going into long term care, without a look back penalty? Effectively using up, paying us back (paying legitimate expenses) most of the money received for the sale of the house?

          • Harry Margolis
            Reply

            Mike,
            You could do that. Once your father-in-law received the payment, he’d probably have to go off of Medicaid until the funds were spent down. In some states, he could preserve his eligibility by transferring the proceeds to a (d)(4)(C) trust. There’s also the question of how you documented your loans to him. If there’s a promissory note, you can definitely deduct what you advance from the purchase price. But without such evidence that the money you advanced was thought of as a loan rather than a gift, the Medicaid agency may treat any reduction in purchase price as a transfer to you, causing your father-in-law to be ineligible for benefits for a period of time.
            You may be better off continuing to advance money to your father-in-law under an iron-clad promissory note and mortgage, to be paid back upon his death or when he owes you the full price of the house.
            The best strategy can depend on how the Medicaid rules are applied in your state. So, I recommend that you consult with a local elder law attorney. You can find one on the site: http://www.elderlawanswers.com.

          • romeno hall
            Reply

            i get ssi and medicaid im 49 yr old if i inherit my mother’s house will medicaid kick me off or can they put a lien on the property years later if i die.i want to leave the house to my girlfriend

              • Harry Margolis
                Reply

                Romeno,
                If you are living in the house your inheriting it will not affect your SSI or Medicaid. However, if you’re not living there, it would probably be a countable asset that could make you ineligible for both benefits. Assuming you are living in the house, you are correct to be concerned that Medicaid would be entitled to recover from your estate whatever it paid for your care after age 55. (Right now you’re under that age, so no claim is accruing.) One good way to avoid this claim would be for your mother to put the house in trust for your benefit during your life and then for your girlfriend’s. She could also give you what’s called a power of appointment to change the ultimate disposition of the house in the event you and your girlfriend broke up or she were to pass away before you.

              • Linda
                Reply

                I have inherited a property from an old family friend , neighbor for over 25 yrs. Her caretaker until she went to a nursing home for rehabilitation and unfortunately was not able to come home . I took care of her house since 2012 while she was in the nursing home till present .I moved in the home with her insistance when i became disabled and her house was much more suitable my for wheel chair. I have summitted a hardship waiver to medicaid for the medicaid lien. long story short.. My lawyer i hired to file my will has made a complete mess with everything 2016 when shirley passed he was hired to file the will that it . so I could get it in my name in order to get major repairs done. He shredded my original will …dragged out 2 yrs before telling me , had to ask the court to accept the copy of the will finally I have my letter of Testament 2019. Now to deal with medicaid lien before putting in my name …the lien is over 289000. The property tax assess at 80000. And in very bad shape , sale value about 60000.can I sell the house for true value to a family member to satisfy medicaid lien? And if so would I be able to buy it back from that family member without a problem?

                  • Harry Margolis
                    Reply

                    Linda,
                    I’m sorry you’ve had such a difficult time. To begin with, if you can prove your lawyer was not honest with you, you should file a complaint with your state bar. Dishonesty with one’s clients is a violation of the rules of professional ethics.
                    Unfortunately, the hardship waivers for Medicaid liens are often very strict, requiring you to follow a very strict timetable. While it sounds like you may well have missed the opportunity for a waiver, it’s worth seeking a second opinion from an elder law attorney in your state. You can find one at http://www.elderlawanswers.com.
                    In terms of selling the house to a family member, you can certainly do so, but you would still have to pay the Medicaid lien. I can’t tell you whether this would be better or worse than seeking a commercial mortgage. If you can’t qualify for a commercial mortgage, perhaps your family member would lend you the money to pay off the Medicaid lien in exchange for a mortgage.

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