Hi all!
I have been taking care of my grand mother for the past two years in her home (so I do not qualify for the caregiver child or any other special exemptions). I moved here to CT from CA to care for her and my dad (who passed away last year from ALS) so I do not have another residence.
One year ago my grand mother began receiving state aid (Home Care Program for Elders) which is Medicaid covered, even though she technically wasn't on Medicaid yet. According to an elder law specialist and the state, this means there is already a lien pending on her estate (only the house, less than $200k, mortgage still owed).
Due to her rapidly declining condition, it is no longer safe for me to care for her by myself at home so she will be placed in nursing home next week, Medicaid-pending. I am currently a full-time nursing student and was working part-time but will be able to increase my hours because I will no longer be a full-time caregiver. However, I still will not be able to pay the mortgage, all the house bills plus all my bills by myself.
I know that Medicaid will force a sale of the home at some point, and I've seen different things about when it happens and the rights of "non-relatives" (aka me) but everything is either very state specific or contradicts itself. The lawyer I spoke with told me to "Call the State!!" and hung up on me, and after several transfers I seemed to get to the right department with Social Services (essentially Medicaid collections) but I've left several messages this week with no call back.
If anyone knows the following about Connecticut that would be great:
1. WHEN does Medicaid usually take action on a lien? Immediately after placement? When its been medically determined that the individual will be permanently placed (which usually takes how long)? Or upon death?
2. What is my right to remain in the house while my grandmother is in the nursing home?
3. What happens to the mortgage payments? If I request to remain in the house, am I required to pay them "in good faith"? (I would pay the other bills because I need heat and electricity) Or would they allocate some of her income monthly to pay it?
THANK YOU!
The bigger player in this is the mortgage company as they are a secured creditor. They will make whatever move first. If grannie defaults on the mortgage (as she has no more monthly income to pay it and you don't pay it), then the mortgage co will eventually do a foreclosure. How long foreclosures take in your area could be 3 mo or could be a year and could depend on who holds the mortgage. But whatever the case, if mortgage is defaulted then it will be foreclosed on & you must be out of the house.
Folks walk on their mortgage all the time and just stay living there till they get served with eviction notice. Whether or not this situation could be the way for you is your decision. If so, keep your bags packed & have a solid idea of where to go if it happens.
Who is grannies DPOA? and who did her Medicaid application? there will be fallout from foreclosure that they will need to deal with…...
Medicaid isn't going to care much about what happens to the house. Although someone may suggest that you pay rent…. but to me what you are doing by living there is ensuring that the property is maintained and not having squatters move in and damage the place. This is a very real issue for foreclosed properties in many places.
It's that when a foreclosure is done the mortgage co will more than likely issue gran a 1099-C Cancelation of debt for the amount owed and all fees etc incurred. Yeah and to add to this fun, it will be considered taxable income.
For those on medicaid it poses 2 different but intertwined issues:
- its taxable income so grannie need to file taxes and figure out a way to get around owing taxes. that means doing a 1040 and a 982. Its not a diy project but need a tax pro. Maybe $ 300 - 400 to get done. Now the 1099 will come for the year foreclosure complete. So if foreclose not till 2018, then its something to deal with in 2019. If grannie dies between now & then, its basically a non-starter.
- the other issue is that as the $ on the 1099-C is viewed as income. Yeah its phantom income but income none the less. So if taxes are owed and not paid, the IRS as a super creditor (this info from another poster VegasLady who is savvy on this issue) can attach grannies SS income. Problem is that she is required by Medicaid to pay all her monthly income to the NH. Well almost all as she can have a small personal needs allowance (for my mom in TX it was $ 60 a mo). But if IRS attaches her income to pay the taxes due then she can't pay the NH the required Medicaid compliance amount. So you need to get the tax stuff done so this doesnt happen. Comprende?
Grannies personal needs allowance…. you may want to set aside a small amount each month to have to pay for the tax pro IF the allowance for CT is high enough to have $ to pay for her extras and set aside a bit. Some states have the PNA so low (like $ 35 -40) that it really barely covers the resident going to the on-site beauty shop or their toiletries replacement.
Just make sure that whatever you do always always sign whatever as "Jane Smith as DPOA for Mary Jones" never just in your name.
