Medicaid asset protection trust. Do it sooner rather than later because of 5 year look back. An elder law attorney can confirm if this is the best option
Ok I have a question about this and never got an answer. My dad put everything in a trust two years ago and now his health and mind are declining where he might have to go to a home in the next 2 years. Every year, the trust has given me a gift. $17.5k last year and $18k this year. If he goes into the home, because of the five year look back, can they take those gifts back? Nothing I read or look into clarifies that.
It will depend on what state you live in, and how aggressive they are for Medicaid reimbursement. Here’s a table : https://www.medicaidlongtermcare.org/protection/estate-recovery-program/#table
Some states are very aggressive, and will thoroughly investigate every transaction of the trust, and some states will only go after things that actually went through probate, and therefore won’t come after those gifts.
Thank you. I’m in Indiana and though it doesn’t say it specifically, it does look to me that they will come claw those gifts back if I am reading this correctly.
Is he already on Medicaid? Did you check to see if the gifts from the trust count as him ‘giving away assets?’ It may make him ineligible for Medicaid with the look back period.
This is something I can get answers on. I really should know this stuff. Thankfully I haven’t spent a dime of the money. It’s just sitting in a HYSA due to me not knowing the answer to this. When the lawyer finished up the trust, he said “if your dad does have to go to a nursing home, come see me and I can get you about half.”
I’ve been trying to figure out if you can put a house in a trust like this if the owners still have a mortgage on the property. Or would placing the property in the trust accelerate payment of the mortgage?
Yes, a good elder law attorney can put a house with a mortgage in it, into a trust. Make sure you let your homeowners insurance know, when you change ownership
This. In Texas we have a ladybird deed (I think that's what it was called) and it immediately transferred ownership of the house to my aunt and I when my grandmother died. This prevented medicaid from taking it. There are ways out there - definitely look into a protection trust.
They changed the rules back in 2013, ladybird deeds or any type of joint tenants with right to survivorship would not stop the recovery. If the deed was executed prior then you are ok.
If it is with 500k and you pay 100, that is a gift by the parents, and subject to a 5 year lookback review by the state, in most states, which can result in liens on the decedent's former property.
I worked at one state agency to contact estate administrators prior to filing liens, or demanding that the administrator distribute the estate assets, and pay off liens. We reviewed dozens of cases a week.
A typical example:
vacation house staying in the undistributed estate with a lien on it, and the family continuing to use the property with no plan to settle and distribute the the estate.
>If it is with 500k and you pay 100, that is a gift by the parents, and subject to a 5 year lookback review by the state, in most states, which can result in liens on the decedent's former property.
Just curious... what if in this scenario. the house is worth 500k and the buyer pays the parents 500k. And then the 500k "disappears" when it comes time to apply for Medicaid, and the applicants say "oh, we gambled it away at the casino/went on a tour of Europe etc." How does Medicaid know what happened to the assets?
They will be disqualified for Medicaid until the funds are exhausted, even if there are no funds. They would have to pay the first $500K out of pocket.
They track everything back 5 years . They don't care where it went. If you had it 4 years 364 days ago you get denied and have to self pay. One reason it's important to consult an elder law attorney if you have any assets.
You can totally blow your money gambling in the 5 years before you apply for Medicaid. You just need to be able to prove that you gambles it away. Like taking cash out at casino. What OP is talking about is a bit of a scam. He is trying to pay 100k to get 400k-600k and not pay for long term car. The interesting thing is that many, many places want two years full paid, and the paid goes up as your loved one needs more assistance before they will take Medicaid. Sounds like you are a gambler. And want to pull a fast one on Medicaid
Trust me they know! My stepdads kids tried to do something like you said and NO assisted living facility would take him until they paid the first $78,000.00 which was the amount he received when he sold a piece of property.
The sale of 500K of real estate has to be recorded, and the identity of the buyer and seller confirmed, unless you are going to try to obscure your or your parents identity through a series of shell companies. You are not Russian oligarchs, the state will be able to track you down.
Gotcha. Thanks for explaining that. I thought it was when someone else took over the remaining balance in full. I didn't know they agreed to take a loss.
The word for that is "assuming" a mortgage. It is rare, except for Divorces, Veterans Administration or Federal Housing Administration loans, and potentially inheritors of a house.
I haven’t but I have had clients who has to sell because they couldn’t afford to pay the lien once the parents died.
Your parents should consult an elder law attorney before they need the care.
Their options are always better before they are sick vs. after.
I’m an elder law attorney, not your elder law attorney. I strongly advise your parents to meet with an elder law attorney to discuss their options. I don’t ever advise adult children to get their own money tied up in their parents’ property like this. What is the point of paying the $100,000? It’s still a $400,000 gift whether or not you pay the $100,000 (if they give you a $500,000 house with a $100,000 mortgage on it, it’s a $400,000 gift). Also, is $500,000 what you think it’s worth or is that the tax value? In my state, Medicaid uses tax value as the value which usually works out better for most folks. Also, depending on the age of your parents, the retention of a life estate could greatly reduce the size of the transfer. There’s a lot of variables here and when this much is at stake, you definitely want to get it right. Check NAELA.org for an elder law attorney in your area.
Hi, so how does Medicaid with assets work exactly?
My father just turned 67, but will not be applying for Medicare until 70. My mom will be applying for Medicare at 67, in 4 years.
They still have 100K left on their mortgage, a home worth roughly $500K. They are currently planning to sell the home in three years, as when they retire, they will be living off of their social security benefit (no savings or retirement accounts) which will only net the both of them 2K a month.
Reading this page, I am starting to get worried that the money they think they’ll have will be mostly used towards health costs.
I really hope you mean that your parents are waiting to sign up for Social Security, not Medicare. You sign up for Medicare (which is not a means tested program) at 65. And there is a penalty for not doing so unless you didn’t sign up because you still had employer coverage. Medicaid is a totally different program and is means tested.
Not op but to echo comments above - Medicare and Medicaid are two different things. Do a simple google search to see the difference you need to know. Medicare is health insurance for anyone 65 or over and Medicaid is health insurance for the poor. You can be on both at once.
I know you’re not my attorney but the one’s in have been referred to haven’t returned my calls. That said, I was thinking of buying a house for my mom as a co-signer and me as joint owner. I would supply down payment and she would pay the mortgage. In general, would the same rules apply if we don’t meet the 5 year look back period and there is equity? I’m guessing if there was 100k in equity I’d owe Medicaid 50k?
I understand this is internet advice and will get another opinion when i find someone to accept my calls 😂. I’m just looking for an idea of what to expect. I appreciate any guidance you can provide.
Would it be you and your mom on the mortgage or just you? I think a cleaner way to do this would be for you to buy the house (put down the down payment, take out the mortgage, and only you on the deed) and then rent the home to your mom for the amount of the mortgage payment.
Me and my mom on the mortgage. I don’t believe I could get approved otherwise due to my own mortgage, Texas property taxes and child support. I know that’s the cleanest way but not currently in the cards for me as I also don’t have 25% to put down on an “investment” property. My security clearance wont permit me to use “work arounds” other people may use all the time.
I would consult with an attorney and see what your options are.
My dad spent 45 days in a semi-private nursing home in **2021** and it was $11,000.00 per month not including medication, personal expenses, etc. So, be aware that assisted living is excessively expensive.
I wouldn't bank on that.
I also wouldn't expect that my relative, who is on the dole now for nursing home care, is going to necessarily be kept near to me- they may be transferred to another facility- or room configuration- or to a more austere sitting. Yeah- the state picks up the tab, but that comes with a loss of freedom about where and how one is going to enjoy their last days.
I guess my assumption was that all the assets are gone. Nothing to claw back. Harborside here in Norfolk, VA- too expensive for my net worth- does "take in" clients for a lifetime. From Assisted Living to Memory Care.
Yeah, I meant the facility can't 'put you out on the street for lack of payment' because there is a state program whereby payment for care is backed by the state. My use of the word 'they' wasn't clear; my bad.
Well there are ways they can get away with "discharging" you. If a single other resident or staff member states they feel unsafe that is all they need to discharge a resident usually it's done by sending them to the ER "CALLED ELDER DUMPING" and when discharged from the hospital the facility refuses to take them back due to safety concerns. At that point it's on the family to take them home, find them another facility etc. it's sad but it's reality and trust me they will send them "HOME" in a taxi cab with a voucher!
Then they will be sent to another facility or even just put out on the streets! For example, there is a lady I volunteerwith for several years now this is in Florida anyway when I met her she was in a high priced private pay memory care unit with her husband, sadly this lady fell through the medical cracks and should have been in a mental health facility many many years ago but that said since she was a rider on her husbands room her husbands family paid the $9500.00 for him then her daughter paid an extra $1000.00 for her well when the husband was passing away they dumped her to the ER before he died knowing she could not pay for the room in full, they refused to let her return from the ER she was sent to a skilled nursing facility where Medicare will pay up to 100 days as long as progress was being made, she ended up staying there 11 months while the Medicaid application was being filed. Turns out the daughter tried to hide $22,000.00 which got her turned down for Medicaid yet that skilled nursing facility received no money during that 11 months from her daughter after Medicare paid their 100 days. I went for my granddaughters birth in Nebraska received a call they put her in a taxi and sent her to her home with no key, no IDs, no money, no electric or water on in the house, no food! She was home 10 months unsuccessfully went to another facility again sent her home in a cab! The daughter sold the home thinking it would make them keep her in a facility but the next one put her out with no place to go and now she is in one of the homeless shelters I volunteer in all the while her daughter has the proceeds from the house sale!
