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In some states income property is allowed as long if they are producing substantial revenues. You should sit down with an elder law attorney and do some planning that works in your state and your situation.
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TJ - there is no one simple approach to Medicaid as each state can manage its Medicaid program. For couple's Medicaid it can be pretty complicated as only the applicant (like your mom) will need to meet Medicaid's pretty strict "at need" eligibility and dad would be considered the "community spouse" so should be able to maintain income & assets and not impoverish himself in the process of mom becoming eligible.

Really for couples working with a NAELA level atty in advance of ever doing the Medicaid application should be the way to go, imho. if your folks have assets (which is sounds like is the case) Dad will more than likely need to shift assets into income or pay off other items to enable him to be in his best community spouse situation. He's probably overwhelmed with his concentration on mom's day to day care to begin with much less figure out future planning. That where an NAELA atty is pretty priceless.

Please please keep in mind that Medicaid is for those who are "at need". If that "income property" is an investment property and not their primary homestead, it's going to be considered an non-exempt asset & will take mom over the asset limit of 2K allowed by Medicaid. She won't be eligible. What often seems to be done is that the property is sold with mom's ownership share used for her spend down but dad's is converted into income (like he gets a Medicaid compliant SPIA - single premium immediate annuity) as his income is not counted for Medicaid. For Medicaid, couples have a max allowed for non-exempt assets - most states have it about 119K. So often investment property sale proceeds feed CS assets to the 119 limit and then the rest go to the SPIA for the CS. Personally I hate annuities, I find them a pox on gullible elderly, but a SPIA for a healthy &/or younger community spouse unable to care at home for their spouse can totally make sense to do both to get mom onto Medicaid yet allow dad to have more funds for his own aging. Whatever the case, none of this is a DIY project. Find a NAELA atty for your folks and make an appointment and help them get their paperwork on assets and income together.

Good luck and keep your sense of humor going….
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