Does she also need a Ladybird deed to protect her house from Medicare?

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My Mother had a revocable trust done by an estate attorney. The revocable trust was done by an estate attorney, but another attorney told my sisters and I that our mom should have a Ladybird deed to protect the house. She is 91 and dementia is getting worse so fast we are afraid she might soon have to go to a nursing home. We want to make sure her house is protected. We are in Texas. Thank You!

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Babalou, an example: modest home equity $250,000
Homeowner dies in Nh 30 days. - 15,000 to Medicaid
Balance of home equity value. $235,000
Cost of lien delays, unknown facts,
Family gives up, Loss: = $250k
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To put it simply, the government can delay the sale of an estate.
The timeliness of an offer and close of escrow, and the close of probate makes a profitable home sale complicated at the very least, and impossible to benefit any entity except the government.
What I am thinking, is if someone were on their toes, a quick, profitable sale could allow Medicaid to be paid in full, with money available, instead of bankrupting all parties by setting up a catch 22. However, no one will ever know what that amount is.
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Igloo! Thank you, you are amazing to give so much of your time. I have read most of your post, but I wanted to thank you most sincerely right now, because I read, then lost your post, looking, looking, so tonight I re-found it.
That was an answer I can understand.
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Sendme - part 2…..None of us have a crystal ball, but I see a whole hosts of issues in the future for MERP:
- the expected payout from MERP is probably not going to be there. Medicaid elderly in a NH just won't have houses that are worth enough to pay off the staggering costs of care if they are in a NH for an extended period of time. If they have any $, they have the ability to buy into a CCRC or be in a noMedicaid facility & they have already done a trust of SCIN to deal with their home, business or other property when in their 60's or 70's and before ever needing care.
Its the poor or limited income lower middle class who end up on Medicaid or the elderly who live to mid to late 90's then need a NH and have run out of $, so they probably haven't done anything on the house in ages.
- right now, MERP is kinda just starting to appear on the radar. Most families are still totally blindsided that MERP even exists and that their elders house is subject to it based on posts on this site. Once more stories are known and the fact that the state is going to place a claim or a lein on the house for whatever huge amount the cost of care is, families will walk on doing anything for their elders home. If there is not ever going to be any benefit to doing anything on the house - whether paying property taxes or mowing the lawn - then family is going to walk on the property. It's not theirs or not theirs ever likely so why bother. People already know they can walk on their homes due to the whole foreclosure & shortsale the past few years. Why care about grannies house? The state is not really set up to manage thousands of old folks old houses with years of delayed maintenance and stuff in them.This snowballs all sorts of property blight & tax sale issues which costs the cities & the state to have to deal with.
That big pay out the outside contractor expects because family will want to keep grannies house at all costs won't happen.
- as more folks realize that MERP exists, they are going to plan and be prepared to document all sorts of costs to offset any MERP claim or lien. Family will file for all sorts of exemptions and exclusions and document as needed.
- a whole new subspecialty for probate atty will open up to deal with the outside contractors who do MERP for the state. Its a perfect opportunity for an HMS or PCG legal to leave and start a speciality practice for families facing MERP.

It will be interesting to see what the true $ # & profits are for recovery. Not what state got paid, but all the costs involved and the time to close out on property. Is the cost effectiveness of the program actually there, type of question.

Genworth just put out a study on costs of care. Alaska came in at #1 for NH costs at $ 281,000.00 annual cost. Over a qtr of a million dollars! Average private NH room & board costs annual is 92K and semiprivate 80K. AL average cost $ 3,800 a month & home health @ $ 20 hr. Health care grows about 8% annual. At some point in the near future, the costs of care paid by the state for Medicaid and by the feds for Medicare (especially hospice) will flat just not be sustainable.

Recovery from elders houses isn't going to be the solution to pay for care for the aging of the US.
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Sendme - get a cup of coffee this is going to be long……Part 1: How the states do recovery varies as Medicaid is administered uniquely in each state but under an overall federal guideline though CMS (Centers for Medicare & Medicaid) & then add in how your states property law and probate runs. The state does not actually "take" a house but rather can place a claim or a lien on the estate & its assets (the house). The claim or lien has to be paid or settled to be lifted off so the house can sell or transfer.