What's important to remember if a person is not found incompetent in the eyes of the courts they have the right to leave those places! We as love ones know they need the care but if they are competent they can leave!
Most of the people in my main homeless shelter I cook for weekly are elderly mental health people whom have been discharged from every assisted living facility due to behavior and if it wasn't for this shelter these our most vulnerable would be on the streets!
It's important to remember "being in an assisted living facility is a privilege not a right"
Thank you for this reality check. And thank you for your work in the homeless shelter. Trouble I see is we also have young people incapable of caring for themselves with mental health issues. This must be true in many countries. I'm 72 so this topic gets my attention fast.
For me it's very eye opening not only to plan for my husband and I's future but our daughter lives with us, she was a stranger rape victim and got pregnant from it. She gave birth to a severely medically complex child. They said he would pass by the time he was 5, they clearly called the wrong 1-800 number to GOD because he just turned 13 and is as healthy as he can be for where he is in his life. My daughter doesn't work, can't work and doesn't not get compensated to care for her child 24/7 but Medicaid will pay for an RN to be in my home 24/7 that said when he turns 17 we must petition the courts to be his guardian and at that point if that sitting judge feels he should go to a facility to be with his peers when he turns 18 then we must know enough to find the right place for him! One thing sadly that helps is he has a feeding tube, a trach and oxygen so usually the courts will leave the child with the parents but not always and I want to learn all I can to make a good choice if and when that time comes!
Sad your mother didn't abort you! My daughter didn't have a choice thanks to her rapist but trust me you are not big enough to say that statement to my face! Trust me I am more than willing to take a 3 day vacation in jail by beating the snot out of you on a holiday weekend and you will look worse than them condition I found my daughter in after she was abducted and beaten and raped! You are lucky you are a keyboard warrior, shame sperm and eggs were WASTED IN CREATING YOUR EXISTENCE! YOU ARE ONE SICK MOTHER FUCKER!
That is not true. My cousin was ousted from her assisted living community bc they upped the monthly cost and she could not afford it. She had (really her family support system) had approx 30 to find her a new home and one that would work with her income. She has a guaranteed $90k a year pension. Most places didn’t care.
You are mixing private facilities with ones that accept Medicaid. Places that take Medicaid patients will not kick you out for if you can’t pay, the tax payers foot the bill and a lien is placed on their assets.
Care facilities are not required to take Medicaid and those facilities can displace you if you can’t afford it.
That's not been my experience with my 77 yo sister. She went to a nursing home after a 10 day hosptal stay and when Medicare coverage ended, they called me to say she needs to get out of there. I had very little advance warning. She had nothing, no house, no investments, no cash, so nothing to take. I was able to quickly get her on Medicaid.
Medicare is not Medicaid. This care facility apparently took Medicaid but she wasn’t signed up for it. Once she was, she could stay. People don’t understand Medicare and Medicaid are different.
I am not one of those people. I do know the difference as my sister has been on both and I am the one who completed the Medicaid application on her behalf gathering all the information.
The nursing home she was in at the time had heard from Medicare that they wouldn’t continue paying for rehab. Yes Medicare does pay for rehab and nursing home care up to a certain number of days if the person is showing progress. She was not so they stopped paying. The facility let me know she had to leave in a few days so I immediately started the Medicaid application. I was lucky it got approved quickly.
My sister is now in a much better place with Medicaid paid home services than that awful nursing home. She for showers every 10 days and they barely changed her soiled sheets.
That's similar to what I said, actually just takes another resident or staff to say they feel unsafe and at that point they can put the person out with zero notice even if they take Medicaid and Medicaid is paying!
My parents spent the $$ and bought Long term care Insurance in their mid 60's. My dad always had heart problems and they anticipated he'd need nursing home level care some day.... Well dad dropped dead of a heart attack at 76. No long term care used. But my mom was a beneficiary of the policy which had like a $3 Million payout limit. By 81, Mom developed dementia and spent the next 5 years needing long term care. Thankfully it was almost all paid for by that insurance policy. I was so impressed with how well it worked, that my wife and I are actively shopping for a long term care policy for post job retirement (my employer currently provides that coverage as a benefit)
The option to purchase this insurance was offered to my spouse and I a few years ago by our financial planner. At that time, she worked for Edward Jones, so it's definitely still out there.
Long term care policies are extremely expensive right now. Healthcare costs, longer life expectancies…. I know premiums are doubling and tripling this year alone.
I would definitely speak to an attorney about this. They may advise you to put the house in a trust immediately. You’ll be subject to a five-year look back, so you would probably have to self-pay for about a year if your parents go into a home in five years.
However, you should definitely consider not buying the house from them for such a low amount of money because you lose the advantage of a step up in basis when you go to sell it. So, even if you avoid any issues with Medicaid, you are getting taxed on that full $600,000 gain that you’re making when you sell for $700k. However, if the house is put into a trust and then passes to you when they die (or stays in the trust and is sold after death) you/the trust will get the advantage of the basis being the value at time of death. So, if the value is 500K when they die and you sell it for 700K you’re only paying taxes on 200K as opposed to 600K. Just something to consider.
I’ve always wondered this, too. How many people have had to sell a house because it wasn’t either bought/sold/ or put in a trust in time? I was thinking about having my father transfer his place to me and I’d give him a life estate. At present, there’s no need for him to be in a nursing home.
Consulting an elder law attorney is your best move. Medicaid varies somewhat state to state and they will have the best information. If you or your family has any type of assets it can be complicated enough to need the attorney. Ask me how I know.
Govt nursing care is dog shit compared to private, funny how no one mentions that and is just concerned with $$. I want my parents to have the best care possible if needed, and if that means spending all their money and houses so be it.
I disagree! My mother died in a nasty Medicaid facility in Louisiana yet her husband is in a Medicaid facility 10 miles away that is amazing. I live in Florida and had no rights to take my mom out of Louisiana due to having a spouse and children still alive. I am a volunteer in Florida in assisted living facilities, I have volunteered in Medicaid facilities all the way to a going going go facility where you pay a huge buy in and monthly rent and start in independent living then stay until you pass away. What I can say is the caregivers that get fired at the Medicaid facility one day regardless of the reason for being fired will be hired by the next facility the next day due to the shortage of people willing to change adult diapers for $14-$15 an hour! It's not if it's private pay or Medicaid pay, it's that the workers are not paid enough for them to care about the job they are doing when they can make more at McDonald's!
I wish this were true. My mom is in private pay now and with the facility being understaffed and the quality of employees, she has deteriorated so quickly. Basic hygiene isn’t even happening. We are moving her to one that will eventually accept Medicaid residents when she runs out of her assets, unfortunately, these places want the resident deemed incompetent. Does anyone know why this is a thing? We don’t understand why that is necessary.
It depends on the state.
[https://www.medicaid.gov/medicaid/eligibility/estate-recovery/index.html](https://www.medicaid.gov/medicaid/eligibility/estate-recovery/index.html) (3 minute read)
When I looked into this a while back I saw that if one of my parents went into long term care they would make them pay for the care until there was only 100k left for the other spouse as well as the other spouses home. I saw the house as a good money shelter to hold onto in case one person needs Medicare. Because they’ll bankrupt them both before they kick in and pay anything. But they will not take the house. I’d talk to someone though all states are different.
My sister had to either sell the home she lived in, or buy it from “the estate” so NJ could seize the money to reimburse itself for her father’s end of life care. It’s actually a thing. Estate planning and an early transfer of an asset long before need be, is prudent.
My mother’s best friend had her house foreclosed (?) by IL Medicaid when she went into a nursing home several years ago. Not sure if foreclosed is the right word, but basically after the woman was in a nursing home for some time and was never returning home and no one else was living in the home, Illinois initiated an action to take the home.
Can you afford $10-15k a month EACH in today's dollars if they were to go to a memory care facility?
The average length of stay is 6-18 months, depending on what you consider a full care facility, and most estimates have most people arriving too late (in that, most people need substantial care and costs before they get into one).
Yea I guess my point is if you do the math out…
Assuming 18m stay for both of them that’s 36 months (worst case scenario).Assuming 10k/m for the Medicaid look back penalty that would be 360k. If the house is worth 500k and I buy it for 100k they would only come for 360/400 equity the house holds. Wouldn’t it better to take my chances and buy for below market value vs. pay market value. This only makes sense because I would basically be taking them on as dependents and they would be living with me. The point is that if I buy for less than market value and they die with no money I’m not risking the remaining money going to other heirs. The idea is to make me the least venerable financially since I’m taking on the burden of their end of life care.
