Condo Exempt from Medicaid?
by Lynn Brenner

My wife and I are 80 and 85 years old. We have a revocable trust, which is the owner of our condo. We are the trustees. My wife doesn't feel well, and she's afraid that she might need a nurse or an aide at home for a long period. If we have to go on Medicaid, do they consider that she owns half of our home? The apartment's value is approximately $250,000. Our income is about $40,000. -JN via e-mail

DEAR JN: You and your wife are still considered to own your apartment. But that fact alone won't disqualify her for Medicaid home-care benefits. As its name implies, a revocable trust can be revoked any time. That's why its assets are deemed available to pay for your care. But certain assets are exempt from Medicaid. Your primary residence is one of them, as long as either of you lives there, says Vincent J. Russo, a Westbury elder-care attorney. Only after that's no longer true can Medicaid get a lien on your home to recoup money it spent on your care.

What's more, under current New York law, Medicaid can only claim recovery for payments to a decreased benefits recipient against assets in her probate estate. These don't include assets that she owned jointly with another person or assets owned by a revocable trust.

What if your wife owned other assets? Under Medicaid's current rules she could transfer them to someone else—one of your children, for example without delaying her eligibility for home-care benefits. (By contrast, asset transfers do delay a Medicaid applicant's eligibility for nursing home benefits.)

It's beyond the scope of this column to offer detailed Medicaid planning advice. Medicaid is a complex program, and its rules are under pressure at the state and federal level. They may soon be changed.

But here's a summary of current eligibility rules for traditional home-care benefits. (Just to make things more complicated, there are different rules for home care under the Lombardi or "Nursing Home Without Walls" program, which combines skilled care and custodial care and generally results in more hours of care than traditional home care.)

As things stand, your wife can't have more than $687 of monthly income to be eligible for traditional homecare benefits, says Lawrence Davidow, an Islandia elder-care attorney and the incoming president of the National Academy of Elder Lawyers. Also, she can't keep more than $4,000 of nonexempt assets - and that includes her spouse's assets. Anything in excess of these amounts must be spent on her care.

This harsh rule would impoverish both spouses before either one qualified for Medicaid benefits, were it not for federal law letting you refuse to spend your income and assets on your spouse's care. (This isn't altruism on the government's part; it doesn't want to force the spouses of Medicaid beneficiaries to become dependent on public funds, too.) Spousal refusals are extremely common. After you sign one, says Davidow, your spouse's Medicaid eligibility is based solely on her own assets

However, New York law requires spouses to pay for each other's food, clothing, shelter and health care. This means after you sign a spousal refusal, Medicaid is entitled to seek a court order requiring you to contribute toward your spouse's care. In the past, Medicaid has rarely filed such suits on Long Island. Readers wishing to know more about their Medicaid eligibility should discuss their situation with an attorney who specializes in elder law.

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