Medicaid is paying for mom's nursing home. Can I rent out her house?


Q: Can a home be rented to cover taxes and utilities while parents (who wish to return home) on Medicaid are in the nursing home?

A: The answer is yes. However you must be mindful that if rented the home is typically no longer an exempt resource.

Any income, after expenses, must go to the cost of their care. In any event, make sure the home is titled properly as to avoid probate and therefore Medicaid estate recovery at their demise. What a pain that would be, especially if it is the only asset!

Ralph S. Robbins, CFP©, is a licensed Certified Financial Planning Practitioner and an Accredited VA Claims Agent specializing in Eldercare Financial Planning. He works everyday helping families in crisis find creative ways to fund long-term care expenses and deal with family financial issues.

Ralph S. Robbins, CFP

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My mom is a TX Medicaid paid resident of a NH & has her home. I & another family member pay for all items related to the property, which sits empty and is NOT rented or occupied. Upon her death we will be able to recoup these costs from her estate. I keep records of all costs.

This is due to Texas Administrative Code Rule §373.213 Deduction Allowed for Expenses for Home Maintenance and Costs of Care:
(a) An amount equal to necessary and reasonable maintenance expenses and taxes may be deducted from the Medicaid Estate Recovery Program (MERP) claim for maintaining the home of the deceased Medicaid recipient, provided that sufficient supporting documentation of these expenditures, such as receipts, is provided to MERP by estate personal representatives, heirs, or legatees. Necessary and reasonable expenses for maintaining the home include real estate taxes, utility bills, insurance, home repairs, and home maintenance expenses such as lawn care.
(b) An amount equal to the necessary and reasonable expenses for the direct payment of the costs of care (including payment of personal attendant care) provided for a deceased Medicaid recipient that enabled the recipient to remain in his or her home and thereby delayed the institutionalization of the Medicaid recipient may be deducted from the MERP claim, provided that sufficient supporting documentation of these expenditures, such as receipts, is provided to MERP by estate personal representatives, heirs, or legatees.
(c) Requests for obtaining allowable deductions from MERP claims for expenses under subsections (a) or (b) of this section must be made in writing within 60 days after receipt of the Notice of the Intent to File a Claim by MERP. All supporting documentation must be attached to the request and sent to MERP, Home Maintenance/Costs of Care Request, P.O. Box 13247, Austin, Texas 78711.
Source Note: The provisions of this §373.213 adopted to be effective March 1, 2005, 30 TexReg 830

For us this works (property is modest and expenses are manageable) and we are most fortunate that my mom had fabulous neighbors who look out for the house. This wasn't a decision just done, but based on meeting with Realtors regarding selling the house in the current real estate market and then estimating out things needed to be done, etc versus spending her money on paying for IL, expensive dental work, etc for her. Doing a spend-down on IL, dental etc was the better thing to do both for her and from a long term financial perspective. My mom is mid90's so realistically this is a limited time situation. If she was like 80 then the house would have been sold and probably way below assessor value with the proceeds used for her care. Now when she dies, we let MERP know of our claim against her estate and request a release of MERP's claim. Texas is an level of Claim state. MERP is a class 7 claim, so our claims against the estate will be paid first and way ahead of MERP. MERP can decide to dig in and file and go to probate, but their claim will be very limited to what they can get. Plus you can roll out probate to 4 years in TX. MERP in TX is done by contract (not state employees), so a claim that is low value and likely to run for long probate is not the best claim to go after. With a release we can probate her will as a Muniment of Title (a single filing and a single hearing in probate court). Since she is on Medicaid, there will be no medical expenses and she has a prepaid funeral & burial, so none of those expenses so really should be no obstacles to doing it as a Muniment and 180 days later it's done and very cost-effective and all that's left is to file another affidavit that the terms of the will have been fulfilled and in less than 6 months. I did this for one of my aunts estates and really is feasible for many to go this route with the proper planning and sense of humor.
Thanks for the Legalese translation. Actually was able to follow it!