Medicare has a lot of coverage gaps that people often don’t realize until they need care. For example, Medicare will not cover extensive rehabilitation services or stays in nursing homes. Those kinds of care can cost thousands of dollars a month, which Medicare recipients may have to pay out of pocket.
The only alternative is to qualify for Medicaid. Medicaid is a need-based program. Provided that you don’t have much income or assets beyond your home, you could potentially qualify for Medicaid if you need nursing home care when you age.
However, while your home won’t count against your qualification for benefits, that won’t stop the Colorado Medicaid recovery program from trying to take your home and other assets from your estate after you die.
How Medicaid recovery works
Medicaid will attempt to seek reimbursement for every payment it makes on behalf of beneficiaries after they die. In theory, the executor of someone’s estate has an obligation to sell all of their property and possibly give every penny of the proceeds to the Medicaid recovery program.
Only if the estate fully repays those benefits can family members claim any inheritance. Often Medicaid recovery will consume every asset left behind when someone dies, leaving nothing for their children or spouses.
How can you prevent Medicaid from taking your home?
There are only a few situations in which Colorado’s Medicaid recovery program can’t make a claim against someone’s house after they die.
One is if the beneficiary has a spouse, minor child or a disabled dependent living in their home. Another involves a sibling cohabitating with the beneficiary or living in their home with them. Children living with the Medicaid beneficiary for at least two years before nursing home care started could also protect part of their interest in the estate’s assets, such as the family home.
Careful planning well before you need benefits, like moving property into a trust or making gifts to family members can help someone qualify for Medicaid and prevent the loss of those assets in estate recovery efforts.