The company we used to sell her possessions (clothes, furniture, knick-knacks) is sending my aunt a 1099 form since her proceeds are over $600. Not sure if this is now considered cash or possessions. She is living in assisted living with Ohio Medicaid paying for it. She has not paid taxes for the last 3 years. Money received is way less than money paid for items. Please advise.
It sounds like she will be over income / Asst max so would need spend to get her below the 2K in asset max and under whatever her state has as income max; let’s say the1099 reads $18900:
- mom sets aside $ to take her right under the 2K asset max. Like if the mo b4 the sale her assets as per bank statement was $1234.00 then set aside $ 765 to bring her right up under 2K.
mom is now $18900 - 765 = $ 18,135.00
- if no funeral and burial preneed done, then go to a funeral home and get them to do an preneed estimate. Make it crystal clear that it needs to be within Medicaid guidelines for this type of spend. I bet it’s an “all in” cost under $9500. Anyways FH does an quote for mom. This you present as an option to the caseworker.
- so 18,135 - 9500 = $ 8,635 left.
this could be 1 month of private pay at a NH or maybe 2 mo at AL. So $ overage solved.
BUT
- if mom needs dental work, 8K is nothing in costs. If she needs dental and she has a dentist that she can still be good to be seen at (by that I mean she will do what the dentist requests, like leave mouth open, etc), perhaps see if they can do a quote for needed dental care and if she can do it as a preneed (pays in full upfront). Getting dental done often runs into the issue to actually being able to get all the work done within the month unless the caseworker allows.
- if mom could use a very fancy, tricked out wheelchair those could run 8K. Or another type of DME aka durable medical equipment. And then Presto! all the excess $ used.
imo doing small ticket items, like clothing, toiletries, is time consuming and there is only so much one can buy and hold for your elder. They can’t do any gifting, so no buying for others.
As you know Medicaid looks at financials on a monthly basis. She kinda needs to start her month “at need” financially eligible and then end her month again “at need” financially eligible. Her bank statements need to show this. Right now she is not this. You can kinda figure out where she is probably ending her Dec $ wise to plan out the$. Then spend down needs to be able to get done within the month of January.
if it were me, I’d try to get the plan figured out over the Holidays and then right at the beginning of Jan, 2023, contact her caseworker that first week & with the spend down options. Get a response asap and then she pays for the preneed funeral or dental care or private pay at the AL or whatever by mid January so it all clears her January banking and she is now reset & under Medicaid max for February.
maybe set aside $500 for a tax professional. What Vegas posted is important. It might be best to have mom do taxes and deal with that pesky 1099. You don’t want the IRS coming back and sayin it’s taxable income & taxes due. IRS is a supercreditor so can actually attach to SS income to get taxes paid….. you do not want to have to deal with IRS doing this.
Hang with me on this as it’s not straightforward - Medicaid by long ago federal law has funding dedicated for skilled nursing care aka a NH; this gets referred to as LTC Medicaid. The rules for LTC are very much fixed by the states & tend to be a max of $2K in nonexempt assets (like $ in the bank account) and income for an individual applicant under $2200. Income would be like SS$ or other retirements. & almost all that income is a required copay to the NH. So that garage sale $ factors in if it takes her over. But she (you/ POA) could try to amortize it over 12 months to lessen the $ by 12.
HOWEVER
she may not be on LTC Medicaid but is instead on a Medicaid waiver. It’s totally going to be dependent on how your State runs it’s Medicaid (yeah big big sigh). Waivers are done to divert some of the dedicated by federal law for LTC $ to go to other programs for the same “at need” population. Waivers fund AL costs, PACE day centers, IHHS in home care. But waivers usually are run under the Medicaid community based care program for administrative & do NOT have the very narrow asset / income of LTC Medicaid. You can have more assets as technically you are still living in your community so can go & do & spend. (Unlike in a NH which means under 24/7 oversight).
the issue is which program is she on & how much $ the sale was & what her usual mo income is.
So let’s say Mom gets the SSA avg of $1200 a month & 1099 shows $987.65; it gets amortized for the yr, so $100 added to her month for $ so all good not matter how you look at it.
BUTif she had loads of antiques, collectibles and it net her a 1099 of $18,900.00 that is way serious $ and needs to be reported to her caseworker. Ya want to report it imho rather than wait for an renewal to be done as it makes you look responsible and proactive for your elder. Also in this $ scenario, she will need imo taxes done.
Which scenario is closer to what you’re facing???