Also having a mailbox for her keeps mail from going to the NH. NH cannot open her mail. Mom has to open her mail. What seems to happen is that it piles up atop their chest of drawers or gets thrown in the trash or disappears.
Keep in mind that once mom stops paying on the CC, the CC will more than likely write the debt off and turn it over to collections.
Writing debt off for those on medicaid will pose two problems later on. The CC as the "original creditor" (OC) will eventually issue mom a 1099-C Cancellation of debt. It will be the debt, plus interest, fees and could be done year mom stops paying or a year or two later. Based on when OC puts it on their books.
1099-C is taxable income. This is the first problem. Yes it's "phantom income" but is reported taxable $$. Mom will owe taxes on the income. If your state does an IRS match up, the income will take her above the income limits for Medicaid. What you as moms DPOA will need to do is file taxes for her and within the tax filing do a Form 982. It's not simple imo and not done by any of those free senior taxes done programs. To me, it's never a DIY as the 982 is sticky, I'd suggest a CPA or someone at the Block business tax offices do it. Maybe $ 300-400. There was someone on this site who was going to Turbo tax the 982 but didn't update how that went......
Second problem, if mom ignores the 1099-C, eventually the IRS will have to come after her income to repay the taxes past due. IRS as a super-creditor (vegasLady has posted about this lil tidbit) can attach Social Security income. IRS doesnt know moms backstory, all it sees is taxes due on a reported 1099-C. Problem is if mom is in a NH on Medicaid, she is required to do her co-pay or SOC (share of cost) of her SS $ to the NH under medicaid rules. If IRS attaches a part of her SS it's a problem for her Medicaid compliance. Your going to have to file taxes for her & for each year she gets a 1099-C. Comprende?
You as DPOA need to keep up with the CC so you are aware of 1099-c being sent. They are required to be sent in January for the prior tax year.
If mom has several CC or other debtors, I'd suggest you go an open a mailbox at a UPS Store and make this moms new address for everything "mom" so that her $ issues and identity can be kept separate from you & your address. This is especially good for when the OC sell the debt to collections. If you are in a city with a college, there likely will be an indepently owned mailing / packaging store that rent mailboxes, these are great as you can develop a relationship and they can tell you when stuff comes in. Also by having a mailbox for mom, you can go once a week or twice a month and get all things "mom" and deal with stuff in a batch.
Yeah it's a butt-rash.... But try to keep your sense of humor going.
Don't pay the credit cards. She is on Medicaid and in a nursing home. You can't get blood from a turnip. Just make sure she is unable to rack up any more charges.
I don't know if you have POA over her financial affairs. If it were me, I would close her accounts and talk to the credit card company directly about payment arrangements. I'm not sure if credit counselling services might be able to help, so you can get all your options. Does the nursing home offer any services about financial matters? Hopefully they have a social worker on retainer that could also help.
6 Answers
Helpful Newest
First Oldest
First
Writing debt off for those on medicaid will pose two problems later on. The CC as the "original creditor" (OC) will eventually issue mom a 1099-C Cancellation of debt. It will be the debt, plus interest, fees and could be done year mom stops paying or a year or two later. Based on when OC puts it on their books.
1099-C is taxable income. This is the first problem. Yes it's "phantom income" but is reported taxable $$. Mom will owe taxes on the income. If your state does an IRS match up, the income will take her above the income limits for Medicaid. What you as moms DPOA will need to do is file taxes for her and within the tax filing do a Form 982. It's not simple imo and not done by any of those free senior taxes done programs. To me, it's never a DIY as the 982 is sticky, I'd suggest a CPA or someone at the Block business tax offices do it. Maybe $ 300-400. There was someone on this site who was going to Turbo tax the 982 but didn't update how that went......
Second problem, if mom ignores the 1099-C, eventually the IRS will have to come after her income to repay the taxes past due. IRS as a super-creditor (vegasLady has posted about this lil tidbit) can attach Social Security income. IRS doesnt know moms backstory, all it sees is taxes due on a reported 1099-C. Problem is if mom is in a NH on Medicaid, she is required to do her co-pay or SOC (share of cost) of her SS $ to the NH under medicaid rules. If IRS attaches a part of her SS it's a problem for her Medicaid compliance. Your going to have to file taxes for her & for each year she gets a 1099-C. Comprende?
You as DPOA need to keep up with the CC so you are aware of 1099-c being sent. They are required to be sent in January for the prior tax year.
If mom has several CC or other debtors, I'd suggest you go an open a mailbox at a UPS Store and make this moms new address for everything "mom" so that her $ issues and identity can be kept separate from you & your address. This is especially good for when the OC sell the debt to collections. If you are in a city with a college, there likely will be an indepently owned mailing / packaging store that rent mailboxes, these are great as you can develop a relationship and they can tell you when stuff comes in. Also by having a mailbox for mom, you can go once a week or twice a month and get all things "mom" and deal with stuff in a batch.
Yeah it's a butt-rash.... But try to keep your sense of humor going.
ADVERTISEMENT
I don't know if you have POA over her financial affairs. If it were me, I would close her accounts and talk to the credit card company directly about payment arrangements. I'm not sure if credit counselling services might be able to help, so you can get all your options. Does the nursing home offer any services about financial matters? Hopefully they have a social worker on retainer that could also help.