WHEN IS A HOME, A HOUSE?
This past week, I had a big, unexpected win in court. I was challenging a denial of Medicaid benefits for a client. At issue was whether or not an independent living unit at a continuing care retirement community was a “house” under the Medicaid regulations. I said it was. The County said it wasn’t. The Judge said I was correct.
I have to tell you, I’m excited. My win here was not only unexpected but also has broad implications.
Under the regulations governing the Medicaid program, a “house” is an exempt resource if one spouse continues to reside in the house. For instance, if a wife enters a nursing home and the husband applies for Medicaid on behalf of his wife, the husband will be able to retain the house, no matter what the value of the house.
The house could be worth $100,000 or $1,000,000. The value of the house doesn’t matter. If the house continues to survive as the husband’s residence, the house is exempt.
A continuing care retirement community (or CCRC) is a facility that offers an array of services. A CCRC has an independent living unit section. Independent living means that the residence does not require any assistance with his activities of daily living – clothing, bathing, feeding, walking, etc.
A CCRC also has an assisted living unit section. The assisted living section provides some assistance with the activities of daily living. Finally, a CCRC has a nursing facility, that is, a nursing home.
If a CCRC participates in the Medicaid program, which it would do voluntarily, only its assisted living and nursing home sections are eligible to provide Medicaid assistance to residents. Medicaid is a health insurance program for needy individuals, so Medicaid will not assist with the payment of room and board charges that are not incident to medical care. In other words, Medicaid isn’t going to pay for a person to reside in an independent living unit because the person’s stay is not incident to medical care that he is receiving.
Most CCRCs require prospective residents to deposit a certain sum of money with the facility in order to reside there. For instance, a resident might be asked to place $200,000 on deposit with the CCRC upon entering the facility. The $200,000 is often called an “entrance fee” and is frequently refundable when the person vacates the unit, either during life or after death.
The agreement between the resident and the CCRC typically indicates that the entrance fee will be refunded to the resident or the resident’s estate after the facility “sell” the resident’s former unit to a new resident. In other words, the facility must re-lease or re-sell – whatever term you wish to place on the act – the unit to another individual before the former resident will get his money back.
Now, to me, a unit in an independent living section of a CCRC is a “house.” Under the Medicaid regulations, a “house” is a person’s principal residence.
In my client’s case, the unit at the CCRC was the husband’s only residence, not just his principal residence. My client had to deposit the $200,000 with the CCRC in order to purchase the right to reside in the unit. If he didn’t give the $200,000, the CCRC would not have allowed him to reside in the unit. Finally, he would not get his $200,000 back until such time as the CCRC sold his unit to another individual.
To me, this type of ownership is analogous to an ownership interest in a co-op and has no significant difference from an ownership interest in any type of property that a person would call a “house.” To my client, his unit is his house. To deprive my client of the right to claim his unit at the CCRC as his “house” under the Medicaid law, depriving him of the right to retain the assets that he has on deposited with the CCRC, would be treating him differently than any other spouse who applies for Medicaid.
And, the good news is, the Judge agreed with me. Since there are thousands of persons who reside at a CCRC, this decision has wide implications.
CCRCs can provide continuity and predictability for future care, but careful review of contracts and costs is essential before making a commitment.