CarrieLockhart Asked October 2019
Can my mom sell her house right now, knowing my Dad will eventually go into a nursing home?
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They are both 75, and my dad has already lost one leg (below the knee) due to diabetes. He will most likely lose the other leg soon. She wants to keep him at home as long as possible because she can't fathom losing everything they have worked and saved so hard for. My mom has had to take care of the house (inside and out) for a couple years now, and it's difficult. They need to sell and get into something smaller (like a patio home) with no steps. Currently they have 5-12 steps, depending on which way you enter the house. I know the community spouse gets to keep the home, so can she sell it now and put the money right back into another one, without penalty in near future? I hope I'm making sense.
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I am no expert but I would think if the house that is purchased is of the same value then there is no problem. The problem might be if the house they sell is worth $900,000 and the one they buy is $200,000.
This might be the time to sit with an Elder Care Attorney and ask these questions.
Also..if your dad is a Veteran it is possible that you (your mom) can get help through the VA. And it may be a lot of help depending on where and when he served. They have changed a lot of the criteria for what they determine to be "service connected disability"
Don't let mom become overwhelmed by caring for dad and for the house! This is a change that needs to be made soon
BUT whether it’s going to be best to buy it outright so no mortgage or have a mortgage and use some of the House sale $ in other ways, that to me are the bigger issues to think about. At 75, if mom is pretty healthy & likely to be even healthier once dad has moved into a facility, she could have another decade or two ahead of her. And she’s going to need all the $ she can possibly keep so she can maintain her living standard till years & years from now.
Your mom as a community spouse is NOT required to impoverish herself for dad to be eligible for LTC NH Medicaid. Only dad has to be impoverished. Her income does not count & her income does not have to be paid to the NH. However dads income does. The “income” can be sticky to deal with for couples.....
AND for LTC Medicaid all their assets are counted but mom as a CS is allowed to keep a certain amount of $ as her own assets. For most states this is $126k. You need to find out exactly what the CS asset max is for your state. And then what they have in non-exempt assets & without counting whatever the house might sell for.
are they over 126k in assets right now?
what might house sell for? & likely cost to buy a new house?
what’s her SS or other monthly income?
And does she right now need dads income in order for thier current household (including her medical costs) to run?
depending on what the #$’s are, it might be better for mom to have a mortgage and instead use some of house sale $ to get for herself a SPIA (single premium immediate annuity, if your state allows for these) and the SPIA pays her the lowest amount allowed under actuarial tables as income each month. Then since she has a mortgage, atop her regular living costs, she files to get CSRA (Community spouse resource allowance). CSRA waives some of dads income from all basically going to the NH as his required by Medicaid copay and instead some of it goes to mom as she needs more income as she has that pesky mortgage. Financial planning when there’s a healthy youngish CS and a NH spouse is imho flat not simple. Personally to me for these situations your folks are best off meeting with a CELA level of elder law attorney.
as they can give you all options as to what works best for how Medicaid runs for your state and deal with the speciality underwriting needed for doing a SPIA.
btw I hate annuities in general& think they just don’t work well for most, but a SPIA is a very unique very restrictive type of annuity that can work for healthy younger CS.
about “keeping” the house.... Medicaid requires all states to do an attempt at recovery (MERP) of all costs paid. But there are exemptions and exclusions to MERP. & just what these are dependent on your states administration of Medicaid and laws for probate & property rights. A lot of states place a unsecured lien onto the property that exists until property is sold or it’s a claim against the estate if she dies. If there’s still a mortgage, the mortgage Co is a secured creditor, so they get paid first & foremost. If there’s no $ after mortgage paid off, then there’s no recovery as no $. Sometimes having a mortgage in your 70’s or 80’s can be a good thing......
She has already told us kids that she cannot even afford to stay in the house without my dad's SS check, so......... her income is well below the state's minimum monthly maintenance income level.
I do not know what their assets are, but there is no way her half would be over the allowed $126K. I just hate that they have to split the amount of money they have, only to have to spend his side all the way down to $2,000. It makes no sense when the CS needs that money to survive. That's why she said she'd like to try keeping him at home, because what if she "spends down" all that money, and he dies 3 months later in the nursing home? She is out all that money. This process is very frustrating.
I will let her know what you said about paying off a new house vs. having a mortgage. It sure makes sense. She could possibly live another 10-15 years if she makes it through this stress.
I’m guessing your to be the POA? If you have siblings and they for sure won’t be all huffy & challenging to your decision making as dpoa in the future, have a sibling go to be the note taker. If siblings likely to be difficult, I’d suggest a friend takes notes.
if atty sends a questionnaire, fill it out in detail in advance
if they have any old legal done - like a will or existing DPOA- take copies of those.
