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FF ... Jimmy is not proposing to use taxpayer money to fix up Dad's house. Dad has money. It is too much money to qualify for Medicaid, but not enough to provide for his care for very long. MANY old people are in this situation. Please don't make it sound like a rip-off scheme.

The question is whether he can spend his own money to fix up his own house, and then be eligible for Medicaid.

I think the answer is yes, that would be legitimate spend down. Whether it is the best use of the spend down money is another issue. Would Dad be able to continue to live in that house, with some in-home help (perhaps provided by Medicaid)? Or what would happen to the house once it is fixed up? Keep in mind that the state will be entitled to recover the money they have spent on Dad through the proceeds of the sale of the house after he passes. (In a way, using the spend down money in this way benefits the state.)

The question of what to do with the house of a person with a chronic illness who will soon need Medicaid assistance is a complicated one. I hope others who have been in your shoes (or rather had parents in your dad's shoes) will weigh in here with the pros and cons of home improvements for folks on the brink of needing financial assistance for medical problems.
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A very qualified elder attorney advised that keeping the elders home in good repair was an acceptable way to spend down. Repairs maintain the value of the property and sometime increase the value whether the end result is for an heir or for Medicaid.
In some cases it might allow the elder to stay in their home longer, in other cases it might allow them to go for needed extra help earlier.
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Parent in a NH on Medicaid and keeping their home is going to be complicated. I'm going to move slightly past the ? of spending dad's assets on the house and go into dad's situation once on Medicaid first. So, has anyone told you about NH SOC & MERP?

Under Medicaid their Homestead & 1 vehicle are exempt assets as long as they are within allowed value & for their lifetime. Dad can feel strongly about keeping his house no matter what & Medicaid allows for this to happen. Although that seems terrific, once on Medicaid all their monthly income less small personal needs allowance ($ 35-105 mo), must be a co-pay or SOC (share of cost) paid to NH. Often SOC is a surprise as is Medicaid estate recovery program (MERP). PNA for TX is $ 60 mo., so if dad's monthly income is $ 1800, then each mo he must pay NH $ 1740. The PNA is just enough for barber shop & some clothing replacement. Often cable & phone costs run $ 60 a mo.

Due to SOC, elder in NH realistically has no $. Family will need to pay house costs (taxes, insurance, utilities, maintenance) from day 1 of Medicaid till after death & through probate &/or estate recovery process. If there is a mortgage (horrors!), going to be quite a bit of $. If dad has other debts - like a funeral policy that still has payment due - those too must be paid by family to keep them in force. So think carefully if all is affordable over time for family.

For some families, house is rented. Must be FMV rent. Rental income will be evaluated by Medicaid as to what must be included in SOC. No special rental deals with family. For some, renting is not feasible. For empty homes, some states have costs for taxes, insurance, maintenance filed as a MERP exclusion from recovery amount. Keeping meticulous records on $ spent is critical and kinda has to be done for the possible many months or years ahead.

I'd suggest you review the "nut" on the house. Is it affordable? Have an emergency fund? Dad's homeowners policy will not be valid anymore, so you will need to get a vacant dwelling policy and they are pricey. If the house is really derelict, you probably can't get it insured.

I'd suggest you review if any of the many exemptions and exclusion to estate recovery/MERP could apply to dads estate. Family is totally responsible for filing & providing documentation required. Exemptions are pretty broad: caregiving for 2 or 3 years prior to NH admission (this one can require a document by their MD or SW w/state license # & info on what caregiving was needed); low income heirs; heirs with disabilities; payments made by family for care that kept them out of a NH. Each heir has to qualify for their own exemption. If there are 4 heirs but only 1 exempt, then recovery is due from 75% of the asset. Costs paid on empty house are usually a exclusion. Many states do undue hardship for homes under a certain value. Your state website should have the details on recovery. Appeals can be made as well. MERP is required to determine if claim is cost-effective to be done also. If there appear to be no exemptions or exclusions that each heir can qualify for, then you should expect that dad's estate will have a claim. Family can also open probate and deal with the assets & claims against the estate within probate system for your state.

So all this gets back to the ? of what is the best use of dad's $?
If dad does not have a fully paid preened funeral & burial, then that imho would be a better first use of dad's $. If dad needs dental work, that too would be a better use of dad's $ as dental is not covered by Medicaid and you want to do it now while he is still good on his ADL's. Ditto for better eyeglasses, hearing aids and walkers. Dental could easily run 20K - 30K or more.

If family doesn't have $ to pay all on the house till whenever & family isn't up for dealing with estate recovery &/or probate, imho everybody is better off if the house is sold now & before Medicaid application is ever done. Dad could use the proceeds to pay for his care; get dental stuff done; get a whole new industrial machine hot water washable wardrobe; and perhaps even do a special needs trust that is Medicaid compliant to cover extras he will need over time.

If the assessor value is whack, I would suggest that you get dad to spend $ to get the house inspected, perhaps get a residential structural engineer report and then an appraisal done. All done by professionals w/state license & registration. It will give you a hard, valid figure on what derelict house is worth. What is great about this is that if you sell the house "as is" & below the assessor value, it provides documentation to do this with no issues from Medicaid.

Elder keeping their home places family in the situation of having the costs for 2nd home but with no guarantee of ownership so runs a risk. But if you have the wallet and like risk, go for it!
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Repairs--- get a licensed contractor and save all the estimates and invoices. Do this ONLY if he is still in the home, because if he is already in the Nursing Home, Medicaid will be unhappy about the expense.
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Yes, you can fix up the house to help with the spend-down. As mentioned, be sure to check out all contractors carefully and keep all of the receipts. If the repairs help your dad to stay in his home longer, it is an excellent use of the money. Best wishes!
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FF, you would have no particular reason to know the details of spend-down rules. You are not "bad" -- just not informed on this particular topic. This is the kind of subject where people who have actual experience should respond.
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As per your profile, you mention your Dad has Alzheimer's/Dementia, thus the reason your Dad is unable to maintain his own home. Time for Dad to downsize into something safer.

As for using taxpayer's money [Medicaid] to fix up his home, you would need to contact your Dad's State Medicaid office, as each State has their own rules as to what can be spent down.
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jeannegibbs, me bad, I was under the impression that the spend down was only used to help Dad with whatever medical needs. Thanks for clarifying that :)

That is an excellent point, if the house is fixed up, it would be worth more thus when Medicaid places a lien on the house they would obtain more equity.
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