Igloo mentioned the forgiveness of debt aspect. I assume your GM was the mortgagor (borrower)? Is she also the sole fee holder (i.e., her name is the only one on the deed and she's sole owner)?
If the house is foreclosed, that imputed income (reflected in a 1099) would be issued to your GM. If she's deceased, that's another issue. I don't have specific knowledge of how this imputed income would impact an estate or a trust - that's beyond my knowledge and would require advice of someone such as an estate planning or elder law attorney.
There's another potential option: Contact the mortgagee (lender) and explain the situation. You might be able to negotiate a "workout agreement" (there's another more delicate term that's used but I can't remember it now) by which the payments could be reduced, or the mortgage restructured in some way that allows you to make the payments. Perhaps the mortgagee would pay the taxes and add them to the principal balance.
But you would have to have written authority (i.e., DPOA proxy authority) or already be a co-mortgagor to authorize and execute any documentation revising the mortgage terms.
I don't know, however, whether a mortgagee would be responsive to any restructuring once it does an updated title search and sees a Medicaid lien on the property.
But it's worth a try, as at least the mortgaged premises would be kept up.
However, if the lender is Bank of America or Wells Fargo, I don't think you'd get a very positive response. I don't think I'd even bother with them.
A few months ago, when Gram was placed into at-home hospice and before the impending NH transfer was even a thought, we consulted with a real estate attorney about what would happen with the home after her death since I didn't know if I was going to sell it right away or what. She said that based on the lender and the size of the area, I MOST LIKELY wouldn't see any foreclosure action on the house for at least 6 months, maybe a year. I wish I had a way of avoiding that negative action altogether but with school and work it honestly makes the most sense for me to try to ride it out at least until I graduate in May...or worst case scenario until winter break so I have a few more months to save up (I had to take a long unpaid LOA the past couple weeks and next week when Gram got really bad and could no longer be alone for even a few minutes so I lost a lot of income).
However, what is this fallout that you mention? Would there be legal action taken against me because I chose to live here and not pay the bills vs sell the house (and therefore temporarily make her ineligible for Medicaid)?
The mortgagee is PHH which is a small and pretty poorly rated lender which I think will work for me, at least in the beginning...and yes, everything is in her name. When gram entered hospice there was some sort of issue with her bank account around the same time where the account # had to be changed which caused a nightmare with SS and she essentially didn't get any payments from anyone from two months...that on top of my time off meant no mortgage payments for two months. When I called and explained the situation they didn't offer any solutions, they were just cheery and said ok! Pay when you can! I got one single letter in the mail reminding me that our payment was late, after about 7 weeks.
Gram's also getting pretty weak, which is the main reason for her NH transfer...as I mentioned while I'm happy I was able to care for her at home for so long it is getting too difficult and unsafe. Ultimately if the situation arises I don't think I'll need to worry about the tax situation beyond me having to handle it with her estate taxes, however that works out. Thankfully the town probate court is pretty good about assisting with that nonsense.
So, just to clarify and wrap up:
1. While Medicaid does/will have a lien on the property, because it is an allowable asset it does not have to be sold until her death to "pay back" Medicaid.
2. I should have no issue continuing to live in the home, because I can make the argument that I am "maintaining the property" if nothing else
3. While I live here I become responsible for the mortgage and any house-related payments. If any of those payments are not made it will not reflect on me negatively in a legal/financial way. However, if the home does complete foreclosure before my grandmother's death, there will be a tax mess that I will have to be sure to handle so that it does not impact her NH.
2. yes unless mortgage holder wants you out, you continue to reside there.
