| It is not too unusual for a child to try to cover the cost | | | | much lower than the "private pay rate." So every |
| of a parent's nursing home stay by taking out a home | | | | month Mom's care is paid for by Medicaid, her family is |
| equity loan against the parent's house. Wise move or | | | | saving money. |
| not? | | | | It rarely makes sense to borrow against the house to |
| Let's assume Daughter took out a home equity loan to | | | | pay for the nursing home. One situation where you |
| pay for Mom's long-term care. Unfortunately, what | | | | might have to do that is when the nursing home you |
| Daughter did not realize is that she is paying more than | | | | want to use simply does not accept Medicaid (most |
| she needed to, often thousands of dollars more. Why | | | | do, though). In that case, you really have no choice. But |
| is that? | | | | for the vast majority of people, they are better off |
| First of all, assuming the only asset Mom has is the | | | | applying for Medicaid and not paying privately, eating |
| house, she should be able immediately to qualify for | | | | up the home equity value. |
| Medicaid, because the house is an exempt asset and | | | | Is there no other alternative than simply waiting till Mom |
| not counted for Medicaid eligibility purposes. So that | | | | dies and then repaying the full amount to Medicaid? |
| means that Daughter could have applied on Mom's | | | | Indeed there are other possibilities that can save the |
| behalf and not had to pay a dime out of Mom's pocket | | | | family even more money. Some of these ideas are |
| (i.e., via the home equity loan) for her nursing home | | | | discussed in my other articles. |
| care. | | | | NOTE: During the Medicaid applicant/recipient's lifetime, |
| Second, even if nothing is done with the house and it is | | | | the house will be exempt so long as the equity is no |
| sold on Mom's death to repay the state for every | | | | more than $500,000. If a spouse is living in the house, |
| penny of Medicaid benefits paid to Mom during her | | | | then there is no limit on value. After the Medicaid |
| nursing home stay (this is required under the "estate | | | | recipient is in the nursing home for some time, some |
| recovery" rules), she'd still be way ahead. That's | | | | states may place a lien on the house to make sure |
| because the state gets a much better deal on nursing | | | | the house will be available to repay Medicaid down the |
| home rates than we private citizens do. The so-called | | | | road, but in no case will the house have to be sold until |
| "state reimbursement rate" to the nursing home will be | | | | after the death of the Medicaid patient. |