Find the paperwork on the house - like Warranty Deed, Release of Deed of Trust -& take those as well as the last Tax collector bill (this one should be going out right abt now for January, 2020 due).
if you don’t have a pretty solid idea of what their monthly income / to expenses are, now is the time to spend couple of weekends pulling all that together for them. Like this years bank statements, ‘18 & ‘ 17 taxes if they still file, anything that pays them $.
also find their “awards letters”. These are a trifold mailing that SSA & federal type of retirements send out usually in Nov. Other retirements also send these out but can do them close to EOY 2019. “awards letters” state to the penny what monthly income will be for 2020.
If the plan needs to be that dad flat requires a higher level of care & needs a NH, clearly ask just how state of TN Medicaid evaluates “at need” eligibility for skilled nursing care. Often families get all in the weeds on the financial aspect of LTC Medicaid BUT he also must show to be “at need” medically for skilled nursing care (aka care in a NH). A lot of states really have narrowed medical eligibility and now require an assessment w/fat health chart that clearly shows he needs skilled nursing care. Not just AL or MC but skilled nursing care in a NH as most states LTC Medicaid do not pay for AL or MC. I was able to have my mom go from IL to NH and bypassing the AL phase entirely a few years back, & she went into the NH as “Medicaid Pending”, but if the situation was now in 2019 she likely imo wouldn’t have met the current much tighter standards for “at need” medically for NH.
Also if you don’t get a good vibe with the atty, there will be another one to see...... most do first maybe 20-30 min visit for free or a a nominal low initial consultation fee. Getting info together in advance really helps use that first visit optimally. Good luck & try not to let yourself get overwhelmed too much!
Medicaid is very complicated. Even if it sounds like someone posting here has done exactly the same thing, Medicaid varies from state to state and individual situations vary based upon something that you may not even be thinking about.
Check with legal advice where you live but if it is really his needs that initiate the move why would anyone have a problem with this arrangement
The only other thing I would add is the "spend down", if it comes to that, doesn't mean you just have to go crazy spending his "share", thus pretty much wasting the funds. Hiring outside help or self-paying at a facility would qualify as part of the "spend down." So long as nothing is "gifted" to anyone and you have receipts, it should be fine. A good EC attorney can explain all this and the benefits of irrevocable trusts and "life estate" trust for the home.
Selling the present homestead residence and purchasing another should not be an issue with respect to future Medicaid eligibility.
When budgeting keep in mind that even if your father were to enter a nursing home, a portion of his income may be "diverted" to your mother to help support her housing needs. The amount she may keep of their combined gross income will be between $2,057.50 and $3,160.50 (the Minimum Monthly Maintenance Needs Allowance or MMMNA).
To amplify on and correct some of the answers posted...
With respect to assets and Medicaid eligibility, at the time of eligibility determination Tennessee will allow the Medicaid applicant spouse (aka Community Spouse) to retain all combined "countable" assets up to $25,284 (amounts are adjusted annually).
Above this asset level the state will require that countable assets be split 50/50 between the couple. The Medicaid applicant spouse may retain only $2,000. The Community Spouse may retain up to $126,420 of the 50%. This compels the Medicaid applicant spouse to "spend down" their 50% to meet the asset eligibility requirement of $2,000 or pursue some other legal way to devise (transfer) the assets without incurring an eligibility penalty. Sometimes as was suggested, a Medicaid Qualified Annuity will be helpful in this process (converting an asset to income) however the higher income generated by the annuity may affect the MMMNA as described above.
This planning can become quite complex and Tennessee requires that an licensed attorney provide advice regarding the transfer or assets of income to obtain Medicaid eligibility.
On other issues...
Tennessee does have a Medicaid Home and Community Based long-term care Waiver program that provides benefits for home care and assisted living. https://www.tn.gov/tenncare/long-term-services-supports/choices/what-home-care-services-are-covered-in-choices.html
Medicaid home based benefits typically require no co-pay and the couple will be able to keep all income for housing and medical needs.
Also mentioned was the potential for VA benefits. Service connected benefits known as Compensation or "Disability" may be an option if your father was a veteran who has injuries or disabilities resulting from active duty service. If circumstances are such, it may be possible for an award to be granted but it may literally take years.
If, however, your father is a war-time veteran (he did not have to have served in combat) he may be eligible for and may qualify for a NON-Service Connected benefit called Improved Pension. This award may provide a monthly benefit to the couple of up to $2,230 per month to assist with home care or provide some assistance with assisted living expenses.
Medicaid home care services and, if applicable, the VA benefit mentioned above may permit your parent's to age in place for quite some time.
I wish you and your family well...
There is a way to keep your home if it is put in some kind of trust but it can’t be right before you put him in one. I think it is 3 years. You need to talk to an attorney and find out because she could lose everything if he lived a long time. A nursing home is approximately 4,000 a month. A Private home where they only keep a few patients is usually cheaper but not a lot.
Social security will pay someone to come in approximately 15 hours a week and there are home health aides that will come out and check them over and help with bathing. You need to find out these things right away.
