How can we protect a new home purchase from Medicaid estate recovery?

Follow
Share

We are in California. My father suffered a stroke and is currently in a skilled nursing facility. He has applied for Medicaid. We expect him to recover and return home. Our desire is for my father and step mother to sell their house, we will sell our house and buy a home jointly for all of us to live together. Because we would be paying the bulk of the mortgage we obviously want to protect it in the event of my father and stepmother's passing. We need them on the mortgage to help qualify. If my stepmother and myself are both on the mortgage and deed (but not my father who is the Medicaid recipient) would it be protected from estate recovery at the time of both of their deaths? My understanding is that an irrevocable trust would protect it but would not be allowable with a mortgage on the property.

This question has been closed for answers. Ask a New Question.
Find Care & Housing
13

Answers

Show:
Jeanne-Thank you. Just realized I did leave that info out which I could see would cause some confusion. We've come to the conclusion that qualifying on our own would just make things less sticky and will probably wait things out a bit. It is sound advice to see how my dad's recovery goes. Thank you.

igloo - Once again, at issue is not whether or not we can afford a new house (we can). Its whether or not we can afford a new house WITH a built in apartment for them. That's a stretch.

You're right, California is a community property state and we've decided it just seems to be too murky waters to potentially have our home at risk down the road. We'll either wait until we can qualify alone or if it becomes necessary move them into our spare bedroom.

I don't know the tax assessment value on their home. I just know based on their outstanding mortgage and comps in their area there is likely little equity.
Helpful Answer (1)
Report

Oceanwaves - what programs for in-home care (aka community based services) will depend on how your state administers medicaid. All states use Medicaid funds as a waiver for some sort of community based program. But whatever the case, you mom will need to qualify both medically and financially for it, as medicaid is an "at need" entitlement. All over the US are Area on Aging which act as a regional clearinghouse for info on programs for the aged. This site has a drop down list on AoA by state. Between info at AoA and whatever you can find out from state Medicaid website, it should give you info on what's what.

Right now the trend for community based is PACE or PACE-like community day centers. So they continue to age in place at home but go to PACE 3 -5 days a week. There is one by us (Benson Center) that is successful with a waiting list & has another is going up at another defunct convent. Both have Catholic Charities as the PACE funding & staffing partner with the state of LA medicaid program. If they are in your area, mom will be evaluated for placement in a PACE first & foremost rather than 1-on-1 caregiving as pace is viewed as more cost effective/ cost efficient. Some states have IHHS programs (in home health) as well. CA has county based network for IHHS which seem to have family paid a nominal & taxable wage to caregive for family and undergo training for this for maybe 20 or so hours weekly of caregiving.

Reality is that most caregiving costs are private paid by elder or family.
Helpful Answer (1)
Report

Imho If you need your stepmoms creditworthiness and 20% assets to get a mortgage, you & your hubs cannot personally afford a new house, no matter how good your intentions are.

But that issue aside, the bigger concern to me would be that you said that Dad - who is in a facility for post stroke rehab - has applied for Medicaid. By doing this he has created a database for the state to access. He & stepmom & their 900 sq ft house is now a know entity as Freqflyer described.

Dad & stepmom are married. CA is community property state, right? I just don't see easily separating each for ownership & liability on anything they do in either of their names as they are a married couple. Really before your dad & stepmom do anything, & once dad is better and out of a facility, they should clearly speak with an elder law atty. to see just what is feasible for CA medicaid and how CA does MERP (estate recovery) and what type of documentation must be kept in detail.

Out of curiosity just what is tax assessor value on dad & stepmoms place?
Helpful Answer (0)
Report

anmickey22, I don't think your original post mentioned that you need a bigger house so they can live there, too. Hence our confusion.

If instead of going on the mortgage with you your parents (or your mother only, if dad is in a care center) simply paid rent for you for the separate apartment, would your income then qualify you for the mortgage?

