Protection from Medi-Cal recovery in California. What happens to the house after one of us passes? -

Protection from Medi-Cal recovery in California. What happens to the house after one of us passes?


My brother (55 years old) and I (57 years old) own our home.... tenacy in common....Joe has 80% I have 20%. The home is owned free and clear. Neither one of us has children. My brother is on SSI and Med-ical due to cirrhosis of the liver. I am on Med-ical as of last year.
We were thinking of taking a Home Equity line of credit out on the house. Joe has very good credit. I do not. I have an unpaid student loan of $2000 from 25 years ago. We would like to have this HELOC to help pay that off and live comfortably.
We are low income. Joe gets his SSI. I have been Joe’s caregiver through IHSS. We also have an ebay store which provides a small income.
We were wondering how this would effect Joe's SSI and Medi-cal?
Would it be a good idea to get a HELOC on the house? Neither of us has children to leave the house to. It would help us live more comfortably.
A more important question is what happens to the house after one of us passes? Does Medi-cal put a lien on it? How do we avoid that?

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Jo - The caregiver exemption isn't new. When DRA was signed in 2005, it required the states to uniformly deal with estate recovery (MERP/MERS) and exemptions and exclusions within the recovery process in order for the state to get the federal funding share of Medicaid. Now just how the caregiver exemption is done will be dependent on your state's Medicaid program, as Medicaid is administered uniquely by each state and your states property & probate laws. CA is probably tweaking how the existing caregiver exemption is done by whatever "law" you are referring to happening in 2017.

For example, for the TX MERP caregiver exemption, the caregiver heir is required to provide to the state's recovery contractor a letter from the deceased old physician or social worker (on letterhead with state licensing info) as to what caregiving was needed and how provided. Now this could be simple to do or could be difficult. AND add to this that each heir (as per the deceased valid will) each will need to provide their own exemption or exclusions or other reasons in order for the claim against the estate to be lifted or not valid. So if 3 heirs, but only 1 has exemption, then 2/3 of the claim still is there to be dealt with. But even if you get the exemption, can you afford the house?

As others have said, you likely are not going to qualify for a HELOC due to income situation; plus most lenders do not want to do any lending to 2 persons on a single property unless it is a married couple; theres just too much risk. If this is a low value property, it's not worth doing the underwriting for the risk for a good lender.
You do realize that HELOC is debt that must be repaid & with interest, right?

I'd be concerned about what happens if your brother dies or his level of care requires he move to a facility. IHHS is a really great system (and your lucky as most states do not have anything even like what CA has with IHHS) but you have to go along with whatever his status is showing for his being "at-need". IHHS has a limit on the # of hours of in-home caregiving allowed. I'd guess it's 32 -34 hrs a week that you could be paid for to caregiver, as once it goes over, well it is not cost-effective to be done as his need is for more skilled care in a facility. If that happens, just what will you do? There won't be that IHHS income to you anymore…. Can you afford all the costs on the house and from then till whenever?? At 57, your still too young for SS. If you get SSDI, does it cover all your living expenses & all the costs on the house with $ left for emergencies? Don't count brother $ in this as his situation could change overnight. Really try to look at this from the hard reality of managing house on just your $.

You might want to find a holiday job to pay off that old 2K education loan. Those appear in any credit reports and can keep you from getting any lending even when you have pretty stellar credit. Then after that is paid off, go to see and elder law atty to see about if its feasible to have brother sign over the house to you (via a legally done deed) and using the caregiver exemption so there is no transfer penalty or "gifting" issue from Medicaid for his eligibility. At least house would be totally in your name, so that if you needed to get lending on it or want sell it, you could.

Homeownership is great but you have to be able to afford it…..
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Under the new law there may be no future claim....but I would guess there is already a current claim. The 2017 law doesn't intend to undo all the liens that predate it.

Also...getting a HELOC is very unlikely given the financial situation
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What about the new MediCal laws coming into effect in Jan 2017 that if a sibling is a caregiver for the MediCal recipient and lived in the same house for the past two years the home or assets will be exempt from Medi-cal recovery? So if that is the case Medi-cal will not have any claim on the property.
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I don't know of any bank that will issue a HELOC to two low income people, especially since the 80% owner is already on Medi-Cal on IHSS. They know that Medi-Cal already has a financial interest in the property. That means you can't avoid it, it is already present.
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