My MIL was living in a home with holes in the floor, rats running all around, toilet not working etc. It was decided that she would sell her house and whatever she got for it would go towards us building a handicapped apartment onto our house for her. Her house sold last Sept. and building started in Oct. She has a 1000 square foot apartment that is 100% ADA compliant and it cost us $156,000 to build. She only received $94,000 for her home so she put that into the apartment. We paid for the extra. Now, she is not doing well and we see that she may end up in a nursing home sooner rather than later. I'm wondering if trying to take care of mom is going to end up really hurting us. If she ends up in a nursing home, are we responsible for paying her back the $94,000 that she put in if it happens before the 5 year look back period?
And that plus her 300k in savings, she will not be eligible for medicaid for at last 2 maybe 2.5/3 years with NH costing 8k - 15k a mo.
NH Medicaid (Medicaid not Medicare) is limited to those who are "at need" both medically (needs skilled nursing care) & financially (basically impoverished with no more than 2k in nonexempt assets). She has 300k in non-exempt assets.
She could do a special needs trust to become Meducaid eligible but I'm pretty sue those require the beneficiary of the SNT to be the state. So if she keels over dead 6 mos from now, family will not get a penny as the state is beneficiary. Really with 300k, gather her paperwork together & ASAP see an elder law atty.
I got a PM that the penalty doesn't decrease with time like I wrote above. I checked and that is correct. There is no reduction in penalty with time if it is in the 5-year look-back period. Medicaid is tough!
The situation you & MIL are in is not uncommon. Commingling of assets. My suggestion is for you to gather all of her financials (income awards letters, house sale paperwork, tax assessor details on old house - could be some FMV issues lurking-, contractor contract & payment, her current bank statements, etc) and schedule a NAELA or CeLA level of experience elder law atty consultation to discuss how to best deal with her future Medicaid application.
The fact that she wrote a check directly to the contractor and not to you is
Iikely a very VERY good thing. I'd bet that you will be asked by the atty. to have to get an appraisal done on your home to get its new value with the addition. So try to find your old tax assessor statements to see how much of an "increase" the addition could pose.
Mil is now safe & secure and that is in & of itself priceless, so keep this in mind.
I'd bet you will need 3 -6 mos or so to get through paperwork on all this before Mil does her Medicaid application. Her monthly income can pay for in home caregivers either from an agency OR her atty. does a personal needs contract between mil & family. personally I'd go with getting an agency as it gives you a bit of a break & you have plenty of other things to deal with....plus show you & hubs are not all about her $.
About the transfer penalty, it's an equation roughly based on whatever your state pays for the daily room & boards rate at a NH by Medicaid. Rates vary by state as each state administers its Medicaid program uniquely but within overall federal guidelines. Many east coast states pay $300/400 a day. Southern states way way less. For my mom - who was in TX - it was about $ 155 a day. So a 94k penalty would mean 606 days of ineligibility; but if she had lived in a $ 350 reinbursement rate state only 269 days.
Good luck! if you would can you post an update as to what the plan is, thanks!
The five year lookback is five years prior to the application for Medicaid. So if she is applying for medicaid today, it would be five years back from today. To avoid the penalty you would need to wait for 5 years from when she spent the $94,000. If you can't wait, you can apply now, and accept the penalty (by paying out of your pocket the $94,000).
Angel
Angel