Many Missouri seniors rely on Medicaid to cover long-term care costs, especially when nursing home expenses become unaffordable. While Medicaid provides essential financial assistance, it also has rules that allow states, including Missouri, to recover costs from a recipient’s estate after their death. This process is called Medicaid estate recovery. It may force heirs to sell your home to repay the benefits received. Understanding the risks is essential to help preserve your estate and your legacy.
How MOHealthNet/Medicaid Treats a Primary Residence
A home is often the most valuable asset that an individual owns, and Medicaid has specific rules governing its treatment. During a recipient’s lifetime, a primary residence is generally exempt from Medicaid eligibility calculations, provided that:
- The applicant lives in the home or intends to return to it if they enter a care facility
- The home equity does not exceed the state’s Medicaid limit (set at $713,000 or $1,071,000 in 2024, in Missouri)
- A spouse, dependent, or disabled child continues to live in the home
While Medicaid does not require the sale of a home during the recipient’s lifetime, Missouri’s estate recovery rules may apply after death.
MOHealthNet/Medicaid Estate Recovery and the Risk to a Home
Under the Medicaid Estate Recovery Program (MERP), Missouri can seek reimbursement for Medicaid benefits paid for long-term care. After a recipient’s death, the state may place a claim against their estate, including real property, to recover costs.
However, a home may be protected from estate recovery under certain conditions:
- A surviving spouse is living in the home
- A minor, blind, or disabled child resides in the home
- The estate’s total value is below the state’s threshold for recovery
- A hardship exemption is granted to protect family members from financial distress
These exceptions vary by state, so individuals must review Missouri’s Medicaid rules to determine eligibility for exemptions.
Strategies to Protect a Home from MOHealthNet Medicaid Estate Recovery
Legal strategies are available to help Missouri Medicaid recipients safeguard their homes from estate recovery claims.
One option is transferring ownership five (5) years or more before applying for Medicaid. Gifting a home to heirs five (5) years or more before applying for Medicaid can remove it from the estate. However, transfers within five years of applying may trigger a penalty period affecting eligibility.
You might also place the home in an irrevocable trust. A Medicaid asset protection trust allows a home to be passed to heirs without being subject to estate recovery, provided that it is created before the five-year look-back period.
Another option is to use a life estate deed (or Beneficiary Deed, in Missouri), which allows the owner to live in the home for the rest of their life, while ensuring automatic transfer to heirs upon death. Not only does this avoid probate, but it also sidesteps the risk of Medicaid recovery.
When MOHealthNet/Medicaid Cannot Take a Home
MOHealthNet/Medicaid cannot force a sale or place a lien on a home while the recipient is alive if they are still living there or intend to return. Certain family members, including a spouse, minor children, or disabled dependents, may also continue residing in the home without risk of forced sale after the recipient’s death.
In cases where estate recovery applies, heirs may negotiate to settle the claim or qualify for hardship waivers to avoid losing the property. However, the best way to be sure your home is safe from Medicaid estate recovery is to contact an estate planning attorney. At Formula Law, we can answer your questions and help you keep your home safe for your heirs.
Key Takeaways
- A home is generally exempt during Medicaid eligibility: If a recipient continues living in the home or intends to return, it is not counted as an asset.
- Estate recovery can place a home at risk after death: Missouri may seek repayment for long-term care benefits through the Medicaid Estate Recovery Program.
- Certain exemptions protect family members: Surviving spouses, minor children and disabled heirs can prevent estate recovery claims on a home.
- Legal planning strategies can prevent Medicaid estate recovery: Irrevocable trusts, life estate deeds and properly timed property transfers can help safeguard a home.
Book a Call Now with St. Louis estate planning attorney Tony Westbrooks to discuss your family’s Medicaid Planning Needs.
References: Medicaid Planning Assistance (Dec. 16, 2024) “Medicaid Estate Recovery Programs: When Medicaid Can and Cannot Take One’s Home” and Super Lawyers (Dec. 27, 2023) “Avoiding Pay Back: Medicaid Planning and Estate Recovery”