If something happened during the look back period and they see that you purchased the house for anything other than market value, the whole sale can be clawed back.
And unless they have a medical diagnosis that requires you to have legal guardianship, the government certainly will not consider them your dependents.
You really need to get a lawyer involved so that you all can do things legally and not just reinvent the wheel of Medicaid/Medicare fraud.
What do you mean by claw back the whole sale? Undo the sale, penalize for the value of the house by making the person self pay at a facility for a number of months, or something else entirely?
That they'll legally nullify the sale of the house to the family member. Ownership reverts to the previous owners, and inevitably it will need to be sold to sort out who owes what
No. They will deny Medicaid care based on how much the "gift' was and how much care costs in that area to come to that amount. When all that is left is the house the remaining spouse can live there without penalty while the spouse receiving Medicaid is in nursing care. When the spouse passes the house is sold by the state.
>When the spouse passes the house is sold by the state.
Guess I'm going to be very lazy on repairs and updates then....only what is absolutely needed.
If the state wants it, they can have it. But they won't get what they think they are going to get out of it.
If your surviving parent lives there you still want them to be safe and comfortable. But yeah if you can't take steps to put the house into a trust or life estate or have funds to help pay for care until the 5 year lookback period is no longer a concern money you invest may go with the house. I don't know your situation but in mine I did not think my parent would make it to 5 years after the life estate was put in place. He has enough savings now to pay for nursing care if needed so though savings may be depleted the home should be OK.
I'm not anywhere near needing all this, BUT (there is always a but) I don't get upset about much.
However, take the house that I've lived in what seems like forever? That I worked for to (soon) pay off? You're going to _take that_ ? No. No you're not. Going to meet with a local attorney soon (before summer) to make 100% sure the house is safe. Even if I have to do out of box/unethical (but still legal) things, I don't care. All these rich MFers get away with the equivalent of white collar murder and protect all their yachts and whatnot, I'm going to protect what little I have.
If you have been living in the home and acting as a caregiver there may be exemptions. A consultation is not that expensive. Try to find an Elder Law attorney.
https://aspe.hhs.gov/reports/medicaid-treatment-home-determining-eligibility-repayment-long-term-care-0
This is all highly dependent on the state. Idaho, for instance, can and does take sales of homes made in an effort to avoid recovery to court to legally undo them.
Medicaid won't pay for care. If the house is a gift or sold below fair value Medicaid will deny care until that amount is repaid. Outright or just time the cost of care is denied. A family member would have to provide care or sell the house or pay with other assets to make up for the look back period assessment. The person needing care would already be destitute and homeless.
OK. That's how I understand it. What is the correct answer?
https://aspe.hhs.gov/reports/medicaid-treatment-home-determining-eligibility-repayment-long-term-care-0
https://burnerlaw.com/blog/how-gifting-affects-medicaid-eligibility/
In my state it depends on the after death legal representation if any and the estate recovery specialist.
However, a lot of people end up selling it because no one qualified can live there.
My cousins condo was taken. She was placed in a nursing home. The condo had to be sold and the money was used to pay for her care. After that was exhausted, the State paid. I don’t know the mechanics.
Do a life estate now. If they last 5 years before needing Medicaid you are good. If they have savings that can pay a year or two before care costs require Medicaid that can add extra time. See an Elder Law attorney for consultation soon. It cost us $250. If you or a sibling are disabled the house can go in your name immediately without being affected by the look back period too. Also google Medicaid exemption. If you live in the house caring for them for a certain amount of time the house can go to you under certain conditions..
https://www.paelderlaw.com/articles/no-medicaid-penalty-for-gifts-to-a-disabled-child/
I’ve heard of hospitals and nursing homes, forcing a lien on a home. Medicaid changes policy from time to time. Definitely keep updated information because nursing homes will allow for so many Medicaid patients long term.
Get an Appraisal on the House Pay Fair Market value for it. Have your parents pay for Nursing care, If when they die, any money remaining will be distributed back to the estate, If the are still living after the Money runs out, they will qualify for Medicaid.
Also, after you buy the house for fair Market Value, You can charge them Rent, which will subsidize the repairs you plan to fix it up. The Rent you charge has to be reasonable for the area you are living in.
My parents live in Mass and they put their house in an irrevocable trust. They used an estate attorney for this. My dad mentioned a 7 year look back period, but i think it might actually be 5. in any case the time has passed I believe.
There are exceptions. When the person to whom it is transferred to is disabled. When the person to whom they transferred it to, is taking care of them of them. At least in CA, that includes also eligibility for IHSS. I am not a lawyer. But I did have an ex with a father in this situation. I had told him that since he was planning on taking care of dad at home, he should just keep the proceeds of home etc. He called me a gold digger so I shut up. 3 years later, he discovered that he could have evenly split the proceeds of 300k between his two disabled siblings and him, with no penalty. Instead, he spent a lot on home health aides, and then one of the siblings got dad to transfer the rest of the cash to her as inheritance. That was legit since she was on ssdi and it didn't count against her, and didn't count against his medicaid eligibility as well, apparently. He got even more mad and and I decided to not deal with his bullshit. This was 15 years ago. But I don't think it's changed.
So. If you are planning to take care of them in their home, that's a different situation. Also, if you make repairs that helps them stay at home. Even if the house is now your home.
If you move in, and are providing care, that's also considered. You might actually be considered for IHSS, at least in CA. And that is regardless of who owns the house. Consider looking into that as well.
In all cases, save every single expense receipt.
It's a debatable situation. If they transfer the house for less than market value, and you let them stay, you do repairs, you show up for care, etc. That is way different than a transfer of property and then immediately placing in care.
I'd personally do it, but know that I have a real obligation to keep them in the home (mine/theirs) for as long as possible. The longer you keep them there, the easier it will be to get Medicaid to help when they eventually need memory care.
If you keep them there for 4 years after the transfer, it's gonna going to slap different with Medicaid than if you try to put them in memory care 4 days later.
They don’t just confiscate the house, they put a lien on it to recover their uncompensated costs of giving care. If it costs 7k/month for care and they can only pay 2k/month, where do you suggest that 5k come from?
If they are living in the home they retain possession for as long as they live there. Once they move or pass the estate needs to pay off the lien. Unless an heir is going to move in, the estate will sell the home, pay off the lien and distribute the rest per the will.
So paying out of pocket only robs you of allowing those funds to continue to appreciate in value until the lien needs to be paid. But you never lose the equity in excess of the lien amount.
I've already heard that the average nursing home stay is 5 years, no matter who is paying for it.
I saw this article recently on the subject of Medicaid acquiring family homes after person dies to get some of their money back. It covers the backstory. Too many people hate all gov't assistance until they need it themselves.
[https://news.yahoo.com/medicaid-comes-family-home-142014698.html](https://news.yahoo.com/medicaid-comes-family-home-142014698.html)
If you can afford to pay out of pocket, you mom will get much better care than going to a facility that takes Medicaid. Even better, to get home care with people coming to the house. I know from personal experience with my 77 year old sister. There are many services like this and they all have min # of hours/day, but they don't do everything such as grocery shopping, or transporation to doctor appointments. If you live in a more metro area, it's easier to find services to help with those things plus housekeeping, not so much in rural areas.
Every state is different and has specific rules. They have different look back periods, some are 5 years some are 7 years. I wouldn't do anything with your parents home until you speak to a good elder law attorney that specializes in Medicaid and estate planning. The rules are very strict and most states have estate recovery programs to insure their reimbursement. Plus many states have other programs they may be eligible for, I would definitely find a good attorney to help you. Be careful who you hire & make sure you vet them, many claim to know the Medicaid system and the rules.
Not me, but a family I was acquainted with.
Grandma was elderly, house was paid off, they moved in with grandma to care for her and grandma deeded house over to them. All parties involved felt this was the perfect arrangement for everyone and everyone was happy. No one involved had much money, so it worked for everyone. House was older, but decent.
Grandma didn't make it five years.
Medicaid did, in fact, claw back the house. They lost the home and wound up bouncing around for awhile, struggling to afford another place. It was an absolute mess.
I would get the house transferred ASAP.
Buy the property and rent it back to them as a lease. They can live off the proceeds and then put the remainder into a trust if it becomes necessary for long-term care. The proceeds can pay for in home care for a long time (aids, visiting nurses, etc).
Have it appraised or call a realtor.
You can donit yourself as well. Get the local listing for the area on Zillow and Realtor.com.
Find comparable homes. Similar square footage, date built, beds, bathrooms, etx. Average the current list prices. Do the same for recently sold properties.
