By Rick Law, Managing Partner and Senior Advocate at the Estate Planning Center of Law Elder Law in Aurora, IL in the Western suburbs of Chicagoland.
When one spouse is in a nursing home (the “institutionalized” spouse), and one spouse still lives in their jointly owned home (the “community” spouse), the home is considered an exempt asset. In other words, the spouse still living in the home does not have to sell the home for the ill spouse to qualify for Medicaid assistance.
But, there are different rules in each state regarding liens placed against the home. In some states, even though the home is “exempt,” the state stands ready to file a lien against the home at the time the community spouse passes away for the amount paid for assistance of the institutionalized spouse.
When a single person moves out of their home to go to a nursing home, the rules change. In most states, the individual in the nursing home is not allowed to keep their home. In some states, if the person does keep the home, the state will file a lien against that home. In Illinois, the state files a lien, but if the person is able to move back home, a lawyer can have the lien removed.
Most states have certain limitations, ranging from $750,000 to $5 million of equity, on the maximum amount of equity that a person can have in a home or be forced to sell it. In many states, including Illinois, if a single person owns a home and goes into a nursing home, it is presumed that person will not go back to their home. Therefore, the state will require that the home be listed for sale if the owner has not returned to the home after 120 days. The owner can claim what is called an “intent to return” and not have to sell the home, but the state of Illinois will file a lien against the house. The lien is based on whatever is the eventual total amount of Medicaid that is expended on that person’s behalf, so that when that house is sold, the state has a claim against the proceeds.
The federal government allows the states to choose levels of exempt assets within a range of what’s allowable under the federal standards. These exempt assets, called the “community spouse resource allowance” (CSRA), is the amount of money available to a community spouse as a resource allowance when an institutionalized spouse applies for benefits under the Medicaid program. Most states require full disclosure of all assets owned jointly or individually by either spouse. Illinois and many other states do not care if this is a second marriage or if there is a prenuptial agreement. All assets must be disclosed when either spouse applies for Medicaid assistance.
Too many families needlessly lose everything they have. Don’t let that be you. If you need help paying the overwhelming cost of long term care, give our office a call at 800-310-3100. Your first consultation is absolutely free. We’ll let you know what steps you need to take, right now, to protect yourself and your family. Call now, because when you’re out of money, you’re out of options!
Rick L. Law, Attorney, Estate Planner for Retirees.
Rick was named the #1 Illinois elder law estate planning attorney by Leading Lawyer Magazine. He has been quoted in the Wall Street Journal, AARP Magazine, TheStreet.com, and numerous newspapers and articles. Rick is the lead attorney for Law Elder Law, LLP, focusing in Estate Planning, Guardianship, and Nursing Home Solutions. His goal is to give retirees an informed edge when it comes to dealing with an uncertain future. Get flexible retirement strategies that work during good times and bad, plus information on how you can save your home and assets from being used to pay for long term care. Call 800-310-3100 for your free consultation now!