What Happens to Your House If Your Family Member Goes into a Nursing Home?
Having yourself or a family member entering a nursing home can be stressful enough without having to worry about what will happen to the existing home. Still, it is common to question if Medicaid will seize the house in order to make payments for nursing home living. Before you or a loved one enters a nursing home, it is a good idea to consult with an St. Petersburg estate planning attorney to discuss different options to protect your home.
What is the Average Cost for Nursing Homes?
Depending on the circumstance, insurance may cover the cost of staying in a nursing home. However, you should know that there are additional costs which may require additional sources of income.
Nursing homes provide supervision and care, but for a hefty price. A semi-private room costs approximately $7,908 while a private room costs $9,034.
What Happens When You Exhaust All Funds to Cover the Cost of a Nursing Home?
Having a backup plan is important when you or someone you love is entering a nursing home. Nursing homes will not show empathy and will be quick to evict a resident who cannot pay. Before you or a loved one moves into a nursing home, ask for copies of the facility’s rules, especially those relating to evictions for those who are unable to pay.
There are a few backup plans to consider when looking to cover the costs of nursing home living. These options include private insurance, pensions, assets, and more.
Area Agency on Aging
While family will usually step in to help with finances, what happens if you don’t have anyone close to you? In this case, the state’s Social Services department or an Area Agency on Aging representative will help you with aging in place. Area Agency on Aging is a great resource for seniors that can help with in-home care, meal services, adult day care, and more.
| Pros | Cons |
| You can stay in your neighborhood | The quality of care may not be the same level you may get if you were in assisted living |
| There are several services that Area Agency on Aging provides such as meal services, home care, and more. | Being alone can be an issue if there is an emergency (i.e. fall, injury, sudden illness) |
| Some Agency on Aging programs provide a “Long-Term Care Ombudsmen Program”. This program allows a person to advocate for those ln assisted living. | Getting help from your home limits the amount of people you see and may cause loneliness. |
Long-Term Care Insurance
Most of the time long-term care insurance will help pay for assisted living. Long-term Care Insurance (LTCI) helps cover the needs, services, and support you require as you continue to age. Policyholders can choose between different options and benefits that suit them best.
| Pros | Cons |
| Can use this insurance to help pay for a good quality nursing home | Premiums can go up |
| Reduces stress by letting you keep some of your assets | You may be paying for insurance you might never use |
| You can customize this insurance to fit your needs | Your long-term care insurance company may go out of business |
Life Insurance
Life insurance provides a couple different options when paying for long-term care. For example, if there is a cash value to your life insurance policy, you can withdraw cash to pay for long-term care. You can also sell the policy for a “life settlement option” which can triple the amount of cash you can access rather than via withdrawals.
| Pros | Cons |
| No monthly premium payments | Knowing how much to take out can be hard |
| You can sell to pay for long-term care, also called a “life settlement option” | Transferring life insurance can count against you for Medicaid |
| If terminally ill, you can sell your life insurance for a viatical settlement , where you are paid the death benefit in a lump sum depending on how many months you are expecting to live. | Life insurance gets more expensive the older or unhealthier you get |
Can Medicaid Take Your Home to Pay for Nursing Home Costs?
Those entering a nursing home do not have to sell their house to qualify for Medicaid. However, the house is not protected as the state can still put a lien on the home while the person is still living. The state can then try to retrieve the property after the resident passes.
Medicaid does pay for nursing homes but only for those who meet the requirements. In order for Medicaid to cover nursing home bills, the person requesting the coverage must relinquish all of their income. Take Medicaid’s daily rate into account so that you’re not left having to pay anything by surprise.
What are the Best Ways to Protect a Home When Entering a Nursing Facility?
If you can plan about five years before you or a loved one enters a nursing home, then you are putting yourself at an advantage. If a spouse or other dependent relative resides in your home while you are at assisted living, then you are able to keep your home without an equity limit.
Transfer the Home
Transferring a home to a loved one can cause a penalty period with Medicaid, but there are rare cases where you may be eligible. Before transferring over property, be sure to contact an attorney for their advice. Otherwise, under most circumstances you are allowed to transfer a home to the following (but not limited to):
- Children who are under 21 years old or are blind or disabled
- Spouse
- A trust fund for the disabled person under age 65
Build a Life Estate
A life estate is owning immovable property for as long as the life tenant lives. Once they pass, the property can revert back to the original owner or on to the next inheritance. A life estate allows the life tenant to keep the house even if they should pass away in a nursing home.
Depending on where you live, certain rules may apply, especially when considering Medicaid. Looking into this before you reside in a nursing home will help you save you a giant headache.
Stay at Home for as Long as Possible
Staying at home, otherwise known as aging in place, can limit the amount of time a person spends at a nursing home. If children or family members can take care of the aging individual at home, it will lessen the accumulation of bills. While the person is staying at home, loved ones can clean out the property and sell belongings to generate extra income for senior living.
Final Say
Selling a house to pay for nursing home costs isn’t always a requirement. If you are able to plan at least five years ahead for assisted living costs, then you may be able to avoid a lot of stress in addition to having to sell your home. Speak with an attorney to weigh your options before your or someone you love goes into a nursing home.