How To Protect The Family Home From Medicaid Recovery

Because the home is the largest asset a couple can keep while still qualifying for Medicaid, it is also usually the main target of estate recovery.

Sidney and Rachel's Story:
Sidney and Rachel had lived in their home since it was new. They built it just after Sidney got a promotion to regional sales manager for a shoe distributor. Through the years, the house was remodeled twice and expanded to add a loft bedroom. Even when their children were grown with families of their own, they all remained close, with frequent family gatherings for holidays and birthdays.

Sidney and Rachel had paid off the mortgage and two second mortgages before Sidney retired. So in addition to being the center of family life, the house had also become the couple's biggest asset.
Rachel always hoped the house would remain in the family when she and Sidney were gone. She often talked about leaving it to their oldest son, Mark, who promised that he and his wife would continue the tradition of hosting the family for holidays and birthday dinners. However, as Sidney's Alzheimer's disease progressed, Rachel worried that Sidney would need to move into a nursing home. With the high cost of long-term care, Rachel knew their savings wouldn't last long. Sidney would eventually need to qualify for Medicaid to pay the bills.

Her biggest question was, "Will I lose my home?"

A Common Question Indeed
For a great many people who need Medicaid benefits for long term care, the home makes up most of their life savings.  Often, it's all a couple has to pass on to their children.
You may not know that the home is an exempt asset according to Medicaid. It continues to be exempt as long as the community spouse lives there.  However, after both the ill spouse and the healthy spouse pass away, the property may no longer be protected.

What Is Estate Recovery?
According to the Omnibus Budget Reconciliation Act of 1993 (OBRA-93), the state has the right to take back whatever it paid for the care of a Medicaid applicant. And because you have to be "broke" to qualify for Medicaid, usually the only property of substantial value that a person on Medicaid is likely to own when they die is their own home. When OBRA-93 was passed, each state established an Estate Recovery Unit (ERU) to go out and find what assets they can take back from those that received Medicaid benefits!

Because the home is the largest asset a couple can keep (while still qualifying for Medicaid), in most states it is also the main target of estate recovery.
After both the community spouse and the ill spouse die, the state's estate recovery unit has the authority to take just about any property that the Medicaid recipient had their name on.  In most cases, that means going back to the house.

For example, if Sidney dies before Rachel after living in a nursing home for two years and Medicaid has paid the nursing home $3,000 per month, the state will have paid $72,000 for Sidney's care ($3,000 per month times 24 months). If the family home where Rachel lives is worth $100,000, the state would have a claim for the first $72,000 that comes from the sale of the house.

So, the house is protected while Rachel is alive. However, when she passes, the state may force the sale of the house. Whatever's left over after Medicaid is paid back ($100,000 minus the $72,000 taken out to repay Medicaid) would go to their children.
 
A Married Couple Strategy For Protecting The Family Home From Recovery
According to federal law, a married Medicaid applicant is allowed to transfer the home to his or her spouse - without any penalty. Once the transfer is made (meaning the ill spouse no longer has any interest in the house), the community spouse may be able to make some changes to that asset. In some states the community spouse can even give the house away!

That sort of gift, of course, would create a period of Medicaid ineligibility if the community spouse needs nursing home care within the five-year look-back period.

The family home remains one of the most difficult assets to protect because of timing, but there are proven strategies that make it possible to protect the home from Medicaid Recovery.

The Society of Medicaid Planners offers a free download of their report “Medicaid Secrets Revealed by Dan Stemen. The report offers information on qualifying for Nursing Home Medicaid without losing the family home to recovery or spending down your life savings.

The National Care Planning Council provides a resource for long term care planning with educational information and lists of professional elder care service providers.

Elder Abuse, Something to Look For!

Many elderly people rely entirely on family or other trusted individuals to help them. Whether it is for physical needs or emotional needs, as people grow older they tend to need more and more help from others. This dependence on caregivers or family members makes an older person more vulnerable for abuse.

For example, an older person relying on her children to provide meals and transportation and help her with financial decisions finds it difficult to complain when one of her children takes advantage of her. If, for instance, the child takes her money, hits her or neglects her care, the parent may be threatened with loss of support from the child if the parent complains. The child may also use threats of violence to keep the parent in line.