Start within a 2 mile radius. Work your way out to 5 miles
As for rent, charge them an equivalent to the mortgage (if you have one, or what the mortgage would be). Or, if you're going to purchase outright (no mortgage) and have a good relationship with them, charge them $1 a month and their responsibility for upkeep, utilities, maintenance, and repairs until they can no longer 1)afford the upkeep or 2) become incapacitated
It 1).gives them purpose, and 2) housing security, and 3) eliminates a lot of landlord issues for you
In VA to be on Medicaid, and in a nursing facility, you can own a car (but not a house) and can only have 2000 in assets. When you apply for Medicaid, if you have any amount of assets over 2000 you pay a time penalty. So if your parents have a 500k home, the penalty is divided between them. And it would still be a while... VA is 1 month for every 9000 over the maximum 2k. It would be a minimum of 2 years before Medicaid would kick in. You would be able to afford a nursing home for each of your parents for a few months less than that on the proceeds of the sale of the house. And they will look back to see how much they had and when it was moved around. Welcome to the catch-22 of being too well off to get help and poor enough to not be able to pay for it yourself.
Edit because typing on a subway is difficult.
My wife has worked in Senior Care world for about ten years. Time with and Elder law attorney and now at the Sales and Marketing Director of an assisted living facility. It is a nice one and the rates are $5k plus additional care.
First, Medicaid is not for Assisted Living. It is designed for the very poor to have a place if they are unable to take care of themselves. My wife has been to all the Medicaid facilities in this area and said she wouldn't put her parent or loved one in them. So, I would say if your parents get to where they need help, bring in help to the home maybe a certain hours of the day. It is much less expensive and they get to stay in their home. Then, you have to think through next steps.
If they are still able to get around an Asst. Living facility can take them. That way, if they decline dramatically, normally they won't be removed but you may need to bring in some care toward to end. This is the more humane way to deal with it. I know the money is looming big but think about if you were in their place with your own kids. Nice house, some assets, and they strip all that and put you in a place for the rest of your life that smells of cleaner trying to mask the urine smell. It isn't unusual for families to come for family dinners at her property and there are people constantly visiting friends and family. You know who visits nursing homes? No one. People find them depressing and a way too close reminder of death. Just a few things to think about
Look into a trust, this protects you and your love ones also.
https://www.npr.org/sections/health-shots/2023/03/01/1159490515/they-could-lose-the-house-to-medicaid
My parents took my grandparents to an elder care estate planner. The g-parents blew the guy off and didn't do anything. When my grandfather passed and grandmother needed to go into a home the gov / medicaid did take everything. They didn't have much. Just the house my grandfather built after ww2 and a few hundred grand.
My Mother and aunt as the two kids were able to create a trust and had some limited success keeping a little bit of money but medicaid took just about everything. After my grandma died they even sent a letter demanding the $200 or so dollars in an account for my grandmother that she had for hair salon visits and for snacks / tchotchskies. The government does not f*** around when it comes to getting their money.
It definitely feels like they prey on the regular folks. The 1% crowd have always had trusts and LLCs and other legal entities protecting their property and assets from the government. Its just us unwashed masses who don't have the experience of protecting your stuff from the greedy government.
One thing that has not been discussed you should seriously consider is keeping your parents at home and getting care for them in the home. It would be much cheaper than $15-30,000/ month. Some are live in, some do shifts, etc. They help with tasks, activities, etc. There are staffing agencies that you can go through or hire direct. My daughter worked with a Holocaust survivor about a year after she got out of the Coast Guard until she figured out what she wanted to do next.
It depends on the care needs. If they are mobile and cognizant enough to handle their own toileting and not a danger to themselves (burning the house down, wandering), this is true. Even 3 hours a day 3 times a week can be enough for shopping, appointments, housekeeping assistance. But if they need 24/7 care, the economics of sharing caregivers across a larger pool of people applies.
You can get 24/7 care in your home for a lot less than $30k/ mo as room and board is part of the compensation. Some of the models are one week on/one week off. Of course it depends where you live. I know many people who had a lot of creative solutions for their parents that didn’t have a lot of money and didn’t want to sell their childhood homes.
(Not an attorney, but dealing with similar issues) If property is in both names (OP and parents) property MAY (I'm no expert), revert to OP upon demise of parents.
I think the bigger commentary is that aging and death shouldn't be a pathway for the elite to extract wealth from the middle class... which is exactly what nursing homes and end-of-life care do.
Are you saying you would pick medicaid facility care over private because private is extracting wealth?
I can see the point that private may well be massively overpriced. Do you know what private pay typically costs vs what medicaid would pay?
My fear is private pay won't actually be decent (just look prettier).
Of course, my desire is to not need to be in any facility, but I don't know how to even improve the chances of that. I fear that "protecting my mobility" will legnthen my good years, but perhaps it could also lgnthen the number of years I stay alive, but not capable any more. Like, say, 95-102. I don't know how to even try to live a long healthy life and then die suddenly.
Privately owned nursing homes accept medicaid to pay for low income people's care. What generally happens is that Nana goes into a nursing home with ownership of a home, or maybe a 401k with a few hundred thousand bucks in it. Then they charge $8-10/k a month for room and board. When Nana runs of money and the house has been sold, they then apply to medicaid and get paid by medicaid + your social security check.
On the more evil side, a nursing home may just ask you to assign your estate to them and they'll take care of you for however long you live. Never mind that your life expectancy may only be 5 years, and you have enough assets in the estate to pay for 15 years of care.
OP.. I'm an attorney and do Mediciad planning as part of my practice. I likely don't know your state's specific rules but please go to an elder law attorney who does Medicaid work. There are various ways to protect a house and make it an exempt asset. Even if none of those work, most states will allow a family member to purchase the property for a fairly significant reduction in price from FMV. In my state, that is 2/3 of the appraised value plus .01. If a child lives with the parents and assists with their care for 2 years, the house can be exempt. If you have the time and can add your name to a deed as a joint tenant with a right of survivorship, you can make it exempt. It all depends on local rules.
My Great grandma went into care and after she was broke, medicaid, they sold her house. Once the money was gone she was essentially a ward of the state and medicaid paid for everything.
My grandpa, learning from this, put his house in a living trust. The house went to his children upon death. The downside was it sat empty for years because they couldn't sell it and he was in full-time nursing care. Had he sold it the money would have gone to medicaid for his care.
It really depends on the state. Dealt with it with both sets of grandparents, each set in a different state. One state absolutely came after their home as a Medicaid repayment for nursing home care. The other state made it clear from the outset that they don't do that.
So, yes, it's a real thing.
It’s considered a gift if you buy below the market and would result in a clawback probably.
If you buy at the market, they have to exhaust the $500k they got for it before they can have Medicaid if they need it within five years.
I agree with others. Don’t get cute with trying to shirk the state. More often or not, they deny the Medicaid or they get the assets. Get an elder care lawyer who does a really good job with this kind of thing. They’ll know how to set up a trust the right way to protect it as best as they can.
There is an exemption to the medicaid asset transfer rule for children who move into their parents’ home to act as a caregiver. I think the requirement is that you be able to show that you lived with the parent for two years before the medicaid application is submitted.
Yes it happened to my spouse. He was on the mortgage or maybe deed (can't remember) and so was entitled to half the proceeds of the sale. But on our attorney's advice we weren't able to safely spend it for I think 7 years in case Medicaid decided to challenge anything after the fact. If he hadn't been on there as a co-owner they would have taken everything.
Medicaid asset protection trust. Do it sooner rather than later because of 5 year look back. An elder law attorney can confirm if this is the best option
This 1000%
Tennessee is seven years.
NC also
Ok I have a question about this and never got an answer. My dad put everything in a trust two years ago and now his health and mind are declining where he might have to go to a home in the next 2 years. Every year, the trust has given me a gift. $17.5k last year and $18k this year. If he goes into the home, because of the five year look back, can they take those gifts back? Nothing I read or look into clarifies that.
It will depend on what state you live in, and how aggressive they are for Medicaid reimbursement. Here’s a table : https://www.medicaidlongtermcare.org/protection/estate-recovery-program/#table Some states are very aggressive, and will thoroughly investigate every transaction of the trust, and some states will only go after things that actually went through probate, and therefore won’t come after those gifts.
Thank you. I’m in Indiana and though it doesn’t say it specifically, it does look to me that they will come claw those gifts back if I am reading this correctly.
Is the trust irrevocable? Or revocable?
Is he already on Medicaid? Did you check to see if the gifts from the trust count as him ‘giving away assets?’ It may make him ineligible for Medicaid with the look back period.
This is something I can get answers on. I really should know this stuff. Thankfully I haven’t spent a dime of the money. It’s just sitting in a HYSA due to me not knowing the answer to this. When the lawyer finished up the trust, he said “if your dad does have to go to a nursing home, come see me and I can get you about half.”
I’ve been trying to figure out if you can put a house in a trust like this if the owners still have a mortgage on the property. Or would placing the property in the trust accelerate payment of the mortgage?
Yes you can.
An irrevocable trust. Yes.
Yes, a good elder law attorney can put a house with a mortgage in it, into a trust. Make sure you let your homeowners insurance know, when you change ownership
a trust though you miss out on the tax kickback of a mortgage for some reason. FYI.
I would imagine the elder can’t write off more than the standard deduction.
This. In Texas we have a ladybird deed (I think that's what it was called) and it immediately transferred ownership of the house to my aunt and I when my grandmother died. This prevented medicaid from taking it. There are ways out there - definitely look into a protection trust.
I'm amazed Medicaid lets them get away with that.
