Downsizing and Medicaid; Will buying a smaller place so there won't be a mortgage adversely affect my husband's application?

Question

Downsizing and Medicaid; Will buying a smaller place so there won't be a mortgage adversely affect my husband's application?

Follow

Share

In case this question has not been asked before, I'd like to hear from the experienced. My husband and I live in a house owned by me. It still has a mortgage and is a drain on my income. And it has a large yard that my husband wanted but no longer has any interest in gardening due to his Alzheimer's. I hate gardening, period. I am thinking of selling this house and buying a smaller place (condo or townhouse) to live in with the proceeds so that there won't be a mortgage. But I am wondering if this would adversely affect my husband's application for Medicaid later when his savings run out. Does anyone know?

Asset Limits Asset Protection Medicaid

This question has been closed for answers. Ask a New Question.

15 Answers

Most
Helpful Newest
First Oldest
First

The home (up to a value of at least $572,000 in 2018) is an exempt asset regardless of which spouse owns it. It is better that it is in your name alone, however, since it will be easier to sell (you won't need your husband's signature on the deed). The new home will also be exempt, so I think it's a good idea you have, to conserve your expenses by downsizing.

Helpful Answer (2)

Report

Worried - what was the determination on your TSP? To me you’ve got to look at the entire financial picture for both yourself as the CS and for your hubs as the future NH spouse on Medicaid. It’s not just about the house, or his SS or your retirement income, TSP, whatever but all your& his joint financials.

Downsizing as we age seems to always be a good idea. But downsizing that creates more joint assets - & if that TSP of yours is also a joint asset - probably not the best move for Medicaid planning purposes. Remember a CS has a maximum for exempt assets (most states have this at 119k) and will have a ceiling as to their income (this all over the place as each state sets their own $ amount). Will downsizing add onto your existing assets / income so then affects hubs Medicaid eligibility?

Also Downsizing and buying a condo in a state that does not seek MERP / Estate Recovery from a CS might mean buying in your name a nicer more expensive place. While downsizing and buying a much lower value property or even renting might be a better use of $ in a state that places a lien &/or does Estate Recovery. You might be able to do some more creative renting - like your kids buy a 2nd home which you pay FMV rent to & that FMV rent covers their mortgage, something like this could solve all sorts of issues but should be run across your attorneys desk.

In the past you’ve posted regarding meeting with 2 attorneys, what were their suggestions? What does your state do for recovery on a CS’s home?

Helpful Answer (5)

Report

Debster, jacobsonbob and srjohnson53,

I think you might find our Common Caregiving Abbreviations and Acronyms Glossary helpful for navigating posts in the Caregiver Forum.

You can find it here: https://www.agingcare.com/articles/common-caregiving-abbreviations-and-acronyms-435589.htm

Take care!

Helpful Answer (3)

Report

Can't see why it would. Before you do that though consult a lawyer about Medicaid eligibilty. With the extra cash from the sale there are a lot of things you can do to do to set yourselves up comfortably for the future.

Helpful Answer (2)

Report

Great info to look into in all the previous post. Also check into Medicaid approved Annuities which are helpful if you have "to much money" if you downsize. And if you do downsize check into buying your next home with a HECM for Purchase loan program, which allows you to buy the home with a 1-time payment of 50% (÷ - 10%) and NEVER have to make another mortgage payment. We used both the HECM & Annuity for my dad.

Helpful Answer (1)

Report

My understanding is that for couples Medicaid, ALL their income & assets are looked at as they are married. No matter whether it’s her name or his name that the assets are titled to. Medicaid does a “snapshot” day for couples to which both their income / assets are affixed to to determine eligibility.

AND limits are placed on those for each of them.
BUT only the in a facility on Medicaid spouse will need to be impoverished (2k in assets) and within Medicaid limits for his income (most states have this at $2100 mo). The CS (community spouse) is themselves not expected to become impoverished but have to be within Medicaid CS limits for their non-exempt assets (119k most states) & income (this varies wildly). Medicaid is a jointly funded federal & state program, BUT each state administers its Medicaid programs uniquely.

So say Worried has 75k in savings & sells her home for 400k. Medicaid for most states has the CS asset limit at 119k. She’s over limit by $356k and for the month received it’s income for her and then moth afterwards it’s a joint asset. If she doesnt find someplace legit to park that 356k asap, hubs is gong to be become ineligible for Medicaid till they are both down to Medicaid limits for him AND for her. Just what to do to me really depends on the likely CS future situation and not a DIY as it’s really an interlocking situation. It’s something that definitely needs a savvy elder law atty, like one that’s NAELA or CELA.

Helpful Answer (1)

Report

I read all the questions and answers here so I can learn more. igloo572 has a lot of good information, I think, but the use of all those acronyms in the initial reply without explanation makes the information provided less valuable for the rest of us.

Helpful Answer (1)

Report

I know nothing about Medicaid and am not sure what all these initials stand for (TSP, CS, NH, HECM, SPIA), so I won't pretend to answer the question. But from a general legal standpoint, it depends on where the the poster lives, because state law varies regarding separate and joint property. I live in Washington, a community property state; California is another example. In these states, assuming the parties have NOT entered into a Community Property Agreement (which many folks do when they get married, and under which, by agreement, the separate property owned by each becomes community property), the proceeds from the sale of separate assets remain the separate property of the owner/seller. There may be subsequent "commingling" of the proceeds, which would turn some or all of the proceeds into community property, but that can be avoided, for example by keeping the proceeds in a separate account. Because of community property laws, estate planning lawyers hate community property agreements. They can create unintended consequences. It's also why people often have prenuptial agreements if there's a significant difference between assets owned by the parties, or they have reasons to keep assets separate, e.g. to maintain those assets for the benefit of children from a previous marriage. But I understand why the poster wants to get equity from the house now, when it's needed, as well as get out from under the mortgage obligation. As others have said, speak to a qualified attorney.

Helpful Answer (1)

Report

I would seek legal advise. If this is a home that you had prior to marriage, an inherited house, etc all changes the situation. Please find out what your state Medicaid laws are and find a good attorney that can help you not lose your assests.

Helpful Answer (1)

Report

Mr Heiser, I wonder if you can shed light on WorriedSpouses other assets that are solely in her name, i.e., her 401k etc. Is there an expectation by Medicaid that spouses whose earned assets are of very different levels pay NH expenses? As an example, by husband makes about 1/4 of what I do. I have substantial retirement accounts and will have a pension. He will have SS when he retires. If he were to need MY care, are MY pension and retirement funds in play?

Downsizing and Medicaid; Will buying a smaller place so there won't be a mortgage adversely affect my husband's application?

15 Answers

Recent Questions

Popular Questions

Related Questions