kwise - you really should try to figure out the value of the property at the time of the transfer from her to you. This would likely be what the state will find to be the "transfer penalty" amount for Medicaid. If she just gave it to you outright, then whatever the 2010 county assessor had as the value is usually what the amount will be. This could be very good or very bad depending on how the assessor does things. Alot of elders property was inflated in the real estate bubble years and they don't go and try to get the assessment lowered as they have all kinds of exemptions so don't feel or pay for the inflated assessment.
How the transfer penalty works is based on your state's NH daily reinbursement rate for Medicaid. In TX, the penalty is about $ 145.00 a day (which is low), so if a $ 50K property was transferred, that would mean about 345 days in which the elder in the NH would be ineligible for Medicaid payment for the NH. They are still approved for Medicaid but ineligible for Medicaid to pay for anything. Yeah, it's total a Catch-22 situation. Each state has it's own formula for figuring it out too. What often happens with transfer penalty, is that the elder applies for Medicaid and gets into the NH, "Medicaid Pending". All seems OK as mom or dad doesn't have any assets and their income is under 2K. Then the property transfer shows up a few months later on. As Jeanne said, all real property ownership is recorded by the state and the transfer will surface eventually........getting a penalty is a total panic situation to be in for all involved. If you get a transfer penalty on house or land or bank accounts, you probably will need an attorney to work it out for you. If it's for a car, then you can probably deal with it on your own but will have to dedicate time to provide the documentation to Medicaid so they can approve it.
dabs4 - OK your dad is slightly over whatever your state has as their Medicaid income limit? So you're thinking he won't qualify for Medicaid, correct?
You need to look into getting a MILLER TRUST done. Miller is total legit and a way to have elderly in your dad's situation go onto Medicaid. The NH or Medicaid usually won't tell you about Miller as they cannot go into legal.....Miller gets used alot for those who are on railroad retirement as RR pays really, really, really well but not enough to private pay for most NH.
This is how Miller works: dad get's $ 1K SS & also get's $ 1,800 from a federal retirement. Dad's "income" is $ 2,800 mo. Basically $ 800 over his state's Medicaid limit for "income" of 2K. Now what Miller does is establish a totally Medicaid compliant trust for the $ 800 extra. So after Miller, now Dad's "income" is 2K & within Medicaid "income" level. The $ 800 a month goes into Miller trust and upon dad's death, the trust reverts to the state (becomes the property of the state and also you or other family can't touch the trust while dad is alive). Now Miller has to be done by an experienced elder care attorney who know how to structure it so that it is compliant and flexible. It is not a DIY project.Flexibility part is super sticky as you don't want to have to re-do it because there was a 1.8% cost of living done this year sort of nonsense.
Miller seems to have some issues if the income isn't a cut & dry type of income - like federal retirement or RR retirement or other set retirement. If part of his "income" is from investments, then it might not work as there can be too much unknowns - like margin calls - that could make the trust defund. But really speak to an attorney about if Miller can work as it could be the answer to NH payment.
dabs4mom, in the absence of proof that something is not a gift, it is considered a gift. Mother owned a rental property. Now daughter owns the property. How much money (or other thing of value, such as stocks) did mother receive for the property? If the answer is None or something far less than the fair market value, then she is considered to have given it away. The ownership of real estate is public record and Medicaid can easily discover this kind of transaction. If Mother owned it in the last 5 years and now she doesn't she is going to have to explain what she did with it, and if the transaction resulted in her having far less than the market value of the property, then it is a gift.
The paper trail would have to show that the property was NOT a gift.
OK, so let me get this straight. Your mom gave you the house a few years ago. By deeding it to you, I don't think it actually qualifies as a gift. For it to have been a gift, and treated as such, there would have to be a paper trail of sorts that actually shows that the house was a gift, and that she then was able to claim it as a gift deduction on any taxes that she may have filed. That's why it may be considered in the look back by medicaid. I agree that an elder care attorney should be contacted. I know how awful it is to be in battle with siblings. I'm the one with the idiot brother in Ohio that thinks he should have control over everything (including me) even though he doesn't hold the primiary POA. Long story....if you're curious see my original posts. Tight hugs to everyone. I'm tired and think I'll hit the bed shortly.