For me with my mom on NH Medicaid in TX, it was that within the initial Medicaid application there was an "Acknowledgement of Participation" statement that basically stated that the state would need to do an attempt to recover any costs that Medicaid paid. As it is an acknowledgement of participation, you don't sign off your approval. By applying for Medicaid, you accept the programs terms. In mom's annual renewals, the acknowledgment was there again. Yes, I do totally agree with you that just what this means is not clear but whether it legally has to be is not covered (as far as I'm researched) by any consumer protection laws as it is the state (and not a credit card company or other creditor subject to consumer protection).

Keep in mind that Medicaid is an at-need entitlement that you have to individually apply for. It's not at all like the 2 other entitlements - SS & Medicare - which we are required to pay into via FICA and get a defined benefit from. It is a by choice entitlement so the state can set the rules within federal guidelines. Since the 1990's, some states have done recovery. But most didn't. I would guess that recovery were done only for those with significant tax assessor value in states that property rights allowed this to be done easily (so not in FL or TX). A pretty easy search by a state worker to find out as tax assessor stuff dovetails with state overall database.

Then in 2006, Bush signed in the Deficit Reduction Act. Within DRA is the requirement for Medicaid to have a defined program for recovery. MERP or MERS depending on your state was now required to be done. The big shift now (2013/15) in this is that more & more the states are turning over recovery to an outside contractor. There are 2 main ones - HMS & PCG - who do this via state contracts in which they get a % of the recovery & fees. About 1/3 of the states are doing this and counting. Really good info on this for TX on the website of Randy Drewitt a NAELA in Beaumont.

What is important is that recovery is required to be attempted, BUT NOT ALWAYS DONE & for various reasons. There are all sorts exemptions & exclusions as well as the state requires a cost benefit analysis for a claim or lien to be done.

What seems to happen is - even w/a will - families don't do probate. Family ignores MERP "Letter of Intent". Family kept no documentation on expenses. Caregiver exemption are not easily gotten as it has been years since the elder saw their old MD & they need a letter from the old doc to get that exemption. Family does nothing so the state can place a claim or a lein by default. For MERP, that is probably the ideal position as once the claim or lien is there, it has to be removed to ever do anything w/property by & large.

If the person dies without a will, then they died intestate which in most states assets escheat to the state so basically the state is in control to begin with.

When the federal level planning for MERP was done, it would have been late 1990's - 2004. With whatever last minute tweaking to the Public Law in 2005/6. At that point in time, it was totally the real estate bubble. Crap houses were being appraised beyond their worth. Low income folks were able to buy homes costing 500K. Homes just appreciated in value by just being. Grannie's old 1940's house w/years of delayed maintenance could be easily sold for 300K maybe 400K or even more! Houses were little gold mines of "value". Then add into this mix, that health planning & legislative wonks writing the PL are in their 20's & 30's and have no real sense of what NH care is or how most elderly live in the US (that most elderly are low income with only SS); what they see is the huge housing bubble that means $ out there for anyone with a home. MERP is the perfect solution to have cost containment for Medicaid costs.

As an aside to this, at the same time MERP was being done, the Medicare Secondary Payer Act was also happening. It's the same thought process, that there's going to be huge payout to the elderly either for their property (MERP) or their insurance claim (the Payer Act) that makes it worthwhile to go after the supposed $$$ of the elderly.

I bet the thought was that even if grannies costs of care paid by Medicaid was 200K, family could still sell house for 300K & everybody happy. Merp gets $, family gets $ & grannies care got paid. Everybody got $. Flash forward to 2015 and grannies crappy old house is just that a crappy old house with limited value but the costs of care by Medicaid has increased dramatically since 2006. Plus there are foreclosed & short-sale houses; lenders required more review of applicants and appraisals on houses; underwriters are adverse to do the paper on old houses with issues. Grannies house is likely never to be a windfall of cash payout.

