How to Avoid a Nursing Home Taking Your Home

In the past couple of decades, nursing homes have gotten a bit of a bad rap –– and perhaps unfairly so. There have been instances of improper care and mistreatment across the country. Still, these facilities primarily exist to provide comfort to elderly residents and ensure they get the ‘round the clock care they need. But while mistreatment might not be as big of a concern for those entering a nursing home, one genuine threat often goes unrecognized: that of potentially losing your cherished house after going to a nursing home. 

But there’s more to it than that, and there are many common misconceptions about when (and why) homeowners may lose their homes this way. Medicare doesn’t cover extended nursing home stays, but Medicaid may provide necessary assistance to those otherwise unable to cover the costs. And while a nursing home itself cannot take your home, those relying on Medicaid may have their home seized by the federal government after passing away as the government’s means of recouping their investment in your care. Through the Medicaid Estate Recovery Program (MERP), beneficiaries of a deceased Medicaid recipient may be notified that the deceased’s home is being seized –– adding insult to injury for those who may have just recently lost their loved one.¹

Below, we walk through how to avoid a nursing home taking your house, sparing families from further loss and potentially extensive litigation. Creating an effective asset protection strategy through proper estate planning is essential for protecting assets from being claimed by a nursing home.

What Are My Options to Pay for My Nursing Home? 

Nursing homes are notoriously costly, with a private room in a long-term nursing or assisted living facility costing upwards of $100,000 a year.² Fortunately, for those in need of the consistent professional care a nursing home or skilled nursing facility can provide, there are several ways to cover this cost. 

• Medicare: While Medicare does not cover extended nursing home stays (those over 100 days), it does cover short-term stays that follow a hospitalization. The Medicare government website also specifies that short-term nursing home stays are not covered if custodial care is “the only care you need,” meaning you can’t check yourself in for a 100-day stay without a good reason –– if you want Medicare to pay for it, that is.³ 

• Long-Term Care Insurance: This method of covering nursing home costs may require some planning –– and the later you purchase long-term care insurance, the more costly premiums will be.⁴ With that said, long-term care insurance is designed to fill the gaps in coverage for conditions not covered by Medicare.

• Personal and Retirement Savings: For older adults with a 401k or Roth IRA, these retirement funds can be put toward any and all expenses –– including nursing home stays. Other personal savings and investments like stocks, bonds, real estate, or a plain old savings account can also go toward these costs. But at $100,000+ a year for a single room, nursing home fees can quickly eat into even the most robust personal savings account. In fact, some might find that selling their home is the only way to cover the growing costs, after all. Estate planning is essential to protect your assets from nursing home claims effectively.

• Medicaid: As mentioned above, Medicaid benefits may cover nursing home care for those deemed eligible by their respective state. This eligibility can vary from state to state, including both care and financial requirements. Medicaid assistance can end up posing the greatest threat of all, however, as the aforementioned Medicaid Estate Recovery Program may grant the government claim to a family home. But if you don’t have long-term care insurance or a healthy retirement fund, this may feel like your best option. 

How Can I Keep My House Safe from a Nursing Home? 

If the thought of sacrificing your home to cover nursing home costs still weighs on you, know there are ways to avoid this –– protecting you, your home, and your beneficiaries in the process. 

Plan Ahead

Sure, if you’re planning to check in to nursing home care next month, you’ll only be able to plan so far ahead. But if you’re looking to the future and whatever uncertainty it may hold, you may be in the best position to protect it. Be it through long-term care insurance, a personal savings account, or tools like a Roth IRA or 401k, planning ahead will ensure you remain in control of both your living and financial situations while getting the professional care you need. Considering long-term care insurance as part of your estate planning can prevent the need to sell your home to cover nursing home expenses. Ultimately, you should seek legal advice from an estate planning attorney to properly plan for the future.

Consider Transfering Ownership of the Home

If you’re not in the financial situation to plan decades in advance for care you may or may not end up needing, you’re not alone –– and you may have no other option but to rely on Medicaid assistance to cover the nursing home cost. Should you find yourself in this position, transferring ownership of your home and other assets may help you keep your home in the family while still benefitting from Medicaid coverage. 

But there’s a catch: Medicaid’s “look-back period.” To prevent Medicaid fraud, the government will scan five years of past transactions to be sure the Medicaid applicant is not cheating the system, meaning you’ll need to begin transferring any asset at least five years before you apply for Medicaid coverage.⁵ This will not only help your Medicaid eligibility but also ensure your home is not listed as an asset that can be claimed. 

Age in Place with a Sale-Leaseback

It might seem obvious, but one of the best ways to prevent sacrificing your home to cover nursing home costs is by skipping the nursing home altogether. By choosing to age in place instead and relying on in-home care from a professional or a loved one, you can dramatically reduce costs while remaining in a familiar environment and a cherished community –– rather than surrounded by strangers in a  new place. And through Truehold’s sale-leaseback, you can use your home equity to pay for everyday expenses, aging-in-place home modifications, and the professional care you need, all while remaining where you’re the most you. If you find yourself asking, “What is a residential sale-leaseback” be sure to research this property transaction properly. 

While our sale-leaseback does mean selling your home to Truehold in exchange for home equity, you stay in your home for the long term rather than losing your home to a government collections agency. You’ll pay market rent while we handle the – and when you decide to move on, it’ll be on your terms.

The threat of losing your home to a nursing home might not be  imminent, but it’s still worth planning ahead to be sure that your future way of living is protected. Learn more about Truehold’s sale-leaseback and discover why more seniors are turning to us to make their “golden years” their best years.‍

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Sources:

1. Harbor Life. Medicaid Estate Recovery: Explanation, Process & How to Avoid. https://www.harborlifesettlements.com/medicaid-estate-recovery-program-guide/   

2. U.S. News. How to Pay for Nursing Home Costs. https://www.harborlifesettlements.com/medicaid-estate-recovery-program-guide/ 

3. Medicare.gov. Nursing home care. https://www.medicare.gov/coverage/nursing-home-care 

4. U.S. News. What You Need to Know About Long-Term Care Insurance. https://money.usnews.com/money/personal-finance/family-finance/articles/what-you-need-to-know-about-long-term-care-insurance 

5. Elder Law Answers. How Does the Medicaid Look-Back Period Work? https://www.elderlawanswers.com/how-does-the-medicaid-look-back-period-work-15545