Your mother gave you property less than 5 years ago. That will be treated as a gift. But since the property is now yours I don't think the rental income is a gift from her. But obviously this situation makes the application for Medicaid less than straight-forward and you might do well to consult an attorney specializing in Elder Law.
dabs4mom, thank you for the information. We are in the midst of a family squabble, which is putting it lightly. The sibling with POA has changed a living trust to joint ownership with the sib on my mom's accounts, just in the past few months in an effort to keep me from being able to access information or money. This was only to be done with documentation from two doctors or the court, which of course has not been done. Her lesson learned, never do anything out of anger without consulting an attorney. Sibling had accused me to taking money, but when she removed the checkbook from my mother's home, she found out otherwise, I am very proud to say. I would not try to exploit money from my mother and we are trying to come up with a care agreement since I have had all responsibility for mom for 19 months now, very little assistance from two siblings that both live nearby. Mom has Alzheimer's and needs 24/7 care which I have been providing in an effort to keep her in her home.
Yes it is. Depending on what state you live in, the lookback could also be 7 or 10 years. It can make things difficult. That's why, as hard as it is to do, a conversation with aging parents needs to be had while they are in their 50's or 60's so that when care and decisions have to be made, all the legal junk is already taken care of. Moving assets, whether is property, investment accounts, etc. should have have a child listed as a co- owner right from early on if possible. Also, if a trust is involved, make sure that you are not only the beneficiary, but also named as a trustee to the trust, or anything in the trust can also be claimed as income/assets, and medicaid won't do you any good. We learned this the hard way with my father in law, and now his care costs are eating up everything he has, and he'll run out of money soon, but his fixed income from social security is just slightly over the qualifying amount. That means that when his assets are gone, the family will have to come up with the funds needed to cover his care. Just some food for thought.
10 Answers
Helpful Newest
First Oldest
First
How the transfer penalty works is based on your state's NH daily reinbursement rate for Medicaid. In TX, the penalty is about $ 145.00 a day (which is low), so if a $ 50K property was transferred, that would mean about 345 days in which the elder in the NH would be ineligible for Medicaid payment for the NH. They are still approved for Medicaid but ineligible for Medicaid to pay for anything. Yeah, it's total a Catch-22 situation. Each state has it's own formula for figuring it out too. What often happens with transfer penalty, is that the elder applies for Medicaid and gets into the NH, "Medicaid Pending". All seems OK as mom or dad doesn't have any assets and their income is under 2K. Then the property transfer shows up a few months later on. As Jeanne said, all real property ownership is recorded by the state and the transfer will surface eventually........getting a penalty is a total panic situation to be in for all involved. If you get a transfer penalty on house or land or bank accounts, you probably will need an attorney to work it out for you. If it's for a car, then you can probably deal with it on your own but will have to dedicate time to provide the documentation to Medicaid so they can approve it.
You need to look into getting a MILLER TRUST done. Miller is total legit and a way to have elderly in your dad's situation go onto Medicaid. The NH or Medicaid usually won't tell you about Miller as they cannot go into legal.....Miller gets used alot for those who are on railroad retirement as RR pays really, really, really well but not enough to private pay for most NH.
This is how Miller works:
dad get's $ 1K SS & also get's $ 1,800 from a federal retirement. Dad's "income" is $ 2,800 mo. Basically $ 800 over his state's Medicaid limit for "income" of 2K. Now what Miller does is establish a totally Medicaid compliant trust for the $ 800 extra. So after Miller, now Dad's "income" is 2K & within Medicaid "income" level. The $ 800 a month goes into Miller trust and upon dad's death, the trust reverts to the state (becomes the property of the state and also you or other family can't touch the trust while dad is alive). Now Miller has to be done by an experienced elder care attorney who know how to structure it so that it is compliant and flexible. It is not a DIY project.Flexibility part is super sticky as you don't want to have to re-do it because there was a 1.8% cost of living done this year sort of nonsense.
Miller seems to have some issues if the income isn't a cut & dry type of income - like federal retirement or RR retirement or other set retirement. If part of his "income" is from investments, then it might not work as there can be too much unknowns - like margin calls - that could make the trust defund. But really speak to an attorney about if Miller can work as it could be the answer to NH payment.
ADVERTISEMENT
The paper trail would have to show that the property was NOT a gift.
I know how awful it is to be in battle with siblings. I'm the one with the idiot brother in Ohio that thinks he should have control over everything (including me) even though he doesn't hold the primiary POA. Long story....if you're curious see my original posts.
Tight hugs to everyone. I'm tired and think I'll hit the bed shortly.