Reverse mortgage is convertible to lump sum with $23K available during 1st year. Should I put this lump sum in his account knowing it will disqualify him for Medicaid coverage for a time? Will be used to pay ahead on insurance and utilities to keep house usable for a year, and to pay for nursing home until he spends down to amount which Medicaid will cover him.. If not, when Medicaid takes all his income for nursing home care and he cannot maintain insurance coverage on the house, the reverse mortgage lender will foreclose for not paying insurance. Can I use the proceeds to keep house livable if he has intent to return? Thanks for any advice. Home is in Mississippi.
Insurance will require that the property owner resides at the home for standard HO policy. Dad moving to the NH means the insurance contract could be viewed as invalid as the property is vacant. Most insurance co will invalidate the contract if any claims are filed and they find the owner is in a NH. Dad won't get any premium back either. Most insurance co will cancel the existing contact within 30 days. I have my mom's property currently in an "estate of" extension of her old HO and it will cancel and not renewed at her next premium due date.
You then have to get a vacant dwelling policy - and they are a b*tch to find.A vacant dwelling covers fire and usually zero on contents. The most common insurance carriers will not do a vacant policy. The speciality carriers I'm finding will not do one for under 250K coverage; require a 1 year policy with full payment, non cancellable. So if you transfer or sell the property at month 4, you do not get back those remaining 8 months paid. Property kinda has to be worth enough to warrant coverage by the insurer. If work done on the home, that will require a rider & the insurance company may want a copy of the contractors business insurance and workman's comp. Ditto for having it listed with Realtor and being shown.
If Dad's home is low value, you may find that the property is uninsurable.
- The 23 large will be an ASSET and will disqualify dad from Medicaid. If you take it and spend it or deposit it in dad's account and spend it, Medicaid will eventually find out as dad's SS # is tied into the RM disbursements. The NH & any health care providers or other Medicaid paid vendors will come after you for repayment on all costs as Dad's acceptance by Medicaid will be declined and the date of this will be the date Dad received the money. You could find yourself personally liable for all $$.
- the $ 300 a mo RM income, would probably be OK for Medicaid's monthly income ceiling as most states have it at $ 2,100 a mo. BUT I'd bet the RM contract requires for at least 1 of the signers of the RM agreement TO LIVE in the house. So if dad was married, he could go into the NH but his wife who also signed on the RM could stay at the home. If dad is solo, he does not have this ability.
- RM contract. Most RM require that the property owner lives in the house. Vacations or cruises are ok, but moving into a facility is not. The contract will be voided and RM is due in full. Read the contract - this is standard stuff. If you / dad take the 23K knowing the contract is invalid, the RM can go after you personally for any costs not paid by the eventual sale of the property. The RM has to be made 100% whole on their terms if you break the contract terms knowingly. The federally required consumer safeguards on RM are there but only IF you meet the contract terms. Dad moving into a NH, not informing the RM holder in writing probably within 30 days, voids the contract.
? for you, why are you spending any time or $ on the house? Is it realistic that dad after a couple of years in a NH can really return to it? Can you afford to pay for all costs on dad's house from now till whenever he moves back or till he dies? SInce dad is receiving Medicaid, Medicaids MERP (estate recovery) will be involved on the property to do anything with it legally and will involve probate. Do you have the wherewithal to deal with all this both in time & $$ from now till whenever dad dies and the probate period after death?
My suggestion to you is to take a hard realistic view of the situation: review the RM contract and then contact the RM on dad's moving out of home. If the RM was done just recently, I'd try to get the RM voided as dad was not competent to do a legally binding agreement. You need an elder law attorney to do this but the RM is just going to have to be dealt with - the mortgage holder will have zero sense of humor in all this. They have a whole instant system set up to deal with foreclosures and it's to their benefit to foreclose that to deal with you.
If you or dad, don't have the $ to pay for utilities, insurance, or taxes for a year, dad simply cannot afford the home neither now for the years & years ahead. The RM is just a band-aid on a much bigger issue.
Keeping your parents home issues, come up on this site pretty often. My perspective is that keeping the family home can work IF the home is fully paid off, and the child can afford all costs on the home for the rest of the parents lifetime. If there is a caregiving child living in the home, it is pretty critical that they have the income to be able to afford the home and if the elder gets Medicaid, they they be able to get the caregiver exemption for MERP. If Medicaid MERP is involved, then the child or heirs have to have ability to do whatever for MERP's review and with detailed documentation. Keeping maw-maw's house is akin to having a second or third home but without the security of ownership. It's a risk that requires somewhat deep pockets of the kids or heirs and a even deeper sense of humor in dealing with an old house. And a good probate attorney.
