The house (mobile home) appraises for more than we can get for it without a whole lot of work. And she owes around $25,000. In 2 loans against the house. I understand Medicaid would want half the appraisal amount spent on her care. Can a family member buy it for half the appraised amount plus the $25,000 or would that be a conflict of interest? The house is in a different state so we can not even try to work on it until she is in a facility and we would need the money to get her in one while appling for Medicaid. We live in PA.
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No, you cannot buy the mobile home for 1/2 the appraised amount plus the $25,000 to pay off loans. Medicaid requires that your mother pay her medical expenses from ALL the profit from a home sold based on the fair market value (FMV) of the home until she is impoverished (usually $2000 in assets). If the house is worth less than the appraised value and needs extensive repairs, you could pay for an updated appraisal - if that is half of the current appraisal amount, you could start from there. But again, the $25,000 in loans against the home will be a problem - Mom cannot sell the home without paying off the loans to give a "clear title" to the mobile home. Your family member could pay fair market value for the house based on an independent appraisal and arrange purchase through a title company to get all the paperwork properly vetted and loans satisfied before title transferred, then your mother could pay down her $25,000 in loans from the proceeds to be able to transfer title to the family member. Then mother spends the rest of profits (if any) on her medical care. I'm not sure where you got the idea of half the appraised value being used for her care...but Medicaid doesn't give any kind of discount for sale of assets to family members. It actually penalizes the person that applies if they have gifted or transferred assets to family members at less than market value. If she applies for Medicaid and tries to treat the mobile home as exempt asset, then there will be no money available to pay the $25,000 loans and depending on your state's laws, you'll either see the house foreclosed on or a judgment put on the title that will prevent sale without payment of it. If mom declares bankruptcy and tries to clear the loans that way, the house will still be there with monthly expenses that she won't have any way to pay from the facility. Put some money together, and consult an attorney about what the best way to go forward is - put home on market to sell to outsider or amount for family member to purchase. And any family member purchase has to be through a bank - no mortgage held by mom and flexible terms. Not a do it yourself project unless you are very experienced with the laws regarding credit and medicaid in your state.
Or is it that mom is in PA but the home is in another state?
If it’s in another state it’s going to be sticky for her to be eligible for Medicaid as a home is an exempt asset for her IF it’s her homestead in the state where she lives AND is applying to Medicaid.
Some states allow for her to have pending eligibility if the in another state property is up for sale with a valid Realtor listing. So no FSBO nonsense.
Try to clearly find out the rules for her state of residency Medicaid rules on home.
HOWEVER, what is see as the bigger issue is the debt 25k on the home & the costs to get it market ready & pay any lot rental. $$$ required every month....
You and your siblings cannot be easily reimbursed from the sale of the home. It will be looked at as “gifting” and will trigger a transfer penalty inquiry by Medicaid. Problem is that if an inquiry happens, you, mom & the NH will be notified. The NH may require you to sign off on a financial responsibility contract in order for her to stay there and if not she gets a 30 day notice (to vacate). Medicaid would have to approve any reimbursement or a transfer penalty period placed onto mom that keeps her ineligible. Medicaid tends to view whatever family does as done for free and out of a sense of family duty. The sale will be recorded to the penny & Medicaid expects it all to be used by her in a spend down.
Due to Medicaid’s copay or SOC (share of cost), from day 1 of medicaid application she is required to have all her income go to the NH. All she will have is a smallish personal needs allowance. PNA ranges from $35-110 a mo. For my mom in TX it was $60. That’s it for $. Your mom’s PNA isn’t going to be able to pay on that 25k loan, lot rental, or for repairs to the home. Is there family who can front all these co$t$ with the likely possibility of not ever being reimbursed?