When Medicaid makes a claim against my my mother's house, can I make payments instead of selling the home? - AgingCare.com

When Medicaid makes a claim against my my mother's house, can I make payments instead of selling the home?


I lived with my mother in her house to help take care of her a short time before she had to go to a nursing home. I've continued to live there as I lost my house in a divorce. I want to keep the house as my residence, as it was my mother's home and my credit is too poor right now to go out and rent or buy. I'm over the 200% of poverty, so I can't claim hardship. Can I simply make payments to the State?

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North Carolina's Medicaid Estate Recovery Program only extends to assets that are subject to probate. Therefore, the last thing you want is for the disposition of the house to be handled via a Will as the property will then be subject to probate and recovery by Medicaid.

Alternatively, the house can be titled in the name of a Revocable Living Trust. Assets titled in the name of a Revocable Living Trust are not subject to probate in North Carolina and therefore not subject to Medicaid recovery.

Since from an ownership perspective (with respect to Medicaid eligibility) an asset owned by "The Mary Jones Revocable Living Trust" is the same as one owned by "Mary Jones" there is no issue with continued Medicaid coverage and "gifting" if the house is retitled in the name of a revocable trust. Your mom will still own the property and have full control of it just as she does under the current deed. You will be named as the trustee and the beneficiary of the trust.

The only issue that may come up is with respect to Homestead property tax exemption. It may be in North Carolina that a home titled in the name of a Revocable Trust may not be eligible for same. If the home does not qualify for exemption under the name of the trust if may cost you a few hundred dollars more per year in property taxes. It will be up to you to decide whether it is worth it or not.

If you have POA for mom you can probably do this without her involvement (if the POA has the correct language) and it should not be very expensive. You do not need a pricey elder law attorney, the guy or gal around the corner will suffice.
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What you are taking about is the MERP program - Medicaid estate recovery. MERP is required by the feds for the states to participate in Medicaid. When they apply for Medicaid for NH, the acknowledgement on MERP is in there. BUT - this is the sticky part - MERP has to run by how your state does probate. Probate court is where estates are heard and where MERP's claim or lien against the estate will be presented via probate.

MERP doesn't seem to want a payment plan, they want the proceeds from a sale. NH costs run 5 - 12K a month, so the overall debt is about 90K a year and the average stay is 3 years, so that is over a quarter of a million $$ due. So they don't want 50 a month as it could never be paid and it's not set up as a revolving debt.

But before even thinking about probate, you need to see what mom's state has as it's MERP exemptions. You may qualify for 1 or more of the exemptions BUT - this is very important - you have to file for the exemption(s) within whatever your state has as it's MERP time frame. This is critical. I am all about finding out the nuances of MERP as my mom still has her house and is in a NH on Medicaid.

It seems that once they die, the state database co-ordinates with MERP. So that if they have real property, MERP will send the decedant's representative on file based on the Medicaid application a "notice of intent". So it is important that your contact info is correct in all things Medicaid. When you get the notice, you have to in writing let MERP know of any reasons why the MERP claim is not what they think it is. So this is why you have to file for exemption(s) in a timely manner, so that MERP can evaluate if they even will do an action and then if they decide to do an action, what the recovery amount is. Understand?

State law for probate is mucho importante! My mom is in TX and under TX law, MERP is a claim against the estate. Not a lien on property but a claim on the estate - quite a big butt difference. Now TX is a level of claim state for probate and claims against the estate are paid by their placement within the claim level groups. So in TX, MERP is a Class 7 claim, so everything that is from Class 1 - Class 6 must by law be paid first and foremost. Now administration of the estate by the executor, funeral and burial costs, mortgage or other property costs, health care costs for the last few months or years are all paid before as they are in higher levels of claim 1 - 6. Credit cards are a Class 8 claim in TX - so good luck on them ever getting paid. So in TX, MERP happens but is lower % of recovery than in a state in which runs as a equal claim state or one that allows for an actual lien to be placed on the property.

Now my mom's house is empty so all the expenses on the house (taxes, insurance, maintenance, etc) is paid for by myself or another family member. For property in which there is nobody living there, all the normal costs on the house are counted against the MERP tally. This is in TX law and is done so that the state does not end up with even more property that has just been abandoned or has tax liens, or mortgage issues. Most states have this in law but seems to only apply to empty homes. As all my mom's $- less $ 60 a mo - goes to the NH, family has to pay for all. When my mom dies, I will let MERP know with documentation, all the expenses we paid on the property. In turn, these will be vetted by MERP and the whole amount deducted from the MERP claim. So MERP has the time to decide whether or not to proceed with the claim. Remember, the executor controls how probate is done. In TX you have 4 years from death to even present letters of testamentary, and that is quite a bit of time in which MERP has to wait and then go to court to present their claim.

Some states have MERP done by state employees. But it seems states are moving to having an outside contractor do MERP. HMS does this for several states and they are very aggressive as they seem to act as debt collectors. TX has contracted with HMS and you can google Randy Drewitt's law firm in Beaumont to get an idea of how MERP is now running with HMS doing it in TX. I am going to post on this site my experience when MERP eventually happens.