It is estimated that 5% to 10% of elderly Americans are suffering abuse. According to the National Committee for the Prevention of Elder Abuse, 

“Spiraling rates of elder mistreatment are reported by both practitioners and researchers. In a recent national study of Adult Protective Services (APS), typically the agency of first report concerning elder abuse, there were 253,421 reports of abuse of adults age 60+ or 832.6 reports for every 100,000 people over the age of 60 (Teaster, Dugar, Otto, Mendiondo, Abner, & Cecil, 2006). The National Elder Abuse Incidence Study (National Center on Elder Abuse, 1998) found that more than 500,000 persons aged 60+ were victims of domestic abuse and that an estimated 84% of incidents are not reported to authorities, denying victims the protection and support they need.” 

Much attention has been focused on abuse in nursing homes but most of the elder abuse in this country is at the hands of family members or other caregivers in the home.
In 2004, Utah Adult Protective Services workers investigated approximately 2,400 allegations of abuse, neglect or exploitation of vulnerable adults. In Utah, a vulnerable adult is defined as an elder adult (65 years of age or older) or an adult (18 years of age or older) who has a mental or physical impairment, which substantially affects that person's ability to protect or provide for themselves. The majority of the victims were females between the ages of 60-89 and 60% of the perpetrators were family members/relatives, while 24% were non-related paid caregivers.

The protective needs identified were as follows:

• self-neglect 31%
• physical abuse 16%
• exploitation 19%
• caretaker neglect 12%
• emotional abuse 19%
• sexual abuse 3%

In conducting the investigations, it was not uncommon to find that adults who were self-neglecting were also being exploited or abused. As stated previously, these statistics are based on approximately 2,400 cases, thus, if only one in ten cases are ever reported, it is possible that there were actually 24,000 or more cases in Utah that year. We suspect 9 out of 10 is close to the actual ratio of unreported versus reported cases in Utah.

We also believe that Utah's lack of reporting elder abuse is not unlike other states in the country. We suspect all the states are experiencing close to the same ratios of underreporting as in Utah.
There are a number of reasons why incidents of abuse, neglect, or exploitation are not reported to Adult Protective Services or other authorities. One of the most common reasons is the victim's fear of losing support. Many of the perpetrators are family members and the victim fears that reporting the crime will result in removal of the caregiver, as the perpetrator may face incarceration or may discontinue relations with the victim once accused, charged, or convicted. Many of these victims fear that by reporting abuse they will be left alone and expected to care for themselves or they will be forced to live in a nursing home.

Many states have implemented mandatory reporting laws to assist in the prevention of abuse, neglect or exploitation of vulnerable adults. Utah is one of the many states to have a mandatory reporting law (U.C.A. § 76-5-111). Utah law states that any person who has reason to believe that a vulnerable adult has been the subject of abuse, neglect, or exploitation shall immediately notify Adult Protective Services or the nearest law enforcement agency. Anyone who makes the report in good faith is immune from civil liability in connection with the report; however, any person who willfully fails to report is guilty of a class B misdemeanor.

It is important to note that the anonymity of the person or persons making the initial report and any other persons involved in the subsequent investigation shall be preserved and may only be released in accordance with the rules of the division (U.C.A. § 62A-3-311). In addition, all investigation information is confidential.

The following is a list of indicators of abuse, neglect or exploitation. It is important to note that the following lists are merely indicators and may not always be violations.
Signs of Abuse: 

• Unexplained bruises, welts, fractures, abrasions or lacerations
• Multiple bruises in various stages of healing
• Multiple/repeat injuries
• Low self-esteem or loss of self determination
• Withdrawn, passive
• Fearful
• Depressed, hopeless
• Soiled linen or clothing
• Social Isolation  

Signs of Neglect/Self-Neglect: 

• Dehydration
• Malnourishment
• Inappropriate or soiled clothing
• Odorous
• Over/under medicated
• Deserted, abandoned or unattended
• Lack of medical necessities or assistive devices
• Unclean environment
• Social Isolation  

Signs of Exploitation: 

• Missing/"disappearing" property
• Inadequate living environment
• Frequent/recent property title changes or will changes
• Excessive home repair bills
• Forced to sign over control of finances
• No/limited money for food, clothes and other amenities 

Prevention can only occur if there is awareness, the statutes are adhered to, and any suspicions of abuse, neglect or exploitation of vulnerable adults are immediately reported to Adult Protective Services and/or law enforcement.

All states have agencies that receive complaints of abuse. In some states failure to report abuse of the elderly is a crime. To contact an abuse complaint department, call your local area agency on aging. To find an area agency on aging in your area go tohttp://www.longtermcarelink.net/eldercare/ref_state_aging_services.htm