Based those who still had their home but were in the NH with my mom, none had a new or renovated home. Their ladies (& occasional rooster) in their 80's & 90's with homes bought 1940 - 1960's with delayed maintenance & tax assessor value under 100K. They have limited income - maybe $ 1500 - $2200 a month at best. They have to be low income level to even qualify for Medicaid. Nobody had a built in 1995 condo with value of 425K. If they are in a NH for a year, the costs of care are going to exceed the value of the home. They have already impoverished themselves to even get onto medicaid. This is what Babalou so aptly, pointed out.

So what to do? Family, hopefully, has been keeping track on the costs of grannies home, so they have their own claim on the property. Family, hopefully, has the income to pay on all on the house from day 1 of Medicaid till they die and then through the probate period. Family, hopefully, keeps track of the costs of care paid by Medicaid & can challenge the tally. If your elder goes onto hospice, this is especially important. Family, hopefully, either does probate to have a way to negotiate claims or liens or does whatever needed to get a release of MERPs claim or lien. Family has the ability to run risk on all this and keep a sense of humor going…..

Your right that the state should be able to provide a tally. Perhaps some states programs do this? I would like to see it required for the state to do this accountability as CMS does so routinely in their Medicare paperwork on all charges paid. It will increase the states costs to do Medicaid, which is probably a reason as to why not done. The feds could require that it be done for the states to get their $ via pressure from CMS and federal consumer protection laws.
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Sendmetohelp, since NH costs where my mom is currently are $15,000 per month, it doesn't strike me that anyone who is relying on Medicaid is going to end up owing less that a modest home is worth. In fact, the equity allowable in a home for Medicaid purposes is currently capped at $500,000, somewhat higher in the NorthEast. I just don't see this as an issue.
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Medicaid should be required to notify people of what is owed. Do they?
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As an added question: Shouldn't there be some accountability from Medicaid to inform the recipient of medicaid benefits (ahead of time, regularly) or their family poa of the amounts already owed to medicaid at death (estate recovery program).
This 'unknown amount' seems to be a secret, looming as a threat on the horizon ---a threat so ominous that they can take someone's house?
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Really you need to either get with the atty who drew up the initial trust or see a new NAELA atty if the old one is more of an estate atty & not elder law savvy.

Lady Bird Deeds aka enhanced benefit deed in theory enable the house to transfer outside of probate so outside of MERP - Medicaid's estate recovery process. There could be an issue if the trust owns the home in doing this, really you need legal to evaluate the situation. There could also be an issue in moms competency in doing anything legal.

Whatever the case, another thing to consider is the financial costs on moms home. Whether in a trust, in a LBD, or continued to be owned by the NH resident, once they go into a NH and on Medicaid, they will be required to do a copay of all their monthly income less $ 60. There will be no -none -nada- zilch of moms $ to pay on anything on the home anymore. So family will need to pay for everything on the house - taxes, insurance, utilities, maintenance....and from day 1 of NH till they die and then through the probate or post death legal process. This could be a manageable amount of $ or not at all affordable. If it is likely the situation will be that several family members are going to be paying on all things house, well.......the reality is that although everybody is all kum-ba-ya at first they just aren't going to be cooperative in paying & doing months or years of house expenses. What happens 3 years from now when a hail storm comes & a roof replacement needs to be done with someone on site during the work? It's stuff like this that become divisive. Have a clear understanding of what the house costs to maintain & legally drawn up agreement as to the house, it's costs, who pays and how the equity on the home is to shared after death is to be done. Someone will need to be the bookkeeper too. Plan on at least 5 years too.

Most of the time family ends up selling the house and using the $ to pay for NH, or do a preneed funeral & burial or a special needs trust. You know your family best, if one of the siblings or their spouse is struggling financially or not keen on keeping the house, or fond of mom, it's not going to be pretty. Good luck.
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Yes, Medicaid.
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