I have read that if your parent moves in with you and lives free, SS and Medicare could be effected. My mom wants to pay living expenses since she has been paying for rent while living alone. She will be moving in with me and my husband. We are going to consult an elder affairs attorney so she and I are protected. I have read that if you receive "rent" it is considered taxable income. Can anyone comment on this?
Matilda
If you take rent and you call it rent, then yes it is taxable income. However, that also means that on your tax return, can subtract out certain expenses that were incurred for getting that rent. If you take "rent" and it is less than the maximum allowed before gift tax kicks in ($16,000 per person in 2022), you don't have to declare that on your income tax. However, if Medicaid does the 5 year look back, then that is money that might make Mom ineligible for Medicaid because from their viewpoint, it will be a gift.
What is possible would be for you to buy a duplex, you and your husband live in 1 of units and your Mom live in the other unit, and you treat the unit that your Mom lives in as a rental unit (charging her fair market rent) and doing all the things a landlord would do to the rental unit and claiming all the tax benefits that are available to landlords on your personal income tax. She would then pay for her own utilities, etc.. The key here is that you have to charge her fair market rent.
Consulting with an elder attorney is a great idea, especially if you think she will be on Medicaid at some point.
The second question is whether her paying rent is relevant. It only matters if she is on Medicaid. If so, determine a minimally acceptable level of rent from her. If you don't, Medicaid will assess a higher market rent and designate that as a GIFT from you to her which, in turn, would affect her benefit. Avoid this situation if possible.
Several have suggested (if Medicaid is involved) to have your mother pay certain expenses, like utilities, directly and or not collecting any rent at all from her. This could result in serious consequences. If or when Medicaid catches up with these practices, it will only spell trouble for your mom. And you could end up fighting Medicaid/Social Security in an appeals court. Don't recommend these actions. Keep it clean and transparent especially if your mom runs out of money and has to apply for Medicaid in the future.
You'd be better off to just let her pay direct to utility company or mortgage payment. Then she's paying bills not rent.
What she pays has nothing to do with social security or Medicare. On the other hand if you meant to say SSI and Medicaid... that's a different story.
Her SSI check could be lowered if she's not paying rent. If she really gets SSI w Medicaid, best to talk to elder atty to get correct info for both of you. You receiving income and her paying shelter expenses
You said that your mother is receiving Social Security and Medicare which indicate that she earned these from years of working. In order for her to qualify for Medicaid, if she makes too much money above Medicaid income guidelines she might not qualify for Medicaid benefits, but it’s worthwhile looking into this if you are interested in getting her on Medicaid.
Medicare does in fact pay a portion of housing if the person was deemed by a doctor to be “disabled”.
if a person is disabled the are seen by govt and Medicare system to need MEDICAL related expenses paid for for thst disability. If doctor certified the patient is disabled to point unable to care for themselves or needs one story gone or similar, then a portion of housing needs are in fact needed for medical care. Then Medicare pays a potion.
For example, there are millions in Medicare facilities or non-Medicare facilities thst accept Medicare for housing costs to accomodate medical needs.
Also, Federal Medicare does pay for family to care for own family at home. This is because there is not enough Medicare facilities.
If a person’s medical issues make it so they cannot see, cannot walk up steps in two story home, cannot care for themselves alone, you can be paid even to care for your own parent. There is a maximum payout and you are paid less then in-home care or memory or assisted or long term care charges. Look it up under Federal govt. It is to help accomodate all the baby boomers out there as there is not ample places for them to go to be cared for. Income is not a requirement. It’s based in the caregivers time for specific medical type care in the home. It is considered income for tax purposes as you are paid by Federal Govt.
Ask your local Senior aging office or look up Federal money for being paid to care for your parent at home.
Gena / Touch Matters
Have mom sign a rental agreement. Have a realtor come into my house and assess the space she uses. Get a letter on his letterhead stating what the fair market rental value would be. Set up a separate checking account just in my name just for that money. In moms case $875. Every month this amount was transferred from her account to my account. After about 1.5 years There was $14,000 in that account. When it came time to apply for Medicaid..I sent Medicaid a copy of the rental agreement. A copy of the Fair Market Value letter from the realtor. And of course her bank statements showed where the money was transferred. It was perfectly acceptable to Medicaid. They never questioned any of it. And now she is in a nursing home...the elder attorney also advised me to be sure to be able to self pay the nursing home for several months. That way you can pick the nursing home. Otherwise good luck in getting her into a good one . She self payed for 3 months. Then ran out of money .she was allowed to stay while it took 5 months for her to be approved. But when she was approved Medicaid back payed the nursing home for those 5 months. It was $9,000 a month.
But anyway the account with $14,000 is still there and I have not touched it. I feel good that if she needs anything I have that money to spend on her . It was a very smart move that I am very grateful that the elder attorney told me about .
source: https://www.medicaidplanningassistance.org/medicaid-eligibility-massachusetts/
Social Security is based on what a person earned during their working life or what their spouse did if they were married for long enough and if their spouse's is more than theirs.
Medicare is Medicare. It pays for what it pays for regardless of where a person lives.
Rent is considered income. Your mother paying you rent is the same as if you rented the space to a tenant or a boarder. Usually if they're paying under a certain amount you don't have to claim it.
Your mother won't get any more money or benefits if she's paying rent to you. She won't get any less either.
If you're her POA keep her money separate from yours. Now, charging her for caregiving service (if she need it) is a whole other story. In some states like Connecticut, a family caregiver can get paid and is tax-free income. It does not put the caregiver's household in a different income bracket and if they are on social security or even Medicaid, and even food stamps it does not interfere with their benefit status.
All of this can be found out for sure by whatever lawyer you're going to.
You are very wise to be asking questions though. Especially if you're going to be dealing with siblings.
Fortunately, we were able to pay off our mortgage since I was unemployed but able to save our shelter, our greatest asset. We made this event just 7 months before my mother was forced into a nursing home when she was then unable to care for herself.
;)
I would say, if you really don't want the money, put it in a separate banking account. Then if Mom ever needs any care, like an aide, she has the money. I did this with my daughter when I babysat her son. She could well afford to pay me so I let her. (Had a hard time saving) I put the money in a separate savings account. Five years later she wanted to take son to Universal but needed to save the money. I told her no she didn't...we all went and had a great time.
Ss and Medicare don't look at where you live or who you live with, what money they have etc. SS is an earned benefit based on work history and Medicare is health insurance earned through the same.
Medicaid is public assistance and THEY WILL look at how her money was spent if she asks for assistance. They don't expect people to live on air, they know we all have monthly expenses of living. They are looking for people that give away all their assets so the taxpayers can pay the bills. They will disqualify someone for coverage if that happens.
A certified elder law attorney will be able to guide you on your specific situation.