October 6, 2020 | Asset Preservation Planning
Selling the Home When a Spouse Received Medicaid
Ohio’s laws on Medicaid estate recovery are among the most aggressive in the country. Following the death of a Medicaid beneficiary, the state must seek reimbursement for the cost of benefits paid on behalf of a beneficiary during his or her lifetime. While most states limit reimbursement only to the assets of the Medicaid beneficiary’s estate that pass through probate, Ohio has elected to make non-probate assets subject to a Medicaid estate recovery. This includes a house that is transferred to a survivor through joint tenancy, tenancy in common, survivorship, living trust or other arrangement.
Many couples assume incorrectly that titling the house solely in the name of a healthy spouse will protect the house from a Medicaid estate recovery for benefits paid to a Medicaid beneficiary spouse. Unfortunately, most assets that are titled in the name of the healthy spouse are subject to recovery for the cost of care paid for the Medicaid beneficiary spouse — including a house titled only in the healthy spouse’s name.
However, the state is prohibited from placing a lien on the house either while the Medicaid beneficiary intends to return home, or while the healthy spouse continues to occupy it. Further, the state may recover from an estate only after the Medicaid beneficiary spouse and the healthy spouse have died.
So, what happens when the healthy spouse wishes to sell the house after the state has paid benefits to the Medicaid beneficiary spouse?
The good news is that since the state is prohibited from placing a lien on the house while either the Medicaid beneficiary spouse or the healthy spouse is alive, the healthy spouse will be able to sell the house free and clear of a Medicaid lien.
The bad news is that Medicaid may assert an estate recovery claim at the death of the healthy spouse to recover expenses paid for the care of the Medicaid beneficiary spouse from the healthy spouse’s estate. Therefore, even though the healthy spouse may sell the house and purchase another, the state will ultimately collect from the healthy spouse’s estate. And the full value of the house will not be passed on to the heirs of the healthy spouse.
At AlerStallings, we have heart. We understand that these situations can be tough, and we are here to listen and help you through difficult and confusing times. Contact us to learn how to protect the value of your house from a Medicaid estate recovery so you can pass the value of the house on to your loved ones. For more information, contact an AlerStallings attorney today to schedule a complimentary 15-minute phone consultation.