Medicaid spend down on a home with lifetime interest?

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Latest post Mon, Mar 10 2014 7:57 PM by karen2222. 15 replies.
  • Sun, Mar 9 2014 12:16 PM

    Medicaid spend down on a home with lifetime interest?

    My mother went to eldercare.  My father is still residing in the home.  They both have lifetime interest in the home for 15 years with my name as owner.  Can my father use his savings towards fixing up the home and working on it to satisfy the spend down requirements of Medicaid?  Will this result in medicaid trying to take the home even though they only have lifetime interest if he were to put money into the home to satisfy the spend down requirement?

  • Sun, Mar 9 2014 12:20 PM In reply to

    Re: Medicaid spend down on a home with lifetime interest?

    crazysweetguy:
    Can my father use his savings towards fixing up the home and working on it to satisfy the spend down requirements of Medicaid?

    It amazes me the number of people who inquire about spending down money so that the tax payers will foot the bill for their parents care.  Do you realize how BAD the care is for senior citizens on Medicaid?  Frightening.  Your father would be much better off spending that money on his health care at a higher standard than in your plan.

    Medicaid has a five year look back period and if they believe the spend down was done to hide assets they could potentially take the home.  

    "That's just my opinion, then again I might be wrong."  Dennis Miller

     

  • Sun, Mar 9 2014 12:41 PM In reply to

    Re: Medicaid spend down on a home with lifetime interest?

    If 50% or more of the savings were spent on prepaid funeral expenses then would any of the remainder be subject to Medicaid spend down or Medicaid Estate Recovery?  Is only 50% of the money required to be spent down since half would be considered the spouses?

  • Sun, Mar 9 2014 1:21 PM In reply to

    • Drew
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    Re: Medicaid spend down on a home with lifetime interest?

    I'll leave the morality of spend down to others.

    By observation of older friends, the quality of care is a daunting problem no matter what..and while some places may seem to duck lower pay clients at the door,  once inside it seems equally daunting ...and that I'll leave to local calls.

    For a spouse to spend so as to have nicer furnishings, new TV, repainted  rooms, newer car or nicer kitchen fridge...so be it.

    If the life tenant is talking about making major capital improvements for the purpose of making assets going away and benefit the remaindermen ..that flunks the smell test....and may flunk more ..... Parent would be smart to pro to comment before they go,down that road .

    I personally think massive prepaid funeral is a risk and a waste for other reason..but that's a personal call...There is some provision in the rules to allow for final arrangements..but I don't know the details.

    Be careful about gift . . -sales. with a retained life estate ..it's probably NOT out for estate purposes ..Which may be GOOD for tax basis purposes / step up .....but a gift/sale/retained control might NOT be out for Medicaid even IF it's more than 5 years old..get a competent elder care attorney to comment.



  • Sun, Mar 9 2014 1:28 PM In reply to

    Re: Medicaid spend down on a home with lifetime interest?

    crazysweetguy:

    If 50% or more of the savings were spent on prepaid funeral expenses then would any of the remainder be subject to Medicaid spend down or Medicaid Estate Recovery?  Is only 50% of the money required to be spent down since half would be considered the spouses?

    You need the advice of a financial planning advisor.  It is impossible to answer generic questions with no knowledge of the amount of the assets involved and the type of assets they are.  To meet the qualifications for Medicaid to dump your parent(s) in a dive of a nursing home at the tax payers expense is going to require solid advice based on their specific circumstances.  

    If you/they get it wrong then Medicaid can seize assets regardless of what steps you took to try and get them qualified.

     

    "That's just my opinion, then again I might be wrong."  Dennis Miller

     

  • Sun, Mar 9 2014 2:12 PM In reply to

    • Drew
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    Re: Medicaid spend down on a home with lifetime interest?

    A life estate is not a lease good for 15 years...and it's beyond me to know if it's a constructive estate for life or a safe  end run around laws which address life interests.

    Obviously intra family life estates have some value transfer features..some open to abuse..and about 2011 the rules changed to cut down on some of the asset shifting for Medicaid  and allow for recovery against remaindermen.  I have NO CLUE if changes impacted date of transfer or date of application....apparently it still postpones recovery  until second person moves out ..but I doubt this is what you had in mind.

    It's designed to be full of minefields if you are trying to duck spending parental assets first....be sure you are using a skilled guide to walk on safe paths.  



  • Sun, Mar 9 2014 2:18 PM In reply to

    • Drew
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    Re: Medicaid spend down on a home with lifetime interest?

    Just be aware that WVa has a law that requires you as children to care for parents...W Va. Code. 9-5-9 

     



  • Sun, Mar 9 2014 4:28 PM In reply to

    • Drew
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    Re: Medicaid spend down on a home with lifetime interest?Be

    Be aware that W Va. Law mandates you care for your parents.....