"Survey reveals that in the United States, a private room in a nursing home costs an average of $8,121 a month. For a semi-private room, the average cost is $7,148 a month. Various factors impact how much a nursing home stay costs including location, size, length of stay and services offered."
and
"The cost of a nursing home varies significantly depending on the location. For example, in Alaska, the average cost for a private room is $800 per day, whereas the same room in Oklahoma would cost an average of $147 per day."
Just out of curiosity, I had checked a local, lower cost place near us - it was over $15k/m. Where you are is clearly one of the less expensive regions - lucky for you (although it is relative to standard of living - costs may be less in areas where average income is less.)
Also, stating she can't have a house isn't necessarily true. My understanding is IF there are two parents and one needs care, the other can retain/remain in the home and keep enough income to avoid impoverishment (if Medicaid is used.)
Please go to www.nelf.org and find a certified elder law attorney in your area and find one that does free consultation. I interviewed around 12 attorneys and I was quoted as high as 12k and ended up with a certified elder law attorney and i spent 12 hundred for something that another attorney wanted 12 thousand for.
It is so important to find an attorney that can be trusted, not all can and it is a highly competitive industry, so please do interview others.
I would do some research, I know that legal fees vary by region but this pay one astronomical fee annually and that is it is a common theme in the industry. I believe that you are paying way to much for services that you may or may not need.
As far as filling out the Medicaid application realize that you will be providing the stacks of paperwork for the application, so it will not be work free. I think that there should be regulations on these law firms that are selling packages. It's almost criminal the amount they charge.
It is worth the time to interview several attorneys.
We also clarified that they could act as fudiciaries and that they had a future plan to ensure that they were around when we needed them.
I gotta ask, just how much $ do your folks have? Are they a higher net worth couple that have all sorts of stocks, Tbills, CDs, land, other investments?, like they file business, interest & partnership stuff for taxes each year? Like 700k-1M+ portfolio excluding their home? Folks in that planet maybe, maybe need 14k oversight a year, imo. But folks on that planet, have it so their $ is actively making $ so 14k can make sense to do. & likely they have a financial advisor who already manages $ & stuff has been placed into non-probatable ownership for the future.
Most of us dealing with our parents & LTC Medicaid have it so that their at the point in their financial life that it’s all outflow..... their $ is NOT making $. It’s all spending out, no more asset building. Their on SS & maybe another retirement income and it’s all just outflow to keep up with costs of living & copays. If this is your folks, they can’t afford 14k annually till forever. Goodness if mom lives another decade, that’s $140,000.
Please look at the contract in detail, is it truly 14k every yr from now till mom dies or herself needs a facility & does it include getting her filing done whenever that is in the future & then just who is gonna pay the 14? And includes tax filing from now till forever?
it sounds like you don’t live where they are, is that right?
So anyway you can get to them for a week / 10 days to ferret out financials so you can lay eyes on stuff and set up appointments so you & mom can both go to see other attorneys? Maybe long Thanksgiving?
if they are still in the old homestead where you grew up, get on your HS alumni group and put a call out asking who others have used. There’s going to be others who have & are currently dealing with your exact situation. Ditto for talking with your folks neighbors but imo this better in person when you come in. Look at their church bulletin to see if there are attorneys. 14k is outrageous, there’s gonna be another attorney.....
oh the no Christmas club $ is cause they want to make sure no movement of $ over $600 done for last 6 months. $600 is the tipping point for IRS reporting on 1099’s. Now if mom say needs to pay $850 for the termite guy to do something or pays $50 a week for yard guy cash that’s ok as that payout can be justified and there’s an bill from a company or a person.
Pls. do your best to calm mom tho’, bet she’s overwhelmed and in major fret mode. Telling her you’re coming in for Thanksgiving will help that.
good luck and let us know what all you find out. We all do learn from each other.
What she needs is someone to put her house in a trust, help with getting my dad medicaid as he will no doubt need nursing home care after he loses his other leg, and to set up POA's & a will. The estate planning attorney's she first met with, would charge $150 each to draw up the POA & will.
The consultation fee of $400 at ELET can be put towards the $14,000 Life Care Planning fee if she chooses to retain them. That covers the first year, after that it is like $3,900 if you choose to keep in continuous contact with them. Otherwise she can just schedule a 2 hour meeting to check on things.
Also, the $14,000 fee can be paid for out of the "spend down", not that that makes it any easier to swallow. The owner of the firm, Amelia Crotwell, is a certified Elder Law Attorney. They are out of Knoxville. Attorney Bailey Schiermeyer is who my mom met with, she is not certified at this time.
I cannot thank you enough for conversing with me. This is truly an eye opening experience that a lot of people just aren't prepared for.
I've done some checking on the TN attorney and definitely would NOT recommend the exorbitant plan she proposed. This suggests to me of someone who has a very limited practice and wants to get as much as she can from the perhaps one client she may get.
The annual "maintenance" fee is nothing I've ever heard of. There's a word for this kind of financial squeeze, but I can't think of it offhand.