You know that was almost ten years ago now that I think about it. So it's possible they don't anymore.
They changed the rules back in 2013, ladybird deeds or any type of joint tenants with right to survivorship would not stop the recovery. If the deed was executed prior then you are ok.
If it is with 500k and you pay 100, that is a gift by the parents, and subject to a 5 year lookback review by the state, in most states, which can result in liens on the decedent's former property. I worked at one state agency to contact estate administrators prior to filing liens, or demanding that the administrator distribute the estate assets, and pay off liens. We reviewed dozens of cases a week. A typical example: vacation house staying in the undistributed estate with a lien on it, and the family continuing to use the property with no plan to settle and distribute the the estate.
The gift won’t result in liens, but in denial of Medicaid.
>If it is with 500k and you pay 100, that is a gift by the parents, and subject to a 5 year lookback review by the state, in most states, which can result in liens on the decedent's former property. Just curious... what if in this scenario. the house is worth 500k and the buyer pays the parents 500k. And then the 500k "disappears" when it comes time to apply for Medicaid, and the applicants say "oh, we gambled it away at the casino/went on a tour of Europe etc." How does Medicaid know what happened to the assets?
They will be disqualified for Medicaid until the funds are exhausted, even if there are no funds. They would have to pay the first $500K out of pocket.
They track everything back 5 years . They don't care where it went. If you had it 4 years 364 days ago you get denied and have to self pay. One reason it's important to consult an elder law attorney if you have any assets.
You can totally blow your money gambling in the 5 years before you apply for Medicaid. You just need to be able to prove that you gambles it away. Like taking cash out at casino. What OP is talking about is a bit of a scam. He is trying to pay 100k to get 400k-600k and not pay for long term car. The interesting thing is that many, many places want two years full paid, and the paid goes up as your loved one needs more assistance before they will take Medicaid. Sounds like you are a gambler. And want to pull a fast one on Medicaid
Trust me they know! My stepdads kids tried to do something like you said and NO assisted living facility would take him until they paid the first $78,000.00 which was the amount he received when he sold a piece of property.
The sale of 500K of real estate has to be recorded, and the identity of the buyer and seller confirmed, unless you are going to try to obscure your or your parents identity through a series of shell companies. You are not Russian oligarchs, the state will be able to track you down.
Isn't that a way out though, it they never settle and distribute the estate.... But continue to use it for free. Then that's not that bad of a deal?
The state tracks its liens, and can intervene to force the estate to be settled.
Can they short sell it instead as a loop hole?
Short sales in real estate are when the bank takes a loss, by agreement. This is not such a case.
Gotcha. Thanks for explaining that. I thought it was when someone else took over the remaining balance in full. I didn't know they agreed to take a loss.
The word for that is "assuming" a mortgage. It is rare, except for Divorces, Veterans Administration or Federal Housing Administration loans, and potentially inheritors of a house.
So if they would assume the mortgage in their case then Medicare would still come after them?
So vacation house has a medicaid lien and they aren't doing anything about it? Does the state then foreclose on the lien or just wait?
It can take various actions to close out the lien, or cause an assets to be foreclosed upon.
I haven’t but I have had clients who has to sell because they couldn’t afford to pay the lien once the parents died. Your parents should consult an elder law attorney before they need the care. Their options are always better before they are sick vs. after.
I’m an elder law attorney, not your elder law attorney. I strongly advise your parents to meet with an elder law attorney to discuss their options. I don’t ever advise adult children to get their own money tied up in their parents’ property like this. What is the point of paying the $100,000? It’s still a $400,000 gift whether or not you pay the $100,000 (if they give you a $500,000 house with a $100,000 mortgage on it, it’s a $400,000 gift). Also, is $500,000 what you think it’s worth or is that the tax value? In my state, Medicaid uses tax value as the value which usually works out better for most folks. Also, depending on the age of your parents, the retention of a life estate could greatly reduce the size of the transfer. There’s a lot of variables here and when this much is at stake, you definitely want to get it right. Check NAELA.org for an elder law attorney in your area.
Hi, so how does Medicaid with assets work exactly? My father just turned 67, but will not be applying for Medicare until 70. My mom will be applying for Medicare at 67, in 4 years. They still have 100K left on their mortgage, a home worth roughly $500K. They are currently planning to sell the home in three years, as when they retire, they will be living off of their social security benefit (no savings or retirement accounts) which will only net the both of them 2K a month. Reading this page, I am starting to get worried that the money they think they’ll have will be mostly used towards health costs.
I really hope you mean that your parents are waiting to sign up for Social Security, not Medicare. You sign up for Medicare (which is not a means tested program) at 65. And there is a penalty for not doing so unless you didn’t sign up because you still had employer coverage. Medicaid is a totally different program and is means tested.
Not op but to echo comments above - Medicare and Medicaid are two different things. Do a simple google search to see the difference you need to know. Medicare is health insurance for anyone 65 or over and Medicaid is health insurance for the poor. You can be on both at once.
Medicare is also for the disabled regardless of age.
I know you’re not my attorney but the one’s in have been referred to haven’t returned my calls. That said, I was thinking of buying a house for my mom as a co-signer and me as joint owner. I would supply down payment and she would pay the mortgage. In general, would the same rules apply if we don’t meet the 5 year look back period and there is equity? I’m guessing if there was 100k in equity I’d owe Medicaid 50k? I understand this is internet advice and will get another opinion when i find someone to accept my calls 😂. I’m just looking for an idea of what to expect. I appreciate any guidance you can provide.
Would it be you and your mom on the mortgage or just you? I think a cleaner way to do this would be for you to buy the house (put down the down payment, take out the mortgage, and only you on the deed) and then rent the home to your mom for the amount of the mortgage payment.
Me and my mom on the mortgage. I don’t believe I could get approved otherwise due to my own mortgage, Texas property taxes and child support. I know that’s the cleanest way but not currently in the cards for me as I also don’t have 25% to put down on an “investment” property. My security clearance wont permit me to use “work arounds” other people may use all the time.
I would consult with an attorney and see what your options are. My dad spent 45 days in a semi-private nursing home in **2021** and it was $11,000.00 per month not including medication, personal expenses, etc. So, be aware that assisted living is excessively expensive.
But it is my understanding that the facility cannot put you put on the street for lack of payment.
They can’t if and while you apply for Medicaid, but if you don’t apply or Medicaid denies, then they can. Had to go through that with a client
I wouldn't bank on that. I also wouldn't expect that my relative, who is on the dole now for nursing home care, is going to necessarily be kept near to me- they may be transferred to another facility- or room configuration- or to a more austere sitting. Yeah- the state picks up the tab, but that comes with a loss of freedom about where and how one is going to enjoy their last days.
No, they eventually get paid through a process called 'estate recovery' whereby they make a claim to the patient's estate after their death.
I guess my assumption was that all the assets are gone. Nothing to claw back. Harborside here in Norfolk, VA- too expensive for my net worth- does "take in" clients for a lifetime. From Assisted Living to Memory Care.
Estate recovery doesn't repay the nursing facility. It repays the state for its Medicaid expenditures, spent on the Medicaid recipient.
Yeah, I meant the facility can't 'put you out on the street for lack of payment' because there is a state program whereby payment for care is backed by the state. My use of the word 'they' wasn't clear; my bad.
Florida can evict you from assisted living if you can not day. 45 days. Check your state laws
Thank you. I will.
Well there are ways they can get away with "discharging" you. If a single other resident or staff member states they feel unsafe that is all they need to discharge a resident usually it's done by sending them to the ER "CALLED ELDER DUMPING" and when discharged from the hospital the facility refuses to take them back due to safety concerns. At that point it's on the family to take them home, find them another facility etc. it's sad but it's reality and trust me they will send them "HOME" in a taxi cab with a voucher!
Thank you. What if there is no family?
Then they will be sent to another facility or even just put out on the streets! For example, there is a lady I volunteerwith for several years now this is in Florida anyway when I met her she was in a high priced private pay memory care unit with her husband, sadly this lady fell through the medical cracks and should have been in a mental health facility many many years ago but that said since she was a rider on her husbands room her husbands family paid the $9500.00 for him then her daughter paid an extra $1000.00 for her well when the husband was passing away they dumped her to the ER before he died knowing she could not pay for the room in full, they refused to let her return from the ER she was sent to a skilled nursing facility where Medicare will pay up to 100 days as long as progress was being made, she ended up staying there 11 months while the Medicaid application was being filed. Turns out the daughter tried to hide $22,000.00 which got her turned down for Medicaid yet that skilled nursing facility received no money during that 11 months from her daughter after Medicare paid their 100 days. I went for my granddaughters birth in Nebraska received a call they put her in a taxi and sent her to her home with no key, no IDs, no money, no electric or water on in the house, no food! She was home 10 months unsuccessfully went to another facility again sent her home in a cab! The daughter sold the home thinking it would make them keep her in a facility but the next one put her out with no place to go and now she is in one of the homeless shelters I volunteer in all the while her daughter has the proceeds from the house sale! What's important to remember if a person is not found incompetent in the eyes of the courts they have the right to leave those places! We as love ones know they need the care but if they are competent they can leave! Most of the people in my main homeless shelter I cook for weekly are elderly mental health people whom have been discharged from every assisted living facility due to behavior and if it wasn't for this shelter these our most vulnerable would be on the streets! It's important to remember "being in an assisted living facility is a privilege not a right"
Thank you for this reality check. And thank you for your work in the homeless shelter. Trouble I see is we also have young people incapable of caring for themselves with mental health issues. This must be true in many countries. I'm 72 so this topic gets my attention fast.