Now some states have MERP thresholds - like MS has it set at either 65K or 75K and for homes at below that level of assessment, MERP doesn't even happen at all. Some states seem to have it set by policy but not law, at homes worth over 100K or 200K. Realize that if the family goes to probate, it will take about the same amount of MERP time to do a property worth 72K as one worth 372K, so they will likely focus on homes worth more money. That make total sense but it is the government, so who knows!

If your mom does not have a will, MERP will be very different because in most states, someone who dies without a will is considered "intestate" and usually all their property and assets default to ownership of the state and the family will have to go to court to prove linear heirship. You kinda really need an attorney to do this too. If this happens, MERP is really much more in control as MERP is an extension of state power. So you don't want this, you need for mom to have a valid will. If she doesn't, do one asap.
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So many problems would be solved if elder folks would realize or admit as it were; that about 50% of us may require Medicaid for NH, due to a LTC need.
Most people do not have LTC insurance
(If the children of parents are trustworthy) putting the house into IRT Irrevocable Trust, AS A PREPLAN, and it passes the 5 year look back period; if children end up helping to pay for LTC before Medicaid, then some 'reimbusement' can be recieved from the house sale, or provide a legacy.
Folks also are mostly unaware that If NH is looming it is wise to use assets to purchase FUNERAL TRUSTS (must be done before applying), for Parents and even children, to qualify for the Spend down, instead of paying it all to a NH, Especially useful if Kids have been helping parents financially. Funeral trusts are generally MEDICAID EXEMPT. Note: if NOT purchased at a Funeral Home, they are transferable anywhere, and that way the Funeral home does not know in Advance about spending plans.
Also asset transfers can be made, again 5 year lookback: so such matters must be managed, and those funds cannot be put at risk or be subject to loss, or misspending.
If Kids are moderatley healthy; funds can be applied to single premium life polcies on themselves, (having return of premium option a must), again if kids later may have to use funds to support care, the $$ is there or if the kid passes, it provides extra dollars for parent care and family expenses.
it may provide a legacy. If the parent was wanting to leave an amount to Children as a CD, Using this method immediately increases the legacy in event of death of child.as opposed to a 'flat cd'
If the parent can be insured, the CHILD MUST BE the owner.
Gifting is not taxable unless we are talking Millions.
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I agree with Decatur that folks need to realize that they might need LTC and LTC insurance might be a good idea. I don't know too many people who have it. I took it out on me and my husband.(he would have never done it!). Most people think they will never go to AL or NH. My parents don't have it and not sure what will happen when they need it. Thank goodness they did the funeral trust. So they just have their house..which if both need NH, it can be sold.
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I totally agree with Robbins on the usefulness of trusts (love, love, love a special needs trust and LadyBird enhanced benefit trust), but isn't it the case that once they go on Medicaid for NH, then change the ownership of the property afterwards, that is likely viewed as done essentially for Medicaid MERP avoidance and subject to penalty?

If Randizzle's parent is already in a NH and applied for Medicaid, the parent or Randizzle or someone signed off or acknowledged the MERP program and it's ramifications. In TX, you don't actually even have to sign off on this, it's done as an acknowledgement of policy. So any changes afterwards can mean a review of their acceptance in Medicaid. My mom has an annual Medicaid recertification and there are specific questions regarding property ownership and within that section is asked if there have been any trusts or other agreements done. I would imagine that a "YES" would mean that my mom would have her acceptance reviewed. That would be a total stress situation for all.

If you change ownership of the property - and if the trust is it's own legal entity and becomes the owner - then I would think the state could impose a transfer penalty for the whole value of the property based on value by tax assessor. As this can be viewed as an after-the-fact MERP avoidance tactic. The penalty could be a significant amount of $ depending on the house value.

I've dealt with a transfer penalty on my mom's car. It was no walk in the park, but with a car, it's not all that much $ all-in-all.Probably could have fought it as it was pretty far out in the 5 year lookback but it was easier to do it as having the value of the car reduced so the penalty was almost nothing so could be waived. But for a home, the assessed value can be a significant amount and not so simple.

Whatever the case, you really need to careful and find out how aggressive your state is on transfer penalty; how they view "after the application" changes; and how the individual NH that mom or dad is in handles the situation when Medicaid payment is suspended. Good luck.
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The five year look back must be complete; there is no 'far enough' into it as an escape.
The parent when transferring: an asset must NOT have any control over it
A trust for a house is Done as IRGT Irrevoccable gantor trust, IT retains 'step up in value' beneficial for taxes upon sale.
If one lives in the elders home caring for them for at least a year, I think there may be waiver in immediate estate recoveryConsult with the QUALIFIED Medicaid ATT in that state.
Being just 1 day or $1.00 over will usuallycause Medicaid Disq.
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does this apply in new york too?
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Momo - all states must have a MERP policy and is required by the fed's in order for any state to participate in Medicaid. Medicaid is a joint federal and state program but Medicaid is administered or managed by each state. As such, MERP is done a per each state's specifics on state law on trusts, death laws, inheritance issues and probate.
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hello so what does all this mean. i dont want my mom's house sold when she passes an i cant pay for her takes an other expenses cuz i get ssi an i'm on medicade what can i do,it seems ive asked around an no one can help me,if need help b4 it's to late thank you
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Best advice I know is get the House in a IRGT (trust), and hope 5 years passes.
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