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She is worried that Medicaid will give her problems. Has anyone had an experience like this and knows what to do?? I need some help!!!

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Why does your mom want to sell her home? Does she plan to buy another? This might make a difference with Medicaid. See a certified elder attorney who understands Medicaid law for her state. The sequence of events on how you handle this could make a difference in what your mom is left to live on.
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I would talk to Medicaid and ask them to give you info in writing as government employees can not be held accountable for verbal advise. Get the rules in writing, then keep them with sales documents to ensure no future hassle. If still not clear spend the money on a good elder care Medicaid knowledgeable attorney, they should be able to answer your questions quickly and thoroughly in a minimum amount of time. Do your research on attorneys it is a pretty unscrupulous field with tons of competition so they can say anything to get you in the door. This is advice from a friend who was an attorney, he would pay for his kids college for any field except attorney. So I'm not just being cynical.

Best of luck getting this all sorted out for mom.
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If both names are on the deed than Medicaid may feel that half of what she gets needs to go to Dads care. Don't think they will keep her from selling.
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I agree with cmagnum above. If Mom wants to sell the house, she should check with Medicaid first, or make an appointment to see an Elder Law Attorney to get his/her advice. Such Attorneys are familiar with Medicaid.
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Medicaid will not take her house as long as she lives it. I would ask medicaid your question so that his medicaid is not messed up.
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