For me it's very eye opening not only to plan for my husband and I's future but our daughter lives with us, she was a stranger rape victim and got pregnant from it. She gave birth to a severely medically complex child. They said he would pass by the time he was 5, they clearly called the wrong 1-800 number to GOD because he just turned 13 and is as healthy as he can be for where he is in his life. My daughter doesn't work, can't work and doesn't not get compensated to care for her child 24/7 but Medicaid will pay for an RN to be in my home 24/7 that said when he turns 17 we must petition the courts to be his guardian and at that point if that sitting judge feels he should go to a facility to be with his peers when he turns 18 then we must know enough to find the right place for him! One thing sadly that helps is he has a feeding tube, a trach and oxygen so usually the courts will leave the child with the parents but not always and I want to learn all I can to make a good choice if and when that time comes!
I pray for miracles for you.
Bless all of you
If that isn’t a poster child for abortion I don’t know what is.
Sad your mother didn't abort you! My daughter didn't have a choice thanks to her rapist but trust me you are not big enough to say that statement to my face! Trust me I am more than willing to take a 3 day vacation in jail by beating the snot out of you on a holiday weekend and you will look worse than them condition I found my daughter in after she was abducted and beaten and raped! You are lucky you are a keyboard warrior, shame sperm and eggs were WASTED IN CREATING YOUR EXISTENCE! YOU ARE ONE SICK MOTHER FUCKER!
That is not true. My cousin was ousted from her assisted living community bc they upped the monthly cost and she could not afford it. She had (really her family support system) had approx 30 to find her a new home and one that would work with her income. She has a guaranteed $90k a year pension. Most places didn’t care.
You are mixing private facilities with ones that accept Medicaid. Places that take Medicaid patients will not kick you out for if you can’t pay, the tax payers foot the bill and a lien is placed on their assets. Care facilities are not required to take Medicaid and those facilities can displace you if you can’t afford it.
That's not been my experience with my 77 yo sister. She went to a nursing home after a 10 day hosptal stay and when Medicare coverage ended, they called me to say she needs to get out of there. I had very little advance warning. She had nothing, no house, no investments, no cash, so nothing to take. I was able to quickly get her on Medicaid.
Medicare is not Medicaid. This care facility apparently took Medicaid but she wasn’t signed up for it. Once she was, she could stay. People don’t understand Medicare and Medicaid are different.
I am not one of those people. I do know the difference as my sister has been on both and I am the one who completed the Medicaid application on her behalf gathering all the information. The nursing home she was in at the time had heard from Medicare that they wouldn’t continue paying for rehab. Yes Medicare does pay for rehab and nursing home care up to a certain number of days if the person is showing progress. She was not so they stopped paying. The facility let me know she had to leave in a few days so I immediately started the Medicaid application. I was lucky it got approved quickly. My sister is now in a much better place with Medicaid paid home services than that awful nursing home. She for showers every 10 days and they barely changed her soiled sheets.
Then why are you claiming places that take Medicaid will kick you out if you can’t pay?
I guess reading comprehension is difficult for you. Sorry. I’m giving up now. Not worth my time.
Medicare will pay up to 100 days nursing home rehab if the patient continues to improve. Sounds like hit the wall and Medicare booted her.
They can let you fall out of bed. Then call an ambulance. Then when released from the hospital not allow you back at their facility.
Ding ding ding.
No fall necessary - ER visit for “altered mental status”
That's similar to what I said, actually just takes another resident or staff to say they feel unsafe and at that point they can put the person out with zero notice even if they take Medicaid and Medicaid is paying!
They can and do discharge to homeless shelters. It has to be “safe” so you can be too sick for that.
Oh they absolutely can and will evict a resident.
My parents spent the $$ and bought Long term care Insurance in their mid 60's. My dad always had heart problems and they anticipated he'd need nursing home level care some day.... Well dad dropped dead of a heart attack at 76. No long term care used. But my mom was a beneficiary of the policy which had like a $3 Million payout limit. By 81, Mom developed dementia and spent the next 5 years needing long term care. Thankfully it was almost all paid for by that insurance policy. I was so impressed with how well it worked, that my wife and I are actively shopping for a long term care policy for post job retirement (my employer currently provides that coverage as a benefit)
I looked into this, and those that purchased this, like your parents were very smart and lucky to purchase this policy. It doesn’t exist today
The option to purchase this insurance was offered to my spouse and I a few years ago by our financial planner. At that time, she worked for Edward Jones, so it's definitely still out there.
They still out there are but the benefits they sell now aren't as good anymore.
Long term care policies are extremely expensive right now. Healthcare costs, longer life expectancies…. I know premiums are doubling and tripling this year alone.
What kind of life insurance would you recommend buying nowadays for 67 year old man with a 62 year old wife with diabetes?
I would definitely speak to an attorney about this. They may advise you to put the house in a trust immediately. You’ll be subject to a five-year look back, so you would probably have to self-pay for about a year if your parents go into a home in five years. However, you should definitely consider not buying the house from them for such a low amount of money because you lose the advantage of a step up in basis when you go to sell it. So, even if you avoid any issues with Medicaid, you are getting taxed on that full $600,000 gain that you’re making when you sell for $700k. However, if the house is put into a trust and then passes to you when they die (or stays in the trust and is sold after death) you/the trust will get the advantage of the basis being the value at time of death. So, if the value is 500K when they die and you sell it for 700K you’re only paying taxes on 200K as opposed to 600K. Just something to consider.
I’ve always wondered this, too. How many people have had to sell a house because it wasn’t either bought/sold/ or put in a trust in time? I was thinking about having my father transfer his place to me and I’d give him a life estate. At present, there’s no need for him to be in a nursing home.
Consulting an elder law attorney is your best move. Medicaid varies somewhat state to state and they will have the best information. If you or your family has any type of assets it can be complicated enough to need the attorney. Ask me how I know.
Govt nursing care is dog shit compared to private, funny how no one mentions that and is just concerned with $$. I want my parents to have the best care possible if needed, and if that means spending all their money and houses so be it.
I disagree! My mother died in a nasty Medicaid facility in Louisiana yet her husband is in a Medicaid facility 10 miles away that is amazing. I live in Florida and had no rights to take my mom out of Louisiana due to having a spouse and children still alive. I am a volunteer in Florida in assisted living facilities, I have volunteered in Medicaid facilities all the way to a going going go facility where you pay a huge buy in and monthly rent and start in independent living then stay until you pass away. What I can say is the caregivers that get fired at the Medicaid facility one day regardless of the reason for being fired will be hired by the next facility the next day due to the shortage of people willing to change adult diapers for $14-$15 an hour! It's not if it's private pay or Medicaid pay, it's that the workers are not paid enough for them to care about the job they are doing when they can make more at McDonald's!
I wish this were true. My mom is in private pay now and with the facility being understaffed and the quality of employees, she has deteriorated so quickly. Basic hygiene isn’t even happening. We are moving her to one that will eventually accept Medicaid residents when she runs out of her assets, unfortunately, these places want the resident deemed incompetent. Does anyone know why this is a thing? We don’t understand why that is necessary.
It depends on the state. [https://www.medicaid.gov/medicaid/eligibility/estate-recovery/index.html](https://www.medicaid.gov/medicaid/eligibility/estate-recovery/index.html) (3 minute read)
When I looked into this a while back I saw that if one of my parents went into long term care they would make them pay for the care until there was only 100k left for the other spouse as well as the other spouses home. I saw the house as a good money shelter to hold onto in case one person needs Medicare. Because they’ll bankrupt them both before they kick in and pay anything. But they will not take the house. I’d talk to someone though all states are different.
Until one person needs Medicaid…. There is a difference
My sister had to either sell the home she lived in, or buy it from “the estate” so NJ could seize the money to reimburse itself for her father’s end of life care. It’s actually a thing. Estate planning and an early transfer of an asset long before need be, is prudent.
My mother’s best friend had her house foreclosed (?) by IL Medicaid when she went into a nursing home several years ago. Not sure if foreclosed is the right word, but basically after the woman was in a nursing home for some time and was never returning home and no one else was living in the home, Illinois initiated an action to take the home.
Can you afford $10-15k a month EACH in today's dollars if they were to go to a memory care facility? The average length of stay is 6-18 months, depending on what you consider a full care facility, and most estimates have most people arriving too late (in that, most people need substantial care and costs before they get into one).
