We recently sold mom's house. How will this affect her Medicaid eligibility?

Ogburn - you posted onto a really old ?, although it is amusing reading my answer back from 2012! Your best doing this as a totally new ?. Also scan the list of current Q&As in the financial section (go to the bottom of AC webpage and within the botton blue section are the categories). There have been 2 "selling moms mobile homes" threads just this month. Lots of good suggestions in the answers.

My mother is in a nursing home since June of 2014. After her money was exhausted she went on Medicaid. My question concerns her mobile home. It's paid for but her monthly land rental is over $300 per month. She now has about $200 left after paying the nursing home. What are my options? Should I try to sell now and turn funds over to Medicaid?

momhouseme: Due to CA's Proposition 13 (late 70s), property taxes for the then-current homeowners were "frozen" at the tax rates in effect at that time. When the property sold, the new owners paid the prevailing tax rate. So some seniors got a real break in their taxes, but the next generation of homeowners did not. The laws may have changed a lot more as I left in the 90s. My husband and I paid 90's taxes for our small place in Southern CA. My parents taxes were "frozen" so they paid considerably less in taxes for a much bigger, nicer property.

question I am selling my home my mom left my and want to by a smaller one in a different town.i get only $805 per month will that mess up my Medicaid I am on disability too thanks laura

The transfer penalty regulations can make you dizzy as it makes IRS regulations look like a cakewalk. Every state has a different rate as each state has it's own adminstration for Medicaid under a general Federal guideline.

Reindeer - my mom is TX too. $ 142.93 a day penalty rate. Which is low but that's TX. Years ago we did all the legal for my mom, used a estate attorney who was elder savvy. Ran about 2,500. One document he did was a "Guardianship in Case of Incapacity" which can be done in TX and most don't have. He suggested it as what it does is protect the DPOA from being cancelled or changed by the elder on a whim in a fit of pique or dementia. Attorney said that so often the elder, will start to view whomever is the DPOA as the source of their problems rather than accepting their aging or senility. When they do this (usually prompted by competing family) they go and change the DPOA. At which time you whip out this document and then you have this legal to trump any changes or challenges.

The most common transfer penalty is for auto transfer. All recorded by state and state uses Kelly Blue Book to set value. What seems to happen most often is that you have mom & dad still at home and each has a car. Well mom goes into NH and so doesn't need her car anymore, so they give it to family member (and the family member is likely a grandchild in college so no $ there or the errant always at need worthless SIL or DIL, so again no $ there or worse...they give it to a charity which does it at the highest value as most people want that for taxes). Car is paid for so they don't view it as having value as there is no debt on it. Do the transfer title at the local grocery store around the corner place - this all seems so easy and one less thing to worry about. Happiness all around. Then a few month later get a transfer penalty on the car and have to come up with private pay asap to keep mom in the NH for however many days the supposed BB value is. So you - the responsible sibling - get stuck with coming up with the transfer penalty $$. So that 2001 Oldsmobile becomes a 10K debt that either you need to pay to the NH or have a specific plan on approved spending (buying a irrevocable funeral or burial policy) by Medicaid. Yes, Value can be challenged but requires mechanic or dealership documentation.

For couples, one of the best things to do IF the nonNH spouse anticipates being at home for a good while, is to sell both cars and get 1 dependable but lower value car and pay for it from what the others sell for (so no new debt).

Suz - most of my mom's taxes are frozen or exempt as she files an annual homestead exemption and qualfies for over 65 stuff. These sort of things are based on the individual state and also the local tax assessor. Very often a bond or millage tax increase has exemptions for elderly property owners but you have to file for the exemption. If their property tax is high and you think it should be lower, ask for a hearing on the assessor value of the property. Most places have it so that you have like 90 days from when you get the tax bill to file for a hearing. I did this for my mom years ago and took in photos and other documentation (like from 3 different contractors) of the cost of repairs and got my mom's house reduced in value. Now her taxes are frozen so it didn't matter much in that way but now that she is in a NH and on Medicaid and still has her home, it will make the value of the property lower on what MERP could possibly get in recovery too.

Happy Holidays & Hugs to all!!

Frozen taxes:::: on one's home at ae 65? Tell me more please, here in CA

For those of you that have a loved one in nursing or dementia care, take advantage of the social worker there. They are trained to help answer such questions. Also, BEFORE we got caregivers for my husband or put him in nursing care, we gave our son Power of Attorney. He contacted an Elder Lawyer here in PA. and got all the questions answers and planned for the future. That took a huge burden off of me. Be certain you can trust your Power of Attorney person! Hugs, Corinne

One of the Medicaid examples that I have seen might excuse half or part of the penalty since mom lived with one of the kids for a period of time .(in reference to original $15,000. house question

The truck was my dad's I think that is why we can transfer it back. Also, mom's car is only worth $1500. and the spouse in the community is allowed to keep a certain amount of assets.

