Got a house to rent? Medicaid will stuff it into its maw.

Started by

NO ONE, absolutely NO ONE, told us if we rented the house that was transferred to us 10 years ago, if we rented it out after mom went into the nursing home, that MEDICAID considered it MOM'S income. Not ours. And now those b*stards,they want us to turn all the money from the rent over to them. Medicaid. NO ONE ever thought to mention this, the nursing home, the lawyers, the tax prep people, my brother who supposedly knows EVERYTHING. We thought it was the 8% cut they wanted because, life tenancy for mom in the house. No, they want it ALL. When the house is sold someday, then Medicaid will get the 8% from that. I am horrified. Our taxes have been done already, we paid taxes for renting out the house, and then we get a letter from Mediciad saying 'you owe all the rent.' So it's not even our house, we paid taxes on MOM's HOUSE???? So what does that mean as far as the taxes? I am beyond horrified. My husband told my brother long ago, "if you want to be a long distance landlord, go ahead, but leave us out of it. I am advising you to sell that sh*tbox 'as is' and don't rent it, try to squeeze out some big profit from it, it's now in a slum neighborhood and who would pay out the nose?" OMG. I told my brother he better find himsself a lawyer. I'm not giving him a cent. .... I have done all the heavy lifting here with mom, I have lost years off my life being a 'caregiver' until I finally got her into a nursing home. Thought we were done. And here is a new sh*t storm falling on our heads, it simply doesn't END! So it's not our house but still my mother's?? Let Medicaid go dun mom up at the nursing home, they will get a big fat smelly diaper for their troubles!.....No one told us. OMG.

13 Comments

He should have gotten himself an eldercare attorney at the outset...
No one told you. Whom did you ask? Maybe ten years ago the notion of needing Medicaid some day wasn't even on your radar, and you (and your brother) can't be blamed for not knowing to consult an elder law attorney, but that sure would have been good!

I suppose Medicaid considers Mother's life tenancy as an asset. She has the benefit of that house as long as she lives. She has responsibility for upkeep, taxes, etc. The rent money is hers and she needs to pay the house costs out of the rent. Then she needs to use the rest of the rent money, if any, for her own care. Her life tenancy was sweet as long as she lived in the house and didn't need government help paying for her care. But things got complicated fast when she moved out.

Death terminates her life tenancy. But she hasn't died. So, I suppose, in the eyes of Medicaid, the house is still hers to do with as she pleases, as long as it doesn't reduce the value of the property.

I'm guessing. I am not a Medicaid expert. A Medicaid expert should have been consulted before renting out the house.

The best you can do now is consult an Elder Law specialist to remedy the situation as best you can.

I always feel bad for people like you who are doing what they consider the right and proper thing who get caught up in technicalities they didn't expect. Perhaps by posting here you may have helped prevent someone else from getting caught short like this.

BTW, what is the 8% you are referring to?
I'm confused. Who's name is on the deed? If it's your name on the deed how was it "transferred" to you? Also, if it's your name on the deed, is it the "life tenancy" that has push this issue so far past the usual five year look back?
The house was deeded over to me and my brother 10 years ago. However, mom has life tenancy in the house. She could live there till she died, but she went into a nursing home 2 years ago. One year ago my brother and I rented the house to some relatives, and Medicaid now says even though the house supposedly is deeded to me and brother, all of the rental income is my MOTHERS income. All of it. We thought Medicaid would want 8% of the rent due to mom's life tenancy, but no, they want all of it - except for insurance and taxes (I HOPE).

They tell me when the house is sold, we will lose the 8% of the cost because of the life tenancy, and we knew about that.

We weren't looking to get rich off the heap, the renters want to buy it, badly, but it won't be for a couple of years (they're young and have to save up some).

It was a shock to get that Medicaid letter. My husband is furious and thinks we should sell it ASAP 'as is', or my brother should 'buy me out'. Just like that!

Brother says he won't charge them rent after the first year lease is up, he will ask them to just pay insurance, upkeep, and taxes, not monthly rent. (Does that sound kosher??? I don't think so, but that's his plan!) He will not sell the house 'as is', he wants to wait 2 years till the renters scrape up the money to put a down payment on it.

And here I am right in the middle, I don't know anything whatsoever about this kind of stuff. I thought my brother knew what he was doing, he handles all the finances. He's the one who does the taxes, talks with the lawyers. And no one ever mentioned anything about the rent and Medicaid, they knew the circumstances, and went, 'yeah, you're renting the house? cool, here's a lease rental form, here's the tax prep forms.' We had no idea all the rent was considered mom's income.