On thinking about your situation, you may want to actually think swinging the $ to pay the mortgage rather than do a foreclosure. A lot to this to me is just how much gran still owes on that mortgage… if it's a huge HUGE amount, then maybe not but if she just owes under 50K on a 200K house, that's a different situation. Now you may want to give some thought and do a bit of research as to the caregiver exemption…. I'm thinking it can be for whatever family member who could be considered an heir. It sounds to me like you fit that category. Hopefully gran has a will done with you as the executor and only heir. Now you may not have 2 full years caregiving but then you may. And then also you could qualify for a low-income heir exemption. You're a student right?, so you probably make no real income. Low income heirs can get an exemption to estate recovery. It may be called an "exclusion" rather than an "exemption". Medicaid speak varies by state, rothflmao. If you can do this, it may be worth you paying mortgage (and look into what Garden suggested as to doing a work-out) if you at all are interested in the home and more than likely will get exemption / exclusion to MERP. As an aside on this, dealing with estate recovery will require lots of OCD documentation on your part but if your organized & are a bit of a pit bully, well imo, it can be done. Your obviously tres organized (lol the 1. ….2. …. 3…. wrap up).
3. If gran dies before mortgage situation dealt with it will be a pretty sticky debt of her estate. I'd try to find the mortgage agreement and see what happens on death. It could be the loan is called in & due in full within 90 days as they want to get something done as probate once opened can go on for quite a while and house is stuck in limbo. Probate in most places doesnt have to even be opened up quickly…… often folks wait a few months to do it. Like for TX you have 4 years from DOD to open probate & get Letters testamentary. If your the executor, you have a bit of discretion as to how probate gets done which mortgage co may not be cheery about. You could get some leverage with mortgage holder to want to get something worked out now with you otherwise probate limbo could possible be on the horizon for them. ALot of this to me depends on just how much debt is still outstanding.
Not to sound harsh, but it sounds like grannie's time may be limited. If hospice is on board and she's quite ill, then she may not be in the NH for the 2 year average NH stay. If its a short period of time the Medicaid tally could be small. Ask the NH as to what Medicaid pays for grans room & board daily rate. Thats what the recovery amount will basically be. Average is around $ 170 a day. The amount is important as Estate recovery is required by the feds to do a cost benefit analysis. If amount owed is under 3K or recoverable estate is 10K or less, then no recovery done. Some states have the recoverable estate limit higher. Like MS seems to no do recovery on property with less than a 65-75K value. MS does not use an outside contractor for MERP (but a lot of states do) so done by state workers. I'd bet someone determined its not feasible to deal with modest properties and heirs who are likely themselves are low income and already on Medicaid, SNAP, Section 8, etc. MS is a really really poor state & usually numero uno on those enrolled in federal programs. Takes the same amount of staff time to do recovery on house worth 50K as one worth 250K.
The county assessed the house at about $140k and we owe about $60k on it. The assessment would probably be higher if someone came out and saw that the "finished basement" is actually a full in-law apartment. Either way, since my dad was sick the house started falling into disrepair and when I moved back I did not have the time or funds to do much maintenance on it besides keeping it from falling down on our heads, so...I don't know much about assessment vs. worth, but I can't imagine that the house is "worth" much more even taking into consideration land value and such.
The senior planning person I talked to did provide me with some brief free advice/insight, similar to what you said:
-CT would have a sort of caregiver/hardship waiver. However, they are "seriously cracking down" on this sort of thing and depending on my interest in the home (I really don't want it...the small income from an eventual sale would be nice but I do NOT want the house itself) depends whether or not I want to do the paperwork proving the amount of effort I put into caring for my grandmother plus the number of hours I worked vs. school etc. etc. She alluded that it is a LOT of paperwork and a LOT of phone calls/meetings...normally it wouldn't bother me, but depending on the timeline I may choose not to pursue. I am the executor/only heir on the will, and should have enough documentation (and witnesses!!) showing the amount of time and care I've put in the past couple of years. But they may come back and say that because I went to school, or because at times I worked full-time that I am ineligible. Who knows. Exhaustive searching for the specific CT statutes show nothing, not even an application or "legalese" to guide me.
-She said that while there will be a lien, they will not "force" a sale of the house nor kick me out. Whatever happens to the home, CT Medicaid simply owns the right to my gram's estate, which is only her house (via the lien). They won't be the ones to force me out (perhaps the mortgage co as you mentioned).
I haven't yet decided about calling the mortgage co. I'm still trying to figure out what to do work-wise...school starts next week and I am going to see how much I can increase my hours or perhaps if I can get some other type of job that will increase my income enough where I can swing it (or a good portion of it) plus the rest of the bills once I see what sort of crazy the professors are planning on throwing at us this semester :) One day at a time right?