Show #453 Airing Sunday, 11/9/09
If you get sick, and need extended care, there’s a good chance you’ll lose your home. That’s right. Under a law called estate recovery, the government can take your home, along with your savings and personal possessions. Years ago on Golden Opportunities, we warned you about this law, and many of you contacted your legislators to urge them to vote no on estate recovery. But unfortunately, here’s one that we lost.
[VIDEO CLIP]There is a law, called estate recovery that allows Ohio to try to get reimbursed for paid-out Medicaid benefits when a person dies. The State cannot force siblings, children, or other family members to pay another person’s nursing home bills.My law partner, Laurie Steiner, will explain.
Question: What's estate recovery?
Answer: Estate recovery is a little known law that allows the government to take your home, your cash, even your wedding ring, to pay for any Medicaid benefits you or your spouse received over the years.
Question: I thought you had to be poor just to get Medicaid?
Answer: Medicaid is a critically important safety net for middle class Americans – it is the only program that will help cover long term nursing home care costs. But you are right: qualifying for Medicaid is real tough. You can’t have much in the way of money or property.
For a single person (widowed, divorced, or never married), you can’t get Medicaid if your assets exceed $1,500. For a married couple, you can keep a little more up to $104,000 of savings, and most important, you can continued to live in your home.
Whether single or married, you also are allowed to keep your household goods and personal effects, such as wedding rings, family photos and clothing.
As you can see, a single person can’t keep much to qualify for Medicaid. A married person with a spouse in a nursing home can keep more: your home, some savings, and your wedding ring.
But even if you’re married, don’t expect to be able to leave your home and cash to your heirs.
Under the Estate Recovery law, Ohio will send in its bill collector to grab every last cent and your home, to repay the State for any Medicaid benefits you’ve previously received.
[VIDEO CLIP]The Ohio House recently said yes, the state should be allowed to take your home. That’s what House Bill 66 provides. If the Senate adopts the same rule, the state will be permitted to claim your home at your death.
Question: Is it right to allow the government to grab your home and savings when you die
Answer: Some people say yes. They note that the government is running deficits and needs money to sustain its programs. They say: if you received benefits from the government, you should pay them back when you die. And on the surface, that makes some sense. But this rule doesn’t apply to any other government program.
Question: Can you give us an example?
Answer: Let’s say you own a home with a mortgage. The government gives you a major benefit: you can deduct the interest payments. This tax break may be worth many thousands of dollars over your lifetime. When you die, the government cannot take your house, in repayment.
How about Social Security? Statistics show that many people are getting far more than they paid in. The government cannot take your home to recover the excess when you die.
Millions of Americans are getting Medicare prescription drug coverage. Should their homes be taken to re-pay those benefits at death? Of course not.
Many American students have benefited from government subsidized school loans. Their homes cannot and should not be taken to collect the taxpayer’s portion of the subsidy.
Millions of American farmers and small business owners receive valuable subsidies and benefits. When folks build their wealth thanks to government assistance, should they be allowed to pass it on to their children?
Medicaid is the only program that allows the government to take your home to repay the benefits at death. Why is Medicaid treated so much differently? Maybe it’s because Medicaid recipients tend to be older, sicker, and less wealthy – and they can’t hire lobbyists to protect them.
Question: Laurie, you've explained how with estate recovery, the government can take everything: your home and your savings. Any way to protect yourself?
Answer: Years ago, protecting against estate recovery was pretty easy. If you put your assets into a revocable living trust, you’d protect those assets from estate recovery, because the government could only go after assets which passed through probate at death. Now, estate recovery applies to everything: probate and non-probate assets. So protecting assets at death has become much more complicated.
Question: How can our viewers try to protect their homes and remaining savings under the new law?
Answer: Let me give you one strategy we use.
When the spouse in the nursing home goes on Medicaid, we put the home and savings into the name of the spouse that’s at home. And the at-home spouse creates a will leaving the remaining assets to the kids, or other intended heirs, not the spouse.
Now here’s what happens.
If the spouse at home dies first, before the spouse in the nursing home, then about half of the value of the assets will go to the government, but the other half will get to the kids. It’s better than nothing.
Question: What if the spouse in the nursing home dies first?
Answer: Then we may be able to protect even more. The spouse at home may create a Medicaid plan, which might involve gifting assets to the kids, or creating a Medicaid Trust. Or the spouse at home might just sell the home and spend the assets on herself. That’s allowable too.
Question: So, if the spouse in the nursing home, on Medicaid, dies first, the surviving spouse can continue to live in the home?
Answer: Yes. This is very important. In earlier years, prior attorney generals were very aggressive and improperly tried to take the home away while the surviving spouse still lived there.
[VIDEO CLIP] When this gentleman came in to see me, he was quite upset. I bet you’d be, too. He had just received this letter from the State of Ohio, Office of the Attorney General. The letter began by stating that Jim Petro, Ohio’s Attorney General, was seeking to collect $121,894 which he supposedly owed to the State. Oh, plus interest. The state was threatening to foreclose on his home if he didn’t immediately come up with $121,000.
At that time, we explained that these acts were outside the law.
[VIDEO CLIP]The state cannot take your home to pay for a spouse’s Medicaid benefits, at least as long as you’re alive. So why did Attorney General Petro send this threatening letter? I believe it was designed to deceive and scare this gentleman into giving up his home to the State
Yes, we exposed this on our show and urged you, the viewers to step in and complain. And you did! And it worked!
[VIDEO CLIP]The good news is that the gentleman of our story can now rest easy that he’s not about to be thrown out into the street. And you can take some credit for that. So thank you.
Question: So, now it's cleat that the surviving spouse can keep the house?
Answer: Yes. But more recently we’ve been running into some new problems with overly aggressive collection lawyers hired by the Attorney General putting liens on people’s homes. Hopefully our new Attorney General will put a stop this process. We’ll keep you posted!
To qualify for Medicaid, you can’t have much. If you’re single, $1500 is it. So you won’t have anything for the government to grab when you die. But if you’re married, and your spouse needs care, you’re allowed to get Medicaid and still keep your home and some modest savings. Until you die. At death, you could lose it all. Unless you do some planning. To learn more, give Laurie a call.
