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Will Arizona Medicaid (ATLCS) Take My Home?

For many people, their homes are their most significant assets — they symbolize a lifetime of hard work. The thought of losing their homes to pay for nursing home or assisted living care, can be demoralizing.

Medicaid coverage can help people avoid needing to sell their homes in order to pay for the costs of long-term care, but that doesn't necessarily mean that their homes are protected; rather, they are simply not required to be sold while they are living. After a Medicaid recipient passes away, however, things can get much stickier.

Specifically, the State of Arizona often pays substantial amounts of money for the care of people on ALTCS and may be required to seek reimbursement for the cost of that care, if possible. Moreover, Arizona has at least two (2) options when it comes recovering those costs: (1) estate recovery and (2) property liens, which could result in ALTCS taking a Medicaid recipient's home.

1. Estate Recovery

When a Medicaid recipient over the age of 55 dies, Arizona must attempt to recover the benefits provided to that individual from his or her estate – that is a requirement under federal Medicaid law. However, Arizona cannot proceed with this recovery process if any of the following applies:

  • If the recipient’s spouse is still living;
  • If the recipient has a child under age 21; or
  • If the recipient has a child who is blind or disabled

Some states have expanded the scope of assets from which they can recover the cost of a Medicaid recipient’s care to include non-probate assets; however, Arizona has not. Arizona law still only permits ALTCS to recover from a person's probate estate, which doesn't include property held in joint tenancy, life insurance proceeds, or other accounts that include designated beneficiaries, such as IRAs.

2. Property Liens

In addition, Arizona can place a lien on a Medicaid recipient’s home during that person's lifetime, unless certain dependent relatives live on the premises. Sale of the property, while the recipient is still living, could result in the loss of Medicaid coverage -- because of excess assets -- and an obligation to use the sale proceeds to satisfy the lien.

There are exceptions to this rule, as well. Satisfaction of the lien is not required if the applicant returns home prior to their death or one or more of the following individuals reside on the property:

  • The recipient’s spouse
  • A child under age 21
  • A child who is blind or disabled
  • A sibling with an equity interest in the home
  • A child who cared for the recipient for the two years preceding his or her application for Medicaid coverage

Property that is owned by a life estate or governed by a beneficiary deed can also be subject to such a lien.

In addition to these limitations upon the assets that Medicaid can look to for reimbursement, there are other strategies to structure the legal ownership of assets to preclude Arizona from attempting reimbursement, including certain types of asset protection trusts.

Free Webinar: How to Protect Your Life Savings in 3 Easy Steps

For a more in-depth look at how to pay for long-term care along with specific strategies, register for our free webinar.

Save Your Spot

This brief overview of some important considerations associated with ALTCS eligibility is by no means comprehensive. Always seek the advice of a competent professional when making important financial and legal decisions.

Arizona Estate Planning AttorneySteve Cook is a estate planning lawyer at Cook & Cook. Although his main office is located in Mesa, Arizona, he represents clients throughout the Phoenix, Arizona Metropolitan area including the following east valley cities: Scottsdale, Paradise Valley, Tempe, Chandler, & Gilbert.

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