That is what the attorney told us in the case of the car. My understanding is that for every $144 app. of a gift of value (car, house) they will be penalized for amount.
$144. equals one day of nursing home care that must be paid for privately. My understanding of the car is that she can sell it for fair market value and spend down the money paying for her clothes, burial plot or plan(only up to $2000) each. Anything she has given away in the last five years that was of value that can be
traced by her social security number can be a penalty for her. If she has a husband, than you could transfer it back to her husband. I would consult an elder care attorney because each state is different and what our attorney said is only really based in our case. It is a case of total assets and income, and I am not qualified. We are not trying to qualify Dad at this time for medicaid which since he is a surviving spouse, this will not be looked at after she qualifies since he is entitled to this. It can be a risky situation to apply for medicaid without the help of
an attorney. If it is all straight forward, no problems but prior transfers need to be
looked at. I am in Texas. My attorney charged me around $3400 to handle everything for me and make sure everything was legal.

reindeermama, did the lawyer say she could transfer it back after she qualifies for Medicaid? She can own a car on Medicaid, but can she give it away or sell it for less than a fair market value?

My dad had given away a $8000.00 pickup, thank goodness the lawyer said put it back in his name or put $8000.00 in his account. The man he gave it to put it back in his name and we told him as soon as mom was qualified for medicaid we would transfer it back. This was a certified elder care attorney that deals with medicaid and has been doing this for 30 years. Don't know if the $15,000. would work the same way, but I am betting it would.

Igloo, loved the time you took with your answer. I waited for that last paragraph as one would read a detective story, and aha, I had guessed the ending correctly. Common sense is not often part of the law, but my common sense immediately said 'put 15k in your mom's banking acct asap'. Let the legal chips fall where they may. But it sounds like you really know your chips! Thank you.

Another thing for any of us, whose elderly parents still have their homes. Please look at your parents tax assessor statement. Most tax forms and homestead renewals go out Nov & Dec for payment in Jan 2013. So if you are going to visit for the Holidays ask to see it. It may be that the assessor value is totally whack and you need to have your folks ask for an adjustment (usually a hearing).

For many elderly who have older not renovated homes surrounded by renovated ones or new builds, their property taxes reflect a renovated or rehabbed comp value. Could be thousand and thousands of $$. The reality is that house could never sell for that price and you need to have the price lowered to have less problems for probate issues later on (like with MERP if they keep the house) or if the house gets sold within the family and then they apply for Medicaid. Often the parent is so excited that their little post war house they bought for 30K is now worth 280K and they don't care as their taxes, etc. are frozen. If they live in an area with tear-downs happening this is especially true. So you want the assessed value to be based on the land value rather than the improvements (the house).

Good news, your mom @ $1,200 a month income will qualify financially
Bad new, by deeding over the house without you & your brother paying fair market value for it, you all are likely to face a transfer penalty from Medicaid and it might not be the 15K the house eventually sold for.

When your mom's Medicaid application gets evaluated the transfer of the house will, most likely, come up eventually. That is the sticky part in that the initial review usually looks at and requires you to submit 3 - 6 months of financials of your mom's in order for the NH to take her "Medicaid Pending". @ $1,200 a month she easily financially qualifies as she is under the roughly $ 2K monthly maximum income. But perhaps a few month later, when the state runs asset search, the property transfer will surface. When you do this, the state can impose a transfer penalty based on the value of the asset. If you all didn't pay a dime on it, then the state can place the penalty on whatever the property assessment value was for that tax year. Most counties send out the property tax notice about this time of the year, so find that so you have an idea what the state assumes the value is. One super sticky in all this is that for many elderly, their property value skyrocketed 2003 - 2008. And because their taxes were frozen since they are 65+, the little 30 K house is now valued at 100K, and because they never had it adjusted down when property values fell 2009-2012, the tax assessor value is high. So the transfer penalty will be higher than the reality of what the property would sell for. Understand? If this is your situation, you can fight the amount by paying for a licensed appraisal of the property to be done. Kinda has to be this and not a letter from a Realtor. Also you can go on-line to see what comperable property sold for at the time of the deed transfer to backup the appraiser figure up too.

Tangible property, like land, home or a car, are all recorded by the county or parish assessor and in turn goes to the state's property database. The transfer of the house will surface and whomever signed her into the NH, will likely get a notice from the state Medicaid program that although mom qualifies for Medicaid she is ineligible for a set amount of time and $ due to the transfer. Transfer penalty varies by state as the amount is based on whatever your state reinbursement daily rate is for NH. My mom is in TX and their transfer penalty is about $ 145 a day, which is low. So for a 15K value item, the penalty would be about 104 days that someone would have to private pay for the NH in order for her to stay. The NH gets the ineligibility notice also and usually the NH will send you a "30 Day Notice" at that time. It basically says you have got to figure out within 30 days how the penalty is going to be paid and do somehting in writing or prepay most of the penalty, in order for her not to be evicted. In reality, it takes about 90 days as the first thing you do when you get these is do an appeal in writing and that gives you an extra 60 days.

If you get a penalty, you can get an elder care attorney to deal with it. But if the house is documented at 15 K and the maximum penalty is 15K, it might not be worth it. But I'd speak with one to see how your state approached transfer penalty and how best to deal with this possibility.

What you might think about doing since mom is still living at home with you & you haven't applied for Medicaid yet and if you have a bit of time before she needs NH, is to pay her for the house now. Say house is assessed at $ 14,690.00. If you have 14,690K, I'd look into putting it into her bank account and then do a spend-down $ 12,790.00 K (they are allowed to have about 2K in assets)and buy her a prepaid irrevocable funeral and burial policy (about 8 - 10K); getting dental done for her; new glasses and hearing aids; new easy off & on clothes that will hold up to the super hot laundry of a NH; new shoes, etc. All this easily is 12K and you get to determine how the 12K is spent rather than turn it over to the NH later on.Good luck and keep a sense of humor in all this if you can.