Why? Well Realize that the Medicare paid post hospitalization benefit is NOT guaranteed past 21 days. What Medicare does is at about 21 days is a "Progress" review. Dad will have to be meeting certain benchmarks in his PT, OT or whatever type of rehab his docs signed off on. I would try to clearly speak with his therapist to see where dad is in his progress maybe twice a week. I've found the therapist to be quiet frank if asked - if dad really can't go home again, perhaps cut the losses sooner and spend down any of dads assets on things now that he will never again have $ for if he applies for Medicaid - like a fully prepaid funeral & burial, dental work, eyeglasses, a more high end walker.
Also realize that if Medicare continues past the initial 21 days, that dad will have to pay his 20% copay for all Medicare paid services. If dad is in a specialized rehab facility rather than a NH with a rehab unit, this could be expensive 20%. Dads secondary insurance could pay the 20%, you need to find out and the policy details to give to the facility. As a word to the wise, I've found that often a facility will imply that Medicare covers 100 days so not to worry.....my advise - don't count on it.
Often what happens is that physically although they can benefit from rehab, they cognitively cannot follow through with the directions or cannot do the reps independently, etc. So for their required by Medicare evaluation, they are not progressing. This can happen at any time in the 100 days maximum Medicare rehab benefit. You want to stay proactive on this, cause the minute Medicare stops the facility will gave to be assured in some way to be paid. Whether its dad doing a spend down, applying for medicaid, or LTC insurance or family private pays - whatever way but NH will need assurance of payment. If you are the POA expect to be pressed to sign off personally on an admissions contract.
I'm going to assume that dad has no funds to private pay the NH & neither is family going to pay. So you or someone will need to do a Medicaid application for dad. I'd ask the social worker at the Nh for a list or sheet of just what this NH wants to see to accept dad as "Medicaid pending". For both my moms & mil NH admission @ different NH, the NH reviewed the items on the list to determine IF the NH would even take them pending and then these documents along with the application and the NH bill were sent to the state caseworker assigned to the NH. Being "pending" is really important as while the application is pending, dad will just have to pay his monthly income (his ss, retirement) to the NH to be ok for living there. Not all NH do pending, so ask to make sure. Also having the list of documents needed will be good to refer to for when you are getting things out of dads house. Having their medicaid application held up or declined because you could not provide their awards letters or face sheet on life insurance will be nerve wracking.
The RM is going to be totally sticky to deal with - really stock up on your adult beverage of choice as you'll need it. The foreclosure maze will likely pose an unexpected issue for dad in 2015. When houses go into foreclosure, as part of it, the debt is written off AND the mortgage holder then issues a 1099-C cancellation of debt for the amount. IRS gets 1099-c and the $ is totally taxable income. Totally phantom income but taxable. So if the RM does this, dad will need to file taxes and do a form 982 impoverishment to not have taxes due. Regular mortgages issue 1099 C routinely - I'd suggest you clearly ask the RM if dad should expect to get one and what the amount could be. You can't ignore it as IRS can garnish dads SS which he has to have to pay the NH for his required by Medicaid copay.
What I've found in this maze of Medicaid & Medicare isn that everything is very much time/# of days driven for compliance. Waiting to do things over Memorial Day break may not work as something needs to be submitted 2 weeks from now. Good luck in all this & keep a sense of humor going.
Question, if your Dad is in assisted living, will his house sit empty or will there be someone else living there? If the house is empty please note that your Dad's homeowner insurance needs to be notified, thus the homeowner policy will increase quite a bit. If the insurance carrier isn't notified and let's say there is water damage, the insurance company might not pay for damage because no one was living in the house to notice a broken pipe, etc.
Angel
His homeowners insurance, power, and water bills are paid for the next two months from his checking account.
The terms of the RM say if he is out of the house for 1 year, or insurance is not maintained, they may foreclose.
I fully understand that the house will go to the mortgage company in foreclosure. I am buying enough time to let me remove his personal items from the house. I am 2-1/2 hours away with a job and a life.
I am not spending any more money on the house. He took a small ($5K) distribution from the account to get some repairs done to the house that were required by the lender for the RM and to make the property more handicap accessible, and to pay a sitter agency 4 hours per day to help him live at home. All this was done before we knew he could not survive without more supervisory care. Again he is NOT currently on Medicaid.
After the Medicare-covered stay in a skilled nursing facility, it will be officially decided whether he will or not be able to return home. At that time we will notify the insurance carrier and the RM lender of the circumstances.
A hard look was suggested and I have done that. He will not take any more money from the RM. We will use the next month or so to retrieve his personal belongings from the house and let it be foreclosed on.
At this point I do not believe we have done anything illegal or anything unethical against The RM company or Medicaid.