In any case, consult with an Elder Law attorney soon -- this is the specialty that knows the Medicaid rules inside and out. If there is a legitimate way for you accomplish what you are intending, they will know!
Helpful Answer (4)
Report

Thank you all for your input. Perhaps waiting until we know my father's long term status would be more prudent. My thought process was even if he requires long term care my stepmother would still need a place to stay and I'd feel much more comfortable with them closer by (right now they are about an hour away). Medicare was refusing to cover his 100 day stay but I've just found out that decision has been reversed and they will be covering it so its entirely possible Medicaid may not be required depending on his level of recovery.

Igloo - My husband and I CAN and DO afford our own home. We just didn't plan on also supporting my dad and stepmom. (And I don't think they want that either). Their house is 900 square feet, has little to no equity, is an hour away in a high crime area, and certainly not an option for my family of four to move into. Our current home wasn't purchased with the idea of housing two more people. Possible, yes, but would be uncomfortable for all. We would essentially be pooling resources (with about 80% of those resources coming from our funds) to get everyone into a home that would give us all enough space to be comfortable and live in harmony. The home purchase we are considering has a separate apartment that they could live in while we live in the main house. This way they will continue to have some level of independence while still having us very nearby to help.
Helpful Answer (0)
Report

Also right now your mom as long as she stays in their home will qualify 100% for the surviving spouse exemption from Medicaid estate recovery aka MERP when dad dies even if there is thousands and thousands paid by Medicaid. It will be pretty straightforward of an exemption to do for mom.

Personally to me it sounds like you & hubs cannot really afford a home. I'd suggest you two just buckle down & move in with mom & help out her & with dad if he is able yo move out of the NH and save every cent you can to later on buy a home you can afford on your own income. After dad dies & mom works out any MERP issues, she sells her home. Hopefully you & hubs have saved and can now buy your own home totally on your own and get a house with a room for mom. Mom moves in with you all. Mom does a totally legal and aboveboard personal care contract (done by elder law atty) and pays you for rent & care each month. So you get a small but stable regular income from moms sale of the home & her SS/retirement income and all this is done all legal so no issues with medicaid for later on if mom needs to apply. Care paid vary as they are based on community standards but should be at least $ 800 -$ 1200 a mo & that's a nice bit of regular solid $ each month for you.

Whatever the case, please give some time to get a bead on just what dads situation will morph into before jumping into them selling their home and your " buying" one with their $ & creditworthiness.
Helpful Answer (2)
Report

"we expect him to recover & return home" & "he is in a NH and has applied for Medicaid"

You have been given solid advice from others. To me the bigger issue is that dads health status is UNKNOWN. I'd stop planning on buying a house till dads long term care needs are more solid. He may not be able to recover; family may not be able to do 24/7 care at home. As he has already applied for Medicaid - which I assume was done as his current post stroke stay in the NH is about to be or is past the point of Medicare post hospitalization benefit - he is going have a claim or lien on his person & his assets for every cent medicaid pays on him at the current NH and any other medicaid paid community based care if he moves back home. The claim or lien may show up on dads credit report or may need to be disclosed on the loan application.

Whe dad & mom go to sell their home (to have $ to enable you & hubs to "buy" a home with them), the title company doing the search for the buyers of the parents home may require the seller to do some sort of Medicaid imdemnity form or statement for sellers over age 55. More & more title companies -as they are on the hook if there are clouds on later on - actively look for Meducaid claim or lien on sales of property with those over 55. There is a great article on this from a cpuole of years ago in The Stargazer, the pro journal for title servicers
Helpful Answer (2)
Report

Uh oh - another word escaped from my answer and left part of it meaningless:

(b) should have read: "consider your parents' ages, and the assets, individually and collectively ..."
Helpful Answer (3)
Report

I see a potential problem beyond the Medicaid issue. If you need either or both of your parent's income to qualify for the mortgage, I'm thinking:

(a) that you might be facing a position of overextending yourselves;

(b) a mortgagee is going to review your application, consider your parents' ages, and the individually and collectively, and :

(c) a mortgagee may require that you qualify for the mortgage w/o your parents' assets; or, alternatively

(d) hopefully your parents aren't that close to the end of their lives, but if something should happen to them in the near future, can you and your husband afford the mortgage payments?
Helpful Answer (4)
Report

is my mom eligible for Medicaid to pay for in-home care even if she owns the house?
Helpful Answer (0)
Report

This question has been closed for answers. Ask a New Question.