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I have no answer to this but it is a question I ask myself. My mom is in my large dining room since we do not have a downstairs bedroom. I have a breakfast area we use as a dining area, but when the family comes we really are squeezed for room. My mother has the money to help us put on an addition, but I wondered the same thing as far as messing up if she might need Medicaid in the future.
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I agree with all of the above. If parent living in own home then Medicaid is involved. If they move out, then I would assume that the house would need to be sold. Redoing basement as a separate living area would mean ur township would need to get involved because of the housing codes.
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Good though, freqflyer. I had assumed the improvement was to the mother's house. I have doubts that an improvement to a house they don't own would be allowed. It could be seen as a gift that increases the value of the child's home. I would tread carefully and get this approved before I did it.
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Rab1947, let me get this straight, one parent is living in a nursing home, the other parent resides by themselves.... you want to finish your basement so that the remaining parent can live with you? Is this correct?

As mentioned above, check with your State Medicaid office to see what is allowable. I assume the parent will be paying for this remodeling? Does this parent has any mobile and/or health issues?

Would he/she be able to walk up and down the stairs? Is there any outside entrance from the basement? Are the windows large enough so that a fireman wear his/her gear can easily climb into that window? Test the basement for radon using a professional company, as that is highly important if someone is going to be sleeping in the basement.

There is so much to think about whenever someone is re-doing their home for an elderly parent to move in not only the remodeling.
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Does the house belong to them? If you need to spend the money to make the house livable for the community spouse, it is probably an allowable expense. Needed improvements to the home are typically allowable. I would check first with your Medicaid worker so there will be no surprises.
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Yes. would it be ok to spend down for medicaid? One spouse in nursing home, other in primary residence
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Do yo mean could you use this expense to "spend down" to be eligible for Medicaid? Who would continue living in the house, and who would be going to a nursing home?
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