Since his stroke last year, Rick (age 75) has needed constant medical care. He and his wife, Helen, have exhausted their savings and plan to sell their home (worth about $240,000) to pay for Rick’s care. Now, Rick needs to be in a nursing home at a cost of about $6,000 per month.
Question. What should Rick and Helen do?
a. Sell their home and spend down their assets until they qualify for medicaid?
b. Sell their home, put the money from the sale in a trust for the kids, and then apply for medicaid?
c. Put their home in an asset protection trust and apply now for medicaid.
d. Put their home in a family limited partnership or an L.L.C.
e. Keep their home and apply now for medicaid.
(The couple owns the home and furnishings, their personal effects, a prepaid funeral plan, and
two year old car. Rick wants to return home as soon as he can.)
 Answer: Choice e.


Choice a. is a bad choice because the cash from selling the home will disqualify Rick and Helen will Rick from Medicaid until the couple spends almost all the cash. If they keep their home, as in choice e., Medicaid will not count the home as a spendable asset. This choice will cost them dearly before Medicaid starts to pay.
Choices b. through d. are poor choices. If Rick and Helen transfer their home or the money from the home to a trust, to their children, to a family limited partnership or L.L.C., or to anyone else for less than its full value, they will be treated as if they still had $240,000. If they apply now, Rick and Helen will be disqualified from medicaid until they spend more than $130,000 in medical expenses. So, b. c. and d. are poor choices.
Why e. is a good choice: If Rick and Helen keep their home and apply now for medicaid they will qualify immediately. Medicaid does not count a home (up to $500,000), furnishings, personal effects, a prepaid funeral plan, and a car when computing assets, so Rick does not have more than the maximum $2,000 in assets.
Medicaid does have a legal right to claim a lien against the Rick’s share of the house for his cost of care, but not until after Rick and Helen die. If Rick returns home before he dies, the lien will be extinguished. Option e. is the best choice.
The family home is one of the best assets to have when a health crisis drives a family to medicaid. DO NOT sell your home to pay medical expenses until you know all of your options.
By Jack Helgesen, Published June 1, 2009