Full question:
I bought a home for my mother. The home was sold and she went to assisted living. Two years later she now is going to skilled nursing. For Medicaid purposes can they count the money from the sale as part of her assets if I bought the home with my money? My mom provided no money for the home.
- Category: Medicaid
- Date:
- State: New York
Answer:
The answer will depend upon whether or not title to that home was in your mother's name. Even if she didn't purchase that home with her own funds, the home was her asset if she held even part of the title to it. Therefore, proceeds from its sale could be construed as her assets.
Before your mother can qualify for the government nursing home assistance program, there is a 60 month (5 year) look back to see if and when she transferred her assets for less than fair cash value or she transferred her assets into a trust system or any system of transferring her wealth for the purpose of becoming eligible for the nursing home program depriving the state of all her available resources for her long-term health care.
If the home was in her hame and the sale of the home was for fair market value to a disinterested party, her eligibility for Medicaid may be easier to determine.
If the home was never owned by your mother but she was permitted to live there, then the proceeds may not be construed as her assets for purposes of Medicaid.
Transferring, giving away or selling resources for less than fair market value is called a "disposal of resources". Under the Deficit Reduction act of 2005, the look back period (five years rather than three) will apply to transfers made on or after February 8, 2006. For every $4300 disposed of you will be disqualified for one month of Medical Assistance coverage of your nursing home care.
The penalty period for transfers made on or after February 8, 2006, starts on the later of: the first day of the month after which assets are transferred for less than fair market value, or the date on which you are eligible for Medical Assistance—Long Term Care. The change from 3 years to 5 will be phased in so that, for example, if you apply for Medical Assistance in March, 2009, the look-back period will be three years and one month. As of February, 2011, the full look-back period of five years will be fully in effect. If you give away property or money on more than one occasion, the second penalty does not begin to run until the end of the first one. The length of the disqualification depends on the value of the resources transferred.
Transferring a house to the following people does not affect eligibility for Medicaid:
-A spouse
-A child under the age of twenty-one or a child who is certified blind or certified disabled at any age
-A sibling with an equity interest in the home who has resided in the home at least one year immediately prior to the date the patient became institutionalized and continues to lawfully reside in the home
-A caretaker child who has resided in the home for at least two years immediately prior to the date the patient became institutionalized and who provided care.
If a person's equity interest in the home is $500,000 or less (or $750,000 or less in some cases) and the person intends on returning home, it will not be considered as a resource in determining eligibility for Medicaid. The equity value is derived by subtracting encumbrances such as liens and mortgages from the fair market value. Reverse mortgages and home equity loans can be used to reduce the equity interest.
The elements of a fraudulent conveyance transfer are defined as follows by the Uniform Fraudulent Transfer Act:
(a) A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:
(1) with actual intent to hinder, delay, or defraud any creditor of the debtor; or
(2) without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:
(i) was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or
(ii) intended to incur, or believed or reasonably should have believed that he [or she] would incur, debts beyond his [or her] ability to pay as they became due.
Eligibility for Medicaid is a complicated and detail oriented discussion. If you have further questions about how to plan for her receipt of Medicaid, I suggest you contact a local attorney who can review all the facts and documents involved.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.