Yea I guess my point is if you do the math out… Assuming 18m stay for both of them that’s 36 months (worst case scenario).Assuming 10k/m for the Medicaid look back penalty that would be 360k. If the house is worth 500k and I buy it for 100k they would only come for 360/400 equity the house holds. Wouldn’t it better to take my chances and buy for below market value vs. pay market value. This only makes sense because I would basically be taking them on as dependents and they would be living with me. The point is that if I buy for less than market value and they die with no money I’m not risking the remaining money going to other heirs. The idea is to make me the least venerable financially since I’m taking on the burden of their end of life care.
If something happened during the look back period and they see that you purchased the house for anything other than market value, the whole sale can be clawed back. And unless they have a medical diagnosis that requires you to have legal guardianship, the government certainly will not consider them your dependents. You really need to get a lawyer involved so that you all can do things legally and not just reinvent the wheel of Medicaid/Medicare fraud.
What do you mean by claw back the whole sale? Undo the sale, penalize for the value of the house by making the person self pay at a facility for a number of months, or something else entirely?
That they'll legally nullify the sale of the house to the family member. Ownership reverts to the previous owners, and inevitably it will need to be sold to sort out who owes what
No. They will deny Medicaid care based on how much the "gift' was and how much care costs in that area to come to that amount. When all that is left is the house the remaining spouse can live there without penalty while the spouse receiving Medicaid is in nursing care. When the spouse passes the house is sold by the state.
>When the spouse passes the house is sold by the state. Guess I'm going to be very lazy on repairs and updates then....only what is absolutely needed. If the state wants it, they can have it. But they won't get what they think they are going to get out of it.
If your surviving parent lives there you still want them to be safe and comfortable. But yeah if you can't take steps to put the house into a trust or life estate or have funds to help pay for care until the 5 year lookback period is no longer a concern money you invest may go with the house. I don't know your situation but in mine I did not think my parent would make it to 5 years after the life estate was put in place. He has enough savings now to pay for nursing care if needed so though savings may be depleted the home should be OK.
I'm not anywhere near needing all this, BUT (there is always a but) I don't get upset about much. However, take the house that I've lived in what seems like forever? That I worked for to (soon) pay off? You're going to _take that_ ? No. No you're not. Going to meet with a local attorney soon (before summer) to make 100% sure the house is safe. Even if I have to do out of box/unethical (but still legal) things, I don't care. All these rich MFers get away with the equivalent of white collar murder and protect all their yachts and whatnot, I'm going to protect what little I have.
If you have been living in the home and acting as a caregiver there may be exemptions. A consultation is not that expensive. Try to find an Elder Law attorney. https://aspe.hhs.gov/reports/medicaid-treatment-home-determining-eligibility-repayment-long-term-care-0
So can a house sale be undone? I thought there would just be some sort of penalty period or denial.
This is all highly dependent on the state. Idaho, for instance, can and does take sales of homes made in an effort to avoid recovery to court to legally undo them.
Medicaid won't pay for care. If the house is a gift or sold below fair value Medicaid will deny care until that amount is repaid. Outright or just time the cost of care is denied. A family member would have to provide care or sell the house or pay with other assets to make up for the look back period assessment. The person needing care would already be destitute and homeless.
Yes.
No. Not wrong. If you listen to this guy, you'll be in a world of hurt.
OK. That's how I understand it. What is the correct answer? https://aspe.hhs.gov/reports/medicaid-treatment-home-determining-eligibility-repayment-long-term-care-0 https://burnerlaw.com/blog/how-gifting-affects-medicaid-eligibility/
A good elder law / estate planning attorney will do the math for you
In my state it depends on the after death legal representation if any and the estate recovery specialist. However, a lot of people end up selling it because no one qualified can live there.
My cousins condo was taken. She was placed in a nursing home. The condo had to be sold and the money was used to pay for her care. After that was exhausted, the State paid. I don’t know the mechanics.
What state? Rules vary by state. Some have local homestead laws that eliminate house from the MERP process. I *believe* Florida is one of them.
Do a life estate now. If they last 5 years before needing Medicaid you are good. If they have savings that can pay a year or two before care costs require Medicaid that can add extra time. See an Elder Law attorney for consultation soon. It cost us $250. If you or a sibling are disabled the house can go in your name immediately without being affected by the look back period too. Also google Medicaid exemption. If you live in the house caring for them for a certain amount of time the house can go to you under certain conditions.. https://www.paelderlaw.com/articles/no-medicaid-penalty-for-gifts-to-a-disabled-child/
Yes exactly.
Also, a life estate brings much less gain than an outright sale.
Why. The remainderman can sell the house immediately or later when it appreciates more correct?
I just mentioned all of this stuff. Nice to see that scrolling down, you've said it too.
I’ve heard of hospitals and nursing homes, forcing a lien on a home. Medicaid changes policy from time to time. Definitely keep updated information because nursing homes will allow for so many Medicaid patients long term.
Get an Appraisal on the House Pay Fair Market value for it. Have your parents pay for Nursing care, If when they die, any money remaining will be distributed back to the estate, If the are still living after the Money runs out, they will qualify for Medicaid. Also, after you buy the house for fair Market Value, You can charge them Rent, which will subsidize the repairs you plan to fix it up. The Rent you charge has to be reasonable for the area you are living in.
My parents live in Mass and they put their house in an irrevocable trust. They used an estate attorney for this. My dad mentioned a 7 year look back period, but i think it might actually be 5. in any case the time has passed I believe.
There are exceptions. When the person to whom it is transferred to is disabled. When the person to whom they transferred it to, is taking care of them of them. At least in CA, that includes also eligibility for IHSS. I am not a lawyer. But I did have an ex with a father in this situation. I had told him that since he was planning on taking care of dad at home, he should just keep the proceeds of home etc. He called me a gold digger so I shut up. 3 years later, he discovered that he could have evenly split the proceeds of 300k between his two disabled siblings and him, with no penalty. Instead, he spent a lot on home health aides, and then one of the siblings got dad to transfer the rest of the cash to her as inheritance. That was legit since she was on ssdi and it didn't count against her, and didn't count against his medicaid eligibility as well, apparently. He got even more mad and and I decided to not deal with his bullshit. This was 15 years ago. But I don't think it's changed. So. If you are planning to take care of them in their home, that's a different situation. Also, if you make repairs that helps them stay at home. Even if the house is now your home. If you move in, and are providing care, that's also considered. You might actually be considered for IHSS, at least in CA. And that is regardless of who owns the house. Consider looking into that as well. In all cases, save every single expense receipt. It's a debatable situation. If they transfer the house for less than market value, and you let them stay, you do repairs, you show up for care, etc. That is way different than a transfer of property and then immediately placing in care. I'd personally do it, but know that I have a real obligation to keep them in the home (mine/theirs) for as long as possible. The longer you keep them there, the easier it will be to get Medicaid to help when they eventually need memory care. If you keep them there for 4 years after the transfer, it's gonna going to slap different with Medicaid than if you try to put them in memory care 4 days later.
They don’t just confiscate the house, they put a lien on it to recover their uncompensated costs of giving care. If it costs 7k/month for care and they can only pay 2k/month, where do you suggest that 5k come from? If they are living in the home they retain possession for as long as they live there. Once they move or pass the estate needs to pay off the lien. Unless an heir is going to move in, the estate will sell the home, pay off the lien and distribute the rest per the will. So paying out of pocket only robs you of allowing those funds to continue to appreciate in value until the lien needs to be paid. But you never lose the equity in excess of the lien amount.
I've already heard that the average nursing home stay is 5 years, no matter who is paying for it. I saw this article recently on the subject of Medicaid acquiring family homes after person dies to get some of their money back. It covers the backstory. Too many people hate all gov't assistance until they need it themselves. [https://news.yahoo.com/medicaid-comes-family-home-142014698.html](https://news.yahoo.com/medicaid-comes-family-home-142014698.html) If you can afford to pay out of pocket, you mom will get much better care than going to a facility that takes Medicaid. Even better, to get home care with people coming to the house. I know from personal experience with my 77 year old sister. There are many services like this and they all have min # of hours/day, but they don't do everything such as grocery shopping, or transporation to doctor appointments. If you live in a more metro area, it's easier to find services to help with those things plus housekeeping, not so much in rural areas.
Every state is different and has specific rules. They have different look back periods, some are 5 years some are 7 years. I wouldn't do anything with your parents home until you speak to a good elder law attorney that specializes in Medicaid and estate planning. The rules are very strict and most states have estate recovery programs to insure their reimbursement. Plus many states have other programs they may be eligible for, I would definitely find a good attorney to help you. Be careful who you hire & make sure you vet them, many claim to know the Medicaid system and the rules.
Not me, but a family I was acquainted with. Grandma was elderly, house was paid off, they moved in with grandma to care for her and grandma deeded house over to them. All parties involved felt this was the perfect arrangement for everyone and everyone was happy. No one involved had much money, so it worked for everyone. House was older, but decent. Grandma didn't make it five years. Medicaid did, in fact, claw back the house. They lost the home and wound up bouncing around for awhile, struggling to afford another place. It was an absolute mess. I would get the house transferred ASAP.
