My father had a massive stroke and is now in a nursing home and on Medicaid. My parents have one house and one vehicle. They have no other assets beyond furniture in their home. The house is worth about $100k and they owe $45k.
Unfortunately, the house is 20 miles away from Nursing home and not ground level. My mother is living there alone and uses a walker. The home is not ideal or convenient. Her health is declining with traveling back and forth.
We have found a home for her to rent close to us and my father. She can not afford the rent house and her house note. We have gotten two different opinions from lawyers and do not know which or if either is correct.
Lawyer 1: do not sell house bc Medicaid will take 1/2 of assessed value. Not half of proceeds (sale price-loan debt). So if the house is assessed for 110 but only sells for 90, mom would have to pay 55k even though she is only making approx 45k.
Lawyer 2: Since they are allowed to retain 126k in assets and she will likely only make 45k in sale, she is still under the 126k threshold, therefore Medicaid will not take anything.
Please help. We are so desperate to get her closer but none of us can afford to come up with large amount of money to pay Medicaid if that is the correct answer. Thank you!
4 Answers
Helpful Newest
First Oldest
First
My understanding is that for LA Medicaid, the homestead exemption of $75k can be used to have the first $75k from the sale of the property not counted into the asset column in figuring out if your over the Medicaid asset max for eligibility. I know this gets done for Orleans & Plaquemines Parish, it may be that each parish has an option to do this. So like house with no mortgage sells for 100k, then minus the 75k homestead exemption leaves 25k profit from house sale which has to divided 50/50. So hubs in NH has to spend down his $12,500 & still at home spouse can keep her full $12,50. I’m gonna guess for your scenario that when it sells and mortgage is paid off, it’s going to be way under 75k that your parents make as profit. If so, mom can hopefully keep all. No 50/50 split. In a way Having the mortgage actually helps her keep the extra $.
So those trees over in Grand Cocteau still dying?
You a true child of the Sacred Heart girl?
ADVERTISEMENT
if so, try to get closing like 3rd -5th of month, & have a plan to spend dads %$ ASAP on ok for Medicaid items so that he ends his month back again at under 2k. Like he buys a fully paid pre-need funeral & burial policy, couple pairs of eyeglasses, new hearing aid, new clothing easier to wear, specialized wheelchair that’s way better than what Medicaid will provide. These all could easily add up to 25k. He spends his share on totally legit items he could use for his care or his needs & at the end of the month, $ gone except for 2k.
this is a traditional mortgage right? Not reverse mortgage, right?
mortgage lender is secured creditor. No matter what it sells it for, whether $103,450.00 or $75,123.00, mortgage co will be in first position to get whatever $ the balance on mortgage stands at in the Act of Sale. I’d suggest you look at mom’s last mortgage statement/ bill to see what figure is. Also look at mortgage agreement to see if she pays it off earlier than it’s lending term, IF there is pre-payment penalty.
Really read that last line again, she can be penalized by paying it off early. If agreement has this, I’d try to negotiate now for it to be waived. We went thru Katrina and lots of folks lost a home that still had a mortgage. insurance paid mortgage co first & foremost as they were lienholders & many mortgage co tacked on a penalty (3% or so) for not doing the full 20 or 30 yr standard mortgage contract. Screwed a second time....
$ she gets from the sale after mortgage paid, Realtor commissions paid and any other seller costs, will hopefully be all hers to keep. & She’s under the 126k asset max for a community spouse. (This assumes, it’s not required to be a 50/50 split to dad/her.)
Did anyone talk with her or you regarding CSRA or MMNA - community spouse resource allowance or monthly maintenance needs assessment? Think of it as old-school alimony. Your mom as a community spouse does NOT herself need to become impoverished for dad to be ok for LTC Medicaid. Only dad does. If mom needs some of dads monthly income to enable her to live in the community, then she can file to have some of his income be “waived” from going to the NH as his copay and instead go to her as her CSRA.
Say mom gets $1k a mo in SS, however, her mortgage/ or rent, meds, living costs run $1,675.00 a mo. Mom’s short $675.
Now dad gets $1380 a mo for his SS income & his Medicaid personal needs allowance set by your state is $60 mo. Dad pays the NH $1320 a mo. as his required copay. BUT mom files for CSRA or MMNA, so mom gets $675 of dads SS$. NH gets only $645 from dad. Comprende?
if she’s not getting CSRA, I’d try to file for it & try to get it retroactively if that at all an option. Putting property up for sale has costs. Even if an “as is” listing, will be increased utilities, yard upkeep. Plus that pesky mortgage has to be paid. She will need to be current on property taxes. & may want a rider on her homeowners policy as it will be listed. All This are costs every month that it’s on the market that folks tend not to take into consideration. Having CSRA $ will be a big help. Even when it’s sold & she’s paying rent, I’d try to keep her filing for CSRA. There was someone on this forum whose mom had all but $45 of her NH hubs SS$ waived over to her as she had mortgage & significant RX costs. But has to be filed for. I’d be wary of an attorney who didn’t bring up CSRA as an option when there’s clearly a community spouse.
Also try to get Realtor who will do listing agreement for less than 3% standard seller side commission. Your mom has a very modest home, you want to max her profit from its sale wherever possible. Good luck.
Lawyer #2 sounds correct, but there are so many scenarios that could change that. It can't hurt to talk to Medicaid and find out what will happen and how this will effect your mom.
I do know that the mortgage holder has 1st position and the mortgage balance is deducted from the value of the asset. So Medicaid would only be able to count half of the cash received, not half of the house value.
It is important to document the fair market value of the house, either through comps or an appraisal to confirm the value of the house in the current real estate market and the actual condition of the property.