On October 9, 2012, the Third District Court of Appeals in Ohio, in Helen Williams v. Ohio Department of Job & Family Services, ruled that if a residence is owned by a revocable trust when one spouse is in a nursing home and one spouse is residing at the residence, the residence will not be considered an exempt asset for Medicaid eligibility purposes. In addition, since the home was transferred from the trust to the community spouse after the Medicaid assessment was completed, the transfer is considered improper and subject to a penalty period. The general rule for Medicaid eligibility is that when one spouse is in a nursing home and the other spouse is residing at the residence in the community, the residence is exempt for all Medicaid eligibility purposes. However, the decision in this case stated that the residence was not exempt and was a countable asset because the deed was titled in the name of a revocable trust at the time the Medicaid resource assessment was conducted. Therefore, it is very important that couples look at who owns the residence before they apply for Medicaid and before a resource assessment is completed.
In general, when a couple applies for Medicaid, assets are considered either exempt assets or countable assets. Exempt assets include the residence, as long as the community spouse is living at the residence, one automobile, furniture, appliances, and clothing. All of the remaining assets are considered countable assets, and Medicaid treats those assets as being owned one-half by each of the spouses, no matter who actually owns the asset. For example, if a couple owns a house, a car, and $100,000.00 of bank accounts, the community spouse is permitted to keep the house, the car, and $50,000.00 of the remaining assets. The nursing home spouse is permitted to retain $1,500.00 of the remaining $50,000.00, and thus, there would be a $48,500.00 spend down before the nursing home spouse is qualified for Medicaid.
In the Williams case, the home was valued at $89,500.00, and the couple owned other countable assets of $29,772.00. Initially, the husband and wife both owned the real estate. The wife was in need of nursing home care. Before the wife went to the nursing home, the couple transferred the ownership of their real estate to a revocable trust in the husband’s name only. The wife then applied for Medicaid and a resource assessment was completed at the time that the real estate was owned by this trust. After that resource assessment was completed, the real estate was then transferred back to the husband. Shortly thereafter, the wife was admitted to a nursing home. Based on these facts, the Court determined that the transfer of the real estate to the husband from the trust was not exempt. In addition, the Court determined that the transfer of real estate to the husband was an improper transfer because at the time of the Medicaid resource assessment, the real estate was owned by a trust and was not owned by either of the spouses.
Since it is prevalent today for couples to desire to avoid probate upon their passing, couples often execute trusts and transfer the ownership of their home to the trust. Therefore, if one spouse is ever in need of nursing home assistance, and if the couple is planning on trying to qualify that spouse for Medicaid, it is very important that the real estate be owned by either or both of the spouses at the time that an application for Medicaid is filed and/or a Medicaid resource assessment is completed in order for the real estate to be considered an exempt asset in this situation.
It is very important that you contact an elder law attorney who is familiar with the Medicaid laws whenever you have a situation in which a loved one may need nursing home services and you are trying to qualify that individual for Medicaid before a Medicaid resource assessment is completed and you actually apply for Medicaid.
NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.
James F. Contini II, Esq.
Certified Specialist in Estate Planning,
Trust & Probate Law by the OSBA
Krugliak, Wilkins, Griffiths & Dougherty Co., LPA
158 North Broadway
New Philadelphia, Ohio 44663
Phone: (330) 364-3472
Fax: (330) 602-3187