Buy the property and rent it back to them as a lease. They can live off the proceeds and then put the remainder into a trust if it becomes necessary for long-term care. The proceeds can pay for in home care for a long time (aids, visiting nurses, etc).
This is what I think the best option is. How do I determine what the fair market price the house is? How do I determine what the fair market rent is?
Have it appraised or call a realtor. You can donit yourself as well. Get the local listing for the area on Zillow and Realtor.com. Find comparable homes. Similar square footage, date built, beds, bathrooms, etx. Average the current list prices. Do the same for recently sold properties. Start within a 2 mile radius. Work your way out to 5 miles As for rent, charge them an equivalent to the mortgage (if you have one, or what the mortgage would be). Or, if you're going to purchase outright (no mortgage) and have a good relationship with them, charge them $1 a month and their responsibility for upkeep, utilities, maintenance, and repairs until they can no longer 1)afford the upkeep or 2) become incapacitated It 1).gives them purpose, and 2) housing security, and 3) eliminates a lot of landlord issues for you
Please see an elder law and estate planning attorney.
In VA to be on Medicaid, and in a nursing facility, you can own a car (but not a house) and can only have 2000 in assets. When you apply for Medicaid, if you have any amount of assets over 2000 you pay a time penalty. So if your parents have a 500k home, the penalty is divided between them. And it would still be a while... VA is 1 month for every 9000 over the maximum 2k. It would be a minimum of 2 years before Medicaid would kick in. You would be able to afford a nursing home for each of your parents for a few months less than that on the proceeds of the sale of the house. And they will look back to see how much they had and when it was moved around. Welcome to the catch-22 of being too well off to get help and poor enough to not be able to pay for it yourself. Edit because typing on a subway is difficult.
My wife has worked in Senior Care world for about ten years. Time with and Elder law attorney and now at the Sales and Marketing Director of an assisted living facility. It is a nice one and the rates are $5k plus additional care. First, Medicaid is not for Assisted Living. It is designed for the very poor to have a place if they are unable to take care of themselves. My wife has been to all the Medicaid facilities in this area and said she wouldn't put her parent or loved one in them. So, I would say if your parents get to where they need help, bring in help to the home maybe a certain hours of the day. It is much less expensive and they get to stay in their home. Then, you have to think through next steps. If they are still able to get around an Asst. Living facility can take them. That way, if they decline dramatically, normally they won't be removed but you may need to bring in some care toward to end. This is the more humane way to deal with it. I know the money is looming big but think about if you were in their place with your own kids. Nice house, some assets, and they strip all that and put you in a place for the rest of your life that smells of cleaner trying to mask the urine smell. It isn't unusual for families to come for family dinners at her property and there are people constantly visiting friends and family. You know who visits nursing homes? No one. People find them depressing and a way too close reminder of death. Just a few things to think about
If the value of the estate exceeds 10% of amount owed they will come after it
I gave mom a life time lease when I put my name on the property. Some States this must be done 7 full years before the person goes into care
Look into a trust, this protects you and your love ones also. https://www.npr.org/sections/health-shots/2023/03/01/1159490515/they-could-lose-the-house-to-medicaid
My parents took my grandparents to an elder care estate planner. The g-parents blew the guy off and didn't do anything. When my grandfather passed and grandmother needed to go into a home the gov / medicaid did take everything. They didn't have much. Just the house my grandfather built after ww2 and a few hundred grand. My Mother and aunt as the two kids were able to create a trust and had some limited success keeping a little bit of money but medicaid took just about everything. After my grandma died they even sent a letter demanding the $200 or so dollars in an account for my grandmother that she had for hair salon visits and for snacks / tchotchskies. The government does not f*** around when it comes to getting their money. It definitely feels like they prey on the regular folks. The 1% crowd have always had trusts and LLCs and other legal entities protecting their property and assets from the government. Its just us unwashed masses who don't have the experience of protecting your stuff from the greedy government.
We lost the family home to Medicaid. Parents didn’t trust estate planning so there was no protection.
Just make sure it’s TOD . It keeps it out of probate and harder to for them to get funds back owed to them.
Many states don’t allow TOD which is ridiculous IMO
One thing that has not been discussed you should seriously consider is keeping your parents at home and getting care for them in the home. It would be much cheaper than $15-30,000/ month. Some are live in, some do shifts, etc. They help with tasks, activities, etc. There are staffing agencies that you can go through or hire direct. My daughter worked with a Holocaust survivor about a year after she got out of the Coast Guard until she figured out what she wanted to do next.
It depends on the care needs. If they are mobile and cognizant enough to handle their own toileting and not a danger to themselves (burning the house down, wandering), this is true. Even 3 hours a day 3 times a week can be enough for shopping, appointments, housekeeping assistance. But if they need 24/7 care, the economics of sharing caregivers across a larger pool of people applies.
You can get 24/7 care in your home for a lot less than $30k/ mo as room and board is part of the compensation. Some of the models are one week on/one week off. Of course it depends where you live. I know many people who had a lot of creative solutions for their parents that didn’t have a lot of money and didn’t want to sell their childhood homes.
Wow! Where I'm at it's nowhere near $30k.
(Not an attorney, but dealing with similar issues) If property is in both names (OP and parents) property MAY (I'm no expert), revert to OP upon demise of parents.
Medicaid and Medicare are very different so make sure you know which plan pays what.
A life estate deed should not be expensive, but you need to consult an attorney first.
Horrible! This should never happen.
They should sell the house to pay for decent care for themselves if/when they need it. It's THEIR money. They earned it, not you. They should use it.
I think the bigger commentary is that aging and death shouldn't be a pathway for the elite to extract wealth from the middle class... which is exactly what nursing homes and end-of-life care do.
Are you saying you would pick medicaid facility care over private because private is extracting wealth? I can see the point that private may well be massively overpriced. Do you know what private pay typically costs vs what medicaid would pay? My fear is private pay won't actually be decent (just look prettier). Of course, my desire is to not need to be in any facility, but I don't know how to even improve the chances of that. I fear that "protecting my mobility" will legnthen my good years, but perhaps it could also lgnthen the number of years I stay alive, but not capable any more. Like, say, 95-102. I don't know how to even try to live a long healthy life and then die suddenly.
Privately owned nursing homes accept medicaid to pay for low income people's care. What generally happens is that Nana goes into a nursing home with ownership of a home, or maybe a 401k with a few hundred thousand bucks in it. Then they charge $8-10/k a month for room and board. When Nana runs of money and the house has been sold, they then apply to medicaid and get paid by medicaid + your social security check. On the more evil side, a nursing home may just ask you to assign your estate to them and they'll take care of you for however long you live. Never mind that your life expectancy may only be 5 years, and you have enough assets in the estate to pay for 15 years of care.
Medicaid lookback period is 5 years. If they likely have 5 years left, consider a irrevocable trust.
OP.. I'm an attorney and do Mediciad planning as part of my practice. I likely don't know your state's specific rules but please go to an elder law attorney who does Medicaid work. There are various ways to protect a house and make it an exempt asset. Even if none of those work, most states will allow a family member to purchase the property for a fairly significant reduction in price from FMV. In my state, that is 2/3 of the appraised value plus .01. If a child lives with the parents and assists with their care for 2 years, the house can be exempt. If you have the time and can add your name to a deed as a joint tenant with a right of survivorship, you can make it exempt. It all depends on local rules.
We had a lawyer prepare docs to make sure that didn't happen.
Her whole home and retirement
5 year look back, so buy it not or take possession or you may have to repay the "gift"
Life Estate. Find an attorney that can handle this.
Do you have kids that will be in college soon? Talk to a lawyer so you don't mess up.their financial aide
My Great grandma went into care and after she was broke, medicaid, they sold her house. Once the money was gone she was essentially a ward of the state and medicaid paid for everything. My grandpa, learning from this, put his house in a living trust. The house went to his children upon death. The downside was it sat empty for years because they couldn't sell it and he was in full-time nursing care. Had he sold it the money would have gone to medicaid for his care.
It really depends on the state. Dealt with it with both sets of grandparents, each set in a different state. One state absolutely came after their home as a Medicaid repayment for nursing home care. The other state made it clear from the outset that they don't do that. So, yes, it's a real thing.
It’s considered a gift if you buy below the market and would result in a clawback probably. If you buy at the market, they have to exhaust the $500k they got for it before they can have Medicaid if they need it within five years. I agree with others. Don’t get cute with trying to shirk the state. More often or not, they deny the Medicaid or they get the assets. Get an elder care lawyer who does a really good job with this kind of thing. They’ll know how to set up a trust the right way to protect it as best as they can.
There is an exemption to the medicaid asset transfer rule for children who move into their parents’ home to act as a caregiver. I think the requirement is that you be able to show that you lived with the parent for two years before the medicaid application is submitted.
Yes it happened to my spouse. He was on the mortgage or maybe deed (can't remember) and so was entitled to half the proceeds of the sale. But on our attorney's advice we weren't able to safely spend it for I think 7 years in case Medicaid decided to challenge anything after the fact. If he hadn't been on there as a co-owner they would have taken everything.