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.
Ok then, I'd be very concerned that mom will be ruled ineligible for Medicaid over rental property snafu. If rental was not disclosed on the Medicaid application & renewals, and family isn't being cooperative now with paying rental income within moms SOC, the state could suspend moms eligibility. What is problematic in this is that it could be retroactive to day 1 of NH stay AND the NH gets a letter this is being done SO the NH gets a clawback of payments paid by the state. It could be a significant sum of $$$. NH expects to get paid and will do whatever to get paid. If mom is not paying the rental property income to the NH as a part of her required co-pay or SOC (Share of Cost), then mom is out of compliance for the Medicaid program so NH can issue her a 30 day Notice (basically an eviction letter). The 30 day usually means she either moves back home with family; or family signs off on a financial Responsibility agreement for past due & monthly fees. No other NH will take her either unless she comes in as private pay as the Medicaid problems will show up. If a resolution doesnt happen, NH can contact APS to get mom made an emergency ward of the state and court appoints a guardian. If ward of state happens, guardian will now be in charge & will decide what happens with that house.
At my moms first NH, this happened to one of the ladies in a room in my moms wing. Her son (a real Azz IMO) sold her home after she went into the NH. & state found out. Son flat refused to deal with Medicaid & NH apparently for months. One day he was there yelling in the hallway as his mom was gone. A ward of the state had been done and guardian moved the little lady to another NH. I just cannot imagine how traumatic this was for her. Cops were called on the son too. The NH probably sued him or turned the account due over to collections. It can & does happen.
So who is DPOA? They have a fiduciary responsibility in all this.
- Who signed the admissions agreement - mom, you, bro? If you personally signed any of the many pages of the agreement, then you could be held responsible.
- Who submitted the documents required for the Medicaid application, like moms awards letters, banking, etc?
- If mom has had medicaid renewals, who signed off on those?
- Who has gotten & is getting the correspondence from Medicaid? These tend to have specific & very tight time frames for documents to be submitted or appeals to be filed. If info isn't submitted on their timeframe, mom will likely be found out of compliance and ineligible. If its your brother, I'd suggest you send a fax & certified mail to medicaid requesting copies on all correspondence especially the ones that state moms required co-pay.
- What is happening with moms personal needs allowance?
- Are there any other issues lurking about? Like if the state asked for 5 years of bank statements and taxes, will there be questionable spending that could trigger a transfer penalty inquiry? I'd be real worried that all this has red-flagged mom and her whole application get re-reviewed.
? is is you or bro that lives where mom is? Its you who lives in moms state, (so bro lives in another state), correct?
The answers to the above are about finding out who's up for liability in this clusterF.. The whole situation probably imho has morphed beyond any DIY action. You (& hubs) need to schedule an appt with an elder law atty - I'd suggest one that is NAELA - to find out what needs to happen for mom to remain on Medicaid and remove you from liability. I'd gather up all the house documents and last couple of years of assessor statements on house & do a "face sheet" on mom in advance as it will make atty costs lower. The face sheet should detail moms life like DOB, all marriage, spouse & children info, details on all property, etc. Every day you delay adds onto NH costs that someone will be found responsible for.
She died. We were told that out basis cost of the property was the market value on the day of her death. We sold it within a month. So after the closing costs were paid, we actually had a small net loss.
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....
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.
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.