  • Sun, Mar 9 2014 4:30 PM In reply to

    Re: Medicaid spend down on a home with lifetime interest?

    ClydesMom:
    Medicaid has a five year look back period and if they believe the spend down was done to hide assets they could potentially take the home.  

    Medicaid cannot take what the father does not own. If Medicaid believes the funds spent should have been used for care rather than improving a property in which he has only a life estate, what it will do is deny Medicaid care for a period of time, leaving the father to come up with the cash to pay for his care during that time. This accomplishes the goal of effectively getting elderly people to spend their assets on their care rather than effectively giving it to their kids. 

  • Sun, Mar 9 2014 5:20 PM In reply to

    • Drew
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    Re: Medicaid spend down on a home with lifetime interest?

    Actually I think the  Medicaid  problem may be a narrower one..to OVER pay for something added to the home may trigger a gift or transfer for lack of adaquate value issue ....and to put in $6000 of desired kitchen improvement , clean done no games, may be OK ..    I simply would stay clear of red flag zone....a massive upgrade that has all the earmarks of benefiting only  the remaindermen for example. 

    I think the states are split on if the value of the life estate is a counted asset....and Id not venture there any way.



  • Sun, Mar 9 2014 6:30 PM In reply to

    Re: Medicaid spend down on a home with lifetime interest?

    The house needs a lot of work done to it.  The floor coverings all needs replaced because its worn and coming loose.  Septic may need work done.  The air conditioning is broke.  There are some lights that dont come on.  there are several other things as well.  i expect my father to live at least another ten years there and plan on helping him if he has trouble to try to prevent him from having to go to nursing home.  i could take some before and after pictures of the work done.

  • Sun, Mar 9 2014 6:47 PM In reply to

    Re: Medicaid spend down on a home with lifetime interest?

    crazysweetguy:
    The house needs a lot of work done to it.

    So you didn't keep up your house and now you want to spend your parent's money to fix it up and then put them on Medicaid to cover their care down the road?

    Has this always been your home or did Dad deed it to you?  Because if Medicaid does a look back in the five years after the transfer, that transfer can be deemed fraudulent and undone.  If it is your home solely then him paying to fix it up may not be in compliance with the spend down rules because right now he does not live in this home and might not ever.  

    crazysweetguy:
     i expect my father to live at least another ten years there and plan on helping him if he has trouble to try to prevent him from having to go to nursing home.

    You are missing the point.  Medicaid has VERY specific rules about the spend down and covering care for the elderly.  It isn't necessarily about what you can prove but whether the expenses you are trying to cover are legal and still qualify for Medicaid.

    You are "planning" on helping him but if he passes before he ever needs long term care then you may have other problems with that spend down and Medicaid.

    You need the advice of a qualified financial expert who can look at what you are trying to accomplish and what will comply with government programs.  Strangers on the internet cannot possibly give you accurate information based on your word alone on the internet.

    "That's just my opinion, then again I might be wrong."  Dennis Miller

     

  • Sun, Mar 9 2014 6:58 PM In reply to

    • Drew
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    Re: Medicaid spend down on a home with lifetime interest?

    I would think that if Dad truly does spend down the money in the counted pot on  need to repair and maintain  the residence that that's going to be on safe side of equation..no gift or transfer of money for inadaquate consideration involved ..it's been a while since I read the forms..expenditures may not even show up.   Double check accuracy.

    I would have legitimate bills paid by Dad to providers...just in case...no cute stuff which destroys his credibility    And picture backup may be useful to back it up.

    As an aside ..some septic system issues get more daunting with very nut who is out to save everything...if the system is sub code. Get it upgraded before some regulatory cost goes thru the roof.

    If Dad gifted the home to you ..be darn careful of time lines..60 mos. Not clear what he did...

    The math as to a couple is not 50/50 ......do some homework and get it right......

    Plan ahead and hope it is not needed. 



  • Sun, Mar 9 2014 7:18 PM In reply to

    Re: Medicaid spend down on a home with lifetime interest?

    He has lived in the home since he acquired it.  My dad had the home placed in my name and put himself and my mom as lifetime interest 15 years ago.  We were talking about doing some work on the home but did not get to it yet.

  • Sun, Mar 9 2014 7:59 PM In reply to

    • Drew
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    Re: Medicaid spend down on a home with lifetime interest?

    Laymans guess?

     

    About how many $ that might be counted his, hers, single, together.

    laymans guess:

    A  10 old completed transfer is well past the look back 60 mos window. 

    The stay at home spouse gets a modest bit  of counted  asset protection ..up to about $115,000?   Is this figured in..check my math. 



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