Nursing home care is very expensive. A semi-private room in a long-term care facility costs almost $95,000 per year, and a private room costs almost $110,000. This can drain a senior citizen’s life savings quickly even if they planned carefully for their retirement, but state Medicaid programs can help to cover nursing home costs. Long-term care facilities cannot seize a senior’s home or require it to be sold to cover the cost of care, but state Medicaid Estate Recovery Programs can claim a primary residence and other probate assets after a senior passes away.
Colorado’s program
The Colorado Medical Assistance Estate Recovery Program is administered by the Department of Health Care Policy and Financing. The program allows for the recovery of all Medicaid payments made to cover of the costs of nursing home care, but some homes are exempt. It will not place a claim on a home that is occupied by a surviving spouse or dependent child or sibling, and the program will not place claims on assets if doing so would cause undue hardship.
Protecting a home from the program
Only assets that are part of a deceased senior’s probate estate can be claimed, but transferring or selling assets to avoid claims is something that should be done well in advance. That is because Colorado’s program has a five-year lookback period. Creating a Medicaid Asset Protection Trust is a common elder law strategy for protecting the residence and other assets of a Medicaid recipient. When a home is placed in an irrevocable trust, it is no longer subject to probate.
Irrevocable trusts
Irrevocable trusts like a MAPT protect assets, but they should be drafted carefully because they cannot be changed. MAPTs can be valuable estate planning tools, but they may not be needed if homes are occupied by dependent family members or surviving spouses. If losing a residence would cause a deceased Medicaid recipient’s family undue hardship, program claims may be reduces or waived at the discretion of the Department of Health Care Policy and Financing.