How To Stop Medicaid From Taking My House When I Die

If you ever had to get on Medicaid, which is free medical insurance, the state may have a claim to take your property after you die.

Here’s how it works:

“Medicaid” is a federal program. It offers states the opportunity to participate in a subsidized health care program.

Medicaid, as a federal program, works with states to provide health care through state specific agencies or programs.

For example, in Massachusetts, “Masshealth” offers medicaid. In Connecticut “Husky” is the implementation of medicaid.

But, some programs under Masshealth aren’t funded by medicaid… And, to complicate matters even more, “Medicare” is a whole separate thing that does not expect repayment for services after you die. BUT to complicate matters even further, sometimes Medicare is supplemented by Medicaid, and in those instances you may owe the state money.

Anyway, what I’m getting at is this – it might not be readily clear whether you have medicaid or not. A lot of people truly can’t answer that question.

So, your first step is to find out if your insurance plan is subsidized by medicaid.

If it is… then any services that Medicaid renders for you will be expected to be repaid by the state. That means any money Husky or Masshealth paid for you, i.e. services that were rendered free of charge, they will expect repayment.

It is typically only in the event that a person goes to a nursing home when Medicaid is owed a bankrupting amount of money.

How Does Medicaid Take Your House?

Very simply. When you die, Medicaid puts a lien on your estate. Legally, they are allowed to open an estate for you if you choose not to, but as a policy they don’t always come after estates if the estate is never opened in probate.

Medicaid bills are substantially less than private insurance bills too. Because Medicaid pays a fraction of the actual hospital bill, you only need to pay back Medicaid what they paid – not the actual bill.

So if the hospital bill is $50k and Medicaid only paid $10k.. you need to pay back $10k.

How To Avoid Estate Recovery

To be on Medicaid you must be poor, meaning, you must have less than $2,000 in “countable assets.” A lot of people think Medicaid qualification goes by income – it doesn’t. If you have more than $2,000 in the bank, or in stocks, or in a retirement account… you don’t qualify.

Whem Medicaid was created, our lawmakers specifically designed the program to help the poor.

Because of this, you truly need to be poor. If you don’t want Medicaid to come after your house or your money, then you may not own a house or money! It really is as simple as that, and Medicaid can be very unforgiving.

The Loop Hole

So like I said, if you want to avoid estate recovery you need to have no money and no house…

But, there’s a loop hole.

There is a way to legally and technically not own your stuff, but also be able to kind of enjoy it at the same time.

With a house, you can reserve a life interest in the house for yourself and give legal title to your heir. If you do this, the heir cannot kick you out of the house until you die. Whats more is Medicaid cannot attach the house if you make the transfer 5 years before getting on Medicaid.

Money is a little more complicated. There’s no way to enjoy the full value of your savings and avoid Medicaid because you need to put your money into a trust.

Remember I said you need to actually be poor?

Well, this trust that you put your money into has to stipulate that you may never use the money again, and you can’t undo the trust.

When you die the money will go to your beneficiaries though, without Medicaid being able to touch it.

It is essentially gifting your money away during life.

However, the trust can pay you income, but only in amounts that will not inflate your net worth over $2,000

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