If you are moving to a nursing home and want to protect your home from Medicaid, you might think that transferring your home to your children is a good way to protect it. Although you don’t typically need to sell your home to qualify for Medicaid coverage of nursing home care, after you die, the state must attempt to recover from your estate whatever benefits it paid for your care if Medicaid had helped cover the cost of the nursing home (this is referred to as “estate recovery”). Transferring your house to your children in order to protect it from estate recovery is not ideal for a number of reasons.
First, transferring your home can make you ineligible for Medicaid for a certain amount of time. The state Medicaid agency looks for transfers made within five years of the Medicaid application and if any transfers were made for less than market value, the state imposes a penalty period in which you are not eligible for benefits.
However, you can typically avoid this penalty when transferring your home to the following: