While the home is automatically protected for the community spouse (see the previous blog entry) there is the possibility that Medicaid could place a lien against the property if certain easy steps are not taken during the Medicaid application process.  The first step to protect the home from any Medicaid liens is to remove the name of the institutionalized spouse from the deed and re-title the property into the name of the community spouse only.  This must be done no later than 60 days after the institutionalized spouse is determined to be eligible for Medicaid benefits.

The second step is that the community spouse should prepare a new will that leaves the home to someone other than the institutionalized spouse.  This is done so that if the community spouse dies before the institutionalized spouse the home will not pass to the institutionalized spouse.  We want to avoid the home passing to the institutionalized spouse because if that spouse gets title to the property it will probably have to be sold and the proceeds used to pay for long-term care.

With proper planning certain assets can be protected for the community spouse.  However, there are many pitfalls and qualified legal advice should be obtained when exploring how to protect those assets.

A community spouse is defined as the spouse who remains at home when the other spouse resides in a long-term care facility.  There are specific rules that apply to the assets of a couple when one spouse continues to reside in the community.  The federal government has established asset exemptions that are intended to protect the financial well being of the community spouse.

Resources that are considered exempt for the benefit of the community spouse are protected and not counted (or considered) by Medicaid when it evaluates the ability of the institutionalized spouse to pay for long-term care.  Exempt resources do not have to be spent in order to qualify for Medicaid.  One resource that is exempt is the couple’s home (i.e. primary residence.)

Unfortunately, most community spouses that meet with us don’t realize they won’t lose their home as a result of their spouse’s need for nursing home care.  This is often the first issue we discuss and clients are immediately comforted by the knowledge they will be able to keep the home.

While the community spouse is entitled to keep the home there is the issue of possible Medicaid liens.  That issue will be discussed in next week’s blog entry.

People dealing with long-term care issues constantly hear about Medicaid.  They have an idea that in New Jersey, long-term care Medicaid can pay for assisted living or nursing home care but they don’t know any more than that.

The starting point for any discussion about Medicaid is to understand that long-term care Medicaid is a jointly funded state and federal program that provides, among other benefits, payments for nursing home patients and certain residents of assisted living facilities.  Because Medicaid is a needs-based program, individuals have to qualify both medically and financially for the program.  This means that the individual must have exhausted his or her funds and be physically disabled within the definition of disabled applied by Medicaid.

More simply put, Medicaid is a form of welfare that provides a financial safety net for senior citizens who have exhausted their funds and cannot afford to pay for long-term care.  It is a form of social insurance; the premium one pays to benefit from this insurance is the complete depletion, with certain exceptions, of the individual’s assets.