Recently, brokers have been requesting information on Medicaid liens for properties that are being voluntarily sold and placed on the market. This article was written to help clarify the source, nature and effect of Medicaid liens on real estate.
Medicaid is a federal program, established in 1965, that is managed individually by each state to provide healthcare coverage for individuals who do not qualify for welfare but still have incomes low enough that they cannot afford healthcare on their own. In North Carolina the Medicaid program is administered by the North Carolina Department of Health and Human Services (DHHS).
Medicaid eligibility is based on limited assets. A Medicaid recipient is entitled to retain their home as a primary residence so long as the home’s equity does not exceed a certain amount, which can change year to year.
Should the recipient require long term care, such as a nursing home, then Medicaid rules envision using the equity in the home to recover those expenses and recovering the costs from the homeowner. More information is available from the NC Department of Health and Human Services,
As part of these recovery programs, Medicaid will place a lien on the real estate for the amounts expended for care. It is not uncommon with extended care facilities or nursing homes for those costs to be thousands of dollars per month. While Medicaid has a lien on the property, the program is precluded from foreclosure as a lien holder under certain circumstances such as when:
For real estate professionals, this means that there could be a Medicaid lien on the property, which is not being foreclosed upon, but which will need to be satisfied in full with the NC Department of Health & Human Services should the owners wish to engage in a voluntary sale of the property.
Many recipients and family members may believe that the home is an exempt asset. While the home is considered an exempt asset for purposes of Medicaid qualification, it may still be subject to liens by Medicaid. Determining the amount of the lien and obtaining approval for the sale from government entities may take longer than the parties anticipate. It is also possible that the existence of the lien may affect the decision or ability of the owners to transfer the property. As a result, advice from an attorney in such situations is strongly encouraged.
When a broker is aware that a Medicaid lien is attached to the property, the broker should disclose this to any prospective buyer. Listing brokers who are aware that their seller-client is receiving Medicaid should inquire about the existence of a Medicaid lien. If one exists, listing agents should strongly encourage sellers to speak with an attorney specializing in Medicare benefits prior to listing their home.