Long-term care costs can devastate an estate. When a person dies owing money for long-term care, an lien may be put on any property the deceased owns, and a claim may be made against the estate. Here’s what you need to know about long-term care costs and personal property probate.

Long-Term Care: a Common and Expensive Need

The Administration for Community Living (ACL) says that about 60% of people will need assistance with basic activities like getting dressed or making meals at some point. This assistance, called long-term care, can be provided at home or in nursing homes and assisted living facilities. However, because it’s not strictly medical in nature, care isn’t typically covered by Medicare or other types of health insurance – and it can be extremely expensive. One month in a semi-private room at a nursing home costs an average of $6,844, and people may need care for months or even years.

It’s possible to purchase private long-term care insurance, but the premiums can be expensive. Many people depend on Medicaid for assistance.

Qualifying for Medicaid

Medicaid is run jointly by federal and state governments to provide health coverage to low-income individuals. To qualify for Medicaid, you must meet the income and asset eligibility requirements in your state. For information of qualifying for assistance in Oregon, see the Oregon Department of Human Services.

The Medicaid program helps many people get the long-term care they need. However, this care might not be as “free” as some people think. States may recover payments from a Medicaid enrollee’s estate.

Probate and Property Liens

When determining Medicaid eligibility, a person’s home is not typically counted as an asset. This means that people can qualify for Medicaid and keep their homes. However, this does not mean that the property will be protected forever.

According to Medicaid.gov, “states are required to seek recovery of payments from the individual’s estate for nursing facility services, home and community-based services, and related hospital and prescription drug services.” Additionally, states are allowed to impose liens on real property belonging to a Medicaid enrollee who is permanently institutionalized.

Protections for Spouses and Dependent Children

Although Medicaid programs can recover payments through probate and property liens, there are some protections for spouses and dependent children.

  • A lien may not be placed on a Medicaid enrollee’s home if a spouse, child under the age of 21, or blind/disabled child of any age lives there. States are also restricted from placing liens if a sibling with an equity interest in the home lives there.
  • States cannot recover payments from the estate of a deceased Medicaid enrollee who is survived by a spouse, a child under the age of 21, or a blind/disabled child of any age.
  • States must establish procedures to waive estate claims when it would cause undue hardship.

Estate Planning and Long-Term Care

Long-term care is an often-overlooked part of estate planning. Given the high cost of care and the potential for probate claims and real estate liens, this can be a serious estate planning mistake.

If you are navigating the probate process for the estate of a deceased Medicaid enrollee, you may encounter claims from the Department of Human Services. These claims can be large – we’ve seen a claim as high as $500,000. You may also find that a real estate lien has been filed, and this may complicate probate and the transfer of property.

Keep in mind that the majority of retirees will need long-term care at some point. This is not an issue that people can afford to ignore. An experienced estate planning attorney can help you incorporate long-term care planning into your estate plan. Need help? Contact us.