Everyone is just furious.









That just doesn't seem right to me - if it's been ten years and your mothers name is not on the deed. I get how'd you would assume 8% but not all the rent. Is there an appeal option? Maybe consult with a elder attorney. Sure seems off to me. I'm sure there are probably dozens of situations like your - where someone else has the house and is renting it. I've heard of houses being sold but the elder person can still live there a while or until death. What would Medicaid do in that case - if the new owner was not related. I can't imagine they'd be able to pull this in that situation. If I were you I would ask for a appeal or review.
The best you can do now is consult an Elder Law specialist to remedy the situation as best you can.
I've been thinking about your situation. I imagine Medicaids stance comes from the lifetime right to live in the house. They probably figure that if mom was living there she would be the sole occupant and of course the house would be unrentable regarless of ownership. So now - while mom can't live there anymore she still retains that right. And since mom can't live there you are able to rent it - thus them coming to the conclusion that because Medicaid is paying the bill that allows mom to live elsewhere this allows you the ability to rent the house - because of them paying the nursing home - therefore they should get the rent money. Does that make sense and/or sum up their position? I follow this train of reasoning but sure think it's a nasty reach-around on their part. Still, I would consult an attorney and ask for an appeal.
Lassie - so exactly how is the property recorded at the courthouse? How it precisely reads is critical in all this.

If it was transferred to you & bro, recorded in both names and so you both have been paying full tilt & no-exemptions taxes based on that, then it's your & bro's asset. And doing this now for about a decade.

BUT, I'm gonna guess that it has not and been kept in moms name in eome way so it has gotten a homestead exemption and a whole bunch of other over 65/senior citizen exemptions as well. Mom has a life tenancy which allows for this but it also means she retains a degree of ownership. Just what & how will depend on your states legal & you need an qtty to dal with this.

Medicaid requires that they pay whatever income they get each month to the NH as their copay or SOC (share of cost). Rent is income and it needs to be fair market value rent. Not a special deal.

I'm going to go out on a limb on this, but I'd bet a case of Prosecco that your Bro is the type that plays fast & loose on requirements, compliance & legalities. He is a big personality and usually gets his way even if its totally wrong. Your hubs knows his BIL is this and has wanted to get away from anything BIL but has held back as he's your bro and hubs has gritted his teeth to not upset you as you are his bride and his love. In the past, the amounts involved were smallish as were issues with the house but now as MILs NH costing thousands a month and a decade older house, it's a lot of $$$$ & liability looming for you & therefore hubs.
If mom is ruled ineligible for Medicaid, the NH will come after you personally to be paid. And the ineligibility will start day 1 of her NH stay. Avg NH cost is 5K -15k a month, over 100k a year in most areas. Hubs knows this!

Bros wanting to not charge FMV rent to get around Medicaid's % and just getting renters to pay taxes, "upkeep" (& just wth is that) won't work. Medicaid rules and required reporting for rental are pretty specific. There are folks on this site who have done this (Pam) and very knowledgeable about renting and the ramifications for Medicaid and tax issues (AKdaughter) of rentals.

If your bro just won't be all legal, aboveboard in all this, I'd suggest you cut your losses & get an atty to legally remove you from any ownership & liability ASAP with the future clusterF. I'd love to hear your hubs viewpoint btw....
igloo: My husband hates my brother. (That's it in a nutshell. He doesn't want us to be involved in all this. He thinks my brother isn't as smart as he thinks he is. He will not pay one red cent for anything involved with this. He wants the house sold 'as is' - tomorrow.) I can assure you, my husband is no financial expert. When his mother died, he called a real estate company and the Salvation Army to come and take the furniture. The house was sold 'as is' within a month. I went over there twice to take out some clothes and valuables, left a note for the Salvation Army to take everything in the house. That was it, the. end...My brother thinks he can get some 'better' money by selling it on the market, 'I am not going to just GIVE it away'. The renters want to buy it but won't be able to for a year or two. .... So here I am in the middle of the two of them, as usual. I would love to be rid of the house, I don't care how much it goes for, I'm on my husband's side. But there's my brother across the country with his long-distance landlording, who is supposed to take care of the financial stuff, and it seems he does NOT know everything.

Keep the conversation going (or start a new one)

Please enter your Comment

Ask a Question

Reach thousands of elder care experts and family caregivers
Get answers in 10 minutes or less
Receive personalized caregiving advice and support