Mom has to go on Medicaid soon. How will this affect her finances? - AgingCare.com

Mom has to go on Medicaid soon. How will this affect her finances?

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Mother is in a health care facility and will have to go on Medicaid soon. In SC can Medicaid go back 5 years on sale of her home?? Will Medicaid file a claim against her IRA ? Can she give children a "gift" from her IRA prior to going on Medicaid?

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NH (aka skilled nursing facility/SNF or long term care/LTC) is paid for 3 ways: 1) private pay by either the elder or their family; 2) from LTC insurance; or 3) by qualifying for Medicaid (both medically & financially).

Medicaid rules set by each state & are state specific even though it is a joint federal & state program. Qualification is both financial & medical. Medicaid is needs-based. You are fully expected to spend down your assets first & foremost before the state will pay for NH. There are things that can be done with assets in advance of NH but imho need to be done by someone qualified who understands the Medicaid program & usually is a certified elder law attorney.

For NH Medicaid eligibility, an individual must show that:
1) are 65+ (can be younger if qualified disability),
2) medical condition requires skilled level of nursing care,
3) monthly income at or below their states max (varies, about 2K),
This is the “income test”– how much $ do you make.
4) all countable assets are at or below 2K (higher if community spouse).This is the “asset test” – how much $ do you own. Assets are IRA’s, stocks, cash value of insurance, real estate, etc.
5) not gifted away anything of value during 5yr look-back period.

If you do, could be a “transfer penalty” for gifting. Penalty based on each state’s NH daily reimbursement rate. For TX, $ 142.92. For example, a Blue Book value car of 10K = 70 days penalty in which you have to private pay NH although they are accepted in Medicaid.

Financial look-back is up to 5 yrs. Most states require 3 – 6 mo. of all financials, plus property ownership documents with application. For car or home, that usually is current tax assessor’s statement. You sign off for state’s ability to access any & all records. State can require add’l documentation if something pique’s interest, like paperwork to establish if insurance is term or whole life.

The 5 yr lookback is federally required. For tangible assets - like a car, home or other real estate - ownership and transfer of ownership will be in the state's database. What often happens, is that the home is gifted or sold to family below market value (assessor's rate) and it was a couple of years before Medicaid application (like mom was living with a daughter in the 2 years since house transferred). So when mom goes into the NH, all seems just fine in the initial review to have her accepted into the NH "medicaid pending" as she seems to have no assets. Then several months later, you & the NH get a letter regarding the transfer penalty as the asset transfer has shown up. This is a total panic situation to be in for family and an awful predicament to put mom in. So this is something to really think about if you could find yourself in this situation. You may find that you keep mom at home a couple of months more to lessen the transfer penalty or figure out how to do private pay at the NH. Really if you think there could be a penalty imposed, you need an attorney to work it through.
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It makes some difference if she is married.

It is OK that she sold her house. She needs to be able to account for the money she got. Did she pay off old debts? That is OK. Did she divide it up among her children? Oops, that may cause a penalty. Her IRA is an asset and will probably have to be spent down.

When my mother went on Medicaid she had absolutely no assets and $800/month SS. Applying was a slam-dunk. When there are assets and potential penalty situations it can get complicated and in your mother's case she might benefit from having a lawyer who specializes in Elder Law help with the application. Also if her husband is living I'd use an elder law attorney.
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I just applied for medicaid for my mom in the state of south carolina. I was told there is a 5 year "lookback", so I am sure this sale will be taken into account. Gifts to others will also be a part of the "lookback" as well.
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