Can a Nursing Home Take Your House?

When the time comes to making decisions about long-term care, many families find themselves overwhelmed with questions - one of the most pressing being: "Can a nursing home take your house?"

The Basics of Senior Care Costs

Senior care is very expensive.  How you pay for it depends on the type of care needed.  

• Care at Home:  If you can stay at home but need a little help, home care is an excellent alternative to moving into a facility, which allows you to stay at home and brings care to you.  This is the least expensive type of care and usually it is paid for out of your pocket.

• Personal Care/Assisted Living:  Multiple factors influence the cost of personal care or assisted living in Pennsylvania. Many of these factors depend on the type and level of care you need.  What is true for both is that they are paid out of pocket.  If you do not have sufficient income, savings or long term care insurance to pay for care, it may be necessary to sell your home to pay for care.

• Memory Care:  Memory care specializes in the care of residents or patients with Alzheimer’s disease or other forms of dementia. Memory care is provided at a standalone memory care facility or at an additional cost in an assisted living facility or nursing home.  Memory care is typically an additional cost above personal care or assisted living.  Like personal care/assisted living, memory care is also paid out of pocket in most instances. 

• Skilled Nursing Care:  The difference between nursing homes and assisted living facilities is in their accommodations and the level of care they provide. In nursing homes, the living environment is more clinical, where residents live in a private or semi-private room without a living room or kitchen area. In assisted living facilities, residents live in apartments with a private bathroom and kitchenette.  The cost of nursing homes in Pennsylvania is nearly 100% greater than that of assisted living facilities.  According to recent estimates, the average cost of a semi-private room in a nursing home is around $10,000 per month. Many families are understandably worried about how they will pay for such care and what might happen to their assets, including their homes.

Medicaid and Asset Protection

One of the primary avenues through which skilled nursing home care is financed is Medicaid. Medicaid is a government program that provides health coverage for those with limited income and resources. For many, the reality is that they may need to rely on Medicaid to cover nursing home expenses as they age.

However, Medicaid has strict eligibility requirements, particularly concerning asset limits. In Pennsylvania, individual applicants for Medicaid must have less than $2,400 in countable resources (as of 2024), while married couples have slightly different thresholds. Countable resources generally include cash, bank accounts, investments, and most real estate—not including your primary residence under specific conditions.

Exemption for the Primary Residence

The good news is that in Pennsylvania, your primary residence is often exempt from being counted as an asset for Medicaid eligibility. As long as you or your spouse continues to live there, it is protected. Even if both spouses are in a nursing home, the house can remain protected until the last spouse passes away or decides to sell it.

However, there are certain nuances you should be aware of:

• Value Limits: As of now, if your home is valued under a certain amount (currently $586,000, though this figure is subject to change), it can typically be exempt from Medicaid calculations. This valuation cap may be higher if there are family members living in the home, such as a child with a disability.

• Repayment Rules: It’s crucial to note that if Medicaid pays for your nursing home care, they may seek reimbursement from your estate after your death through a process called estate recovery. This means that while your home may be protected during your lifetime, the state can claim its value after you pass away—potentially leading to your house being sold to pay back the expenses incurred.  If your home is sold to pay back Medicaid, your family loses a valuable inheritance you worked hard to pass along to them.

Strategies for Protecting Your Home

Understanding these rules, you may be wondering how you can protect your most valuable assets. Here are some effective strategies:

1.  Estate Planning: Working with an elder law attorney to create an estate plan can help you understand which of your assets are at risk and develop a plan to protect your assets. This planning might include setting up trusts or making certain gifts of assets while you're still healthy.  It will certainly include preparing a Will, financial and medical powers of attorney to ensure that a medical or health emergency does not get in the way of putting your plan in place or into action.

2.  Create a Medicaid Asset Protection Trust: This is something to do in anticipation of the chance you might need skilled nursing care in the future.  You’d place your home, and possibly other assets, in this trust.  After a waiting period, these assets will be completely disregarded from determining your eligibility for Medical Assistance.  In addition, if Medicaid does pay for your skilled nursing care, the assets in the Asset Protection Trust will not be subject to estate recovery, thus preserving your hard-earned assets for your family.   You can continue to live in your home after it’s placed in the trust.  If the trust sells your home, you can invest the proceeds and access income from the savings.  This can work out well if the Medicaid recipient has a spouse or beneficiary who wants to remain living in the home, or the recipient doesn’t plan to move into a nursing home for several years. Additionally, this option allows the trustee to sell the home without a Medicaid penalty. 

3. Long-Term Care Insurance: This insurance can help cover nursing home costs and shielding your assets. Long-term care insurance is a special type of insurance that’s main purpose is to cover care expenses such as stay in a nursing home, assisted living facility, adult day care, or home health care. If someone has this insurance and develops a chronic illness or requires care services to help with activities of daily living, the policy offers a daily or monthly benefit that will cover expenses up to a certain amount such as $150 per day or $4,500 per month. Anything beyond that will need to be covered by the individual.  It can potentially prevent the need to liquidate assets to qualify for Medicaid. This option can help cover a lot of nursing home and other care expenses, but premiums can be high for older individuals and some people may be hesitant about purchasing something they may not end up needing.

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The question, "Can a nursing home take your house?" largely depends on your situation and planning strategy. While your home can often be protected while you're alive, proactive estate planning is vital to prevent any surprises later on. If you have questions about the costs of nursing home care, it would be wise to consult with one of our experienced elder law attorneys who can guide you through the maze of Medicaid eligibility and asset protection strategies.

Remember, the earlier you plan, the better equipped you will be to protect your home and other assets for you and your loved ones. If you have any more questions or need assistance, don’t hesitate to reach out!