-The Rest of the Medicaid Nursing Home Benefits Story by E. Wyles Johnson Jr., Attorney at Law


Jan 22, 2024

The radio personality Paul Harvey was widely known for the radio series “The Rest of the Story”.  The series consisted of short stories presented as obscure facts on a variety of subjects with some key pieces of the story held back until the end.  His broadcasts always concluded with a variation on the tagline: “And now you know the rest of the story.”

Well, there is a “rest of the story” regarding Medicaid nursing home benefits.  People sometimes engage in effective planning to protect assets during their lifetime, only to lose those same assets upon their death.  For Medicaid eligibility purposes, some assets are excluded, including the primary residence, one automobile, certain life insurance policies, all household goods, and all personal effects.  This means that the State of North Carolina cannot touch these assets while you are receiving benefits. 

Now for the rest of the story.  These assets are excluded only during your lifetime, not after you are gone.  At the time you become eligible for Medicaid nursing home benefits, the State establishes an account in your name and charges that account for every dime it spends on your behalf for your care.  Upon your death, the assets that were excluded at the time you applied for and received benefits may become part of your estate.  If you received benefits after reaching age 55, the State will have a statutory claim against your probate estate for the value of all such benefits it paid on your behalf.  This procedure is called “Estate Recovery”.  Even if you have a will, the assets in your estate cannot be distributed to your beneficiaries until the State’s claim has been resolved.  The practical result is that assets often must be sold to satisfy the claim, leaving little to nothing for your beneficiaries. 

You can potentially prevent recovery against your estate by holding title to certain assets and designating life insurance beneficiaries in such a way that those assets do not end up in your probate estate but instead pass automatically to those whom you want to get them upon your death.  The rules regarding Medicaid nursing home benefits and estate recovery are exceedingly complex, so be sure to retain an attorney who specializes in elder law and asset protection to assist you. 

And now you know…the rest of the story.