She still has money but will run out. Her house is covered under insurance to eventually go to us. We were thinking of moving in and selling our house. We would take care of the house, but live rent free. Can Medicaid come to us later wanting all the rent we would have paid?
Medicaid will likely come later on sell the house and take the money to repay themselves.
And when you say you can't sell the house until your Mom passes, that is another questionable item. With Medicaid, once your Mom uses up her own money for her room/board/care in the nursing home, then Medicaid steps in to pay. Medicaid needs to be reimbursed, and they do that by placing a lien on the house. You really need to verify this with your State Medicaid office. I would hate to see you sell your house, move into Mom's house, then Medicaid instructs that the house be sold when your Mom passes.
Does your Mom still have a mortgage on the house? Who is paying the real estate taxes for the year? The utilities? Did Mom contact her homeowner's insurance carrier to let them know the house is empty? If not, and heaven forbid something happens to the house, the insurance carrier could refuse to pay.
Oh, I know, why does everything have to be so complicated.... [sigh].
Can you explain a little more
about the insurance policy that ensures you will inherit your mothers house and protects it from Medicaid lien/sale for reimbursement?
Have you seen the policy and read through it?
What makes you think Medicaid can NOT take her house? Is her husband still living there? Is it owned by a trust?
A Life Estate occurs when Person A inherits property, and Person B inherits the right to live at the property or to manage the property, such as a farm, while he/she is alive.
(Edited: I had not comprehended that your Mom was in a nursing home so I have edited my response accordingly.)
Using your Mom's house as an example: a "Life Estate" means that you and/or your husband inherited the house from the previous owner, such as your Father, when he died. And that your Mom was given "Life Estate" of the house--meaning that she has/had the right to live in the house until she dies or until she moves out permanently; and that she is responsible for upkeep of the house along with paying all utilities, property taxes, house insurance, etc. as long as she lives in the house.
When your Mom moved out of the house into the Nursing Home, then you became responsible for upkeep of the house along with all of the utilities, property taxes, house insurance, etc. because you inherited the house several months or years ago from the previous owner. You just are/were not responsible for the house until the "Life Estate" is completed/terminated.
It is possible that if your Mom has/had "Life Estate" of the house and that you inherited it when the previous owner died, then Medicaid might not be able to put a lien on the house because your Mom never owned the house--she just lived there.
Also, when someone purchases a house, the financial company usually requires that the person buying the house take out an insurance policy that pays the financial company if the purchaser dies before the house is paid for or if the purchaser files for bankruptcy or if the purchaser defaults on mortgage payments. Is it possible that is the type of Life Insurance policy that your Mom purchased years ago?
You need to talk to an Elder Care Attorney and clarify who owns the house and who will inherit the house and whether the "Life Insurance Policy" is actually a "Life Estate".
Mom goes on Medicaid, home is still hers, you would have to pay market rate for rent that would go towards mom's nursing home costs.
Definitely, see an elder law attorney, well versed in Medicaid to get that input and knowledge on how this "insurance policy" would effect Medicaid benefits. It seems that the actual cash value of the house would be required to be used to pay for Mom's care.
https://www.elderlawanswers.com/protecting-your-house-from-medicaid-estate-recovery-12155
For instance - I can remember a similar question from a few years ago where the mother had sold her house several years prior to her daughter but the mother arranged a “Life Estate” which allowed her to live in the house with her daughter rent free. The mother eventually went into a nursing home on Medicaid. After she passed Medicaid billed the daughter for the “worth” of the Life Estate - the amount that would have been saved had the woman lived in the home rather than a nursing home.
I realize that situation differs from yours - but it is a good example of just how tricky it can be dealing with Medicaid and the principal still owning a home. Although the mom did not own the home in that case she still owned the Life Estate... and Medicaid wanted to be paid back.
If I were you, I wouldn’t do anything without getting some solid answers from an Elder Care Attorney who knows your states Medicaid Recovery laws well. Really well.
Has your Mom started the application for Medicaid? If so, then she needs to take/send a copy of the life insurance policy to the local Medicaid office. Your Mom (or you) need to ask Medicaid about the life insurance policy and how it will affect your Mom qualifying for Medicaid and how you and your spouse moving into your Mom's house rent free will affect your Mom's ability to qualify for Medicaid.
All of your Mom's money must go towards paying for the nursing home. Her money cannot be used for the upkeep of the house nor for paying any utilities, property tax or house insurance or life insurance.
Most of the time when someone lives in the house of a Medicaid recipient, the person living in the house is responsible for paying for the upkeep of the house, for paying the utilities, property tax and house insurance.
Is your Mom still paying the premium for this life insurance policy or are you paying the premium for this life insurance policy? Have you contacted the life insurance company and made sure that this policy is still in effect?
Sorry that we cannot be of more help, our answers are based on our experiences and most of us have never heard of the type of life insurance that you are describing. Like Rainmom said: "You need to talk to an Elder Care Attorney who knows your state's Medicaid Recovery laws...Really well." and who knows your state's Medicaid qualifications really well also.
This would not circumvent Medicaid recovery.
Like Dee Anns too about a "Life Estate"
I would not do anything until u get your paperwork in order. Is it a Life Estate or in the house in Trust for you. I agree, u may need a lawyer to straighten out this for you. One who knows Medicaid.
The first question to ask is: can your mother be eligible for Medicaid now, since she still has ownership of a house?
The answer depends on the ownership arrangement. Is your mother the only owner of the house? Did she set up a Life Estate arrangement in past years? How long ago?
You are best served by talking with an Elder Law Attorney in your state who can explain how your mother's situation fits into the Medicaid regulations in your state.
When you understand the current status of the real estate you can make good decisions about next steps involving the house, which factor into planning an application for Medicaid.
https://www.iii.org/article/what-are-partnership-long-term-care-programs
"if you live in California, Connecticut, Indiana or New York and you participate in the state’s Partnership for Long-Term Care program, you can qualify for Medicaid without spending yourself into poverty. To participate in the Partnership, you must buy a long-term care insurance policy that contains at least the basic benefits required by the Partnership program."
"What’s the benefit of participating in the Partnership? If you live in California, Connecticut, or Indiana, for example, and you
--buy a policy under the program,
--live in the state while receiving long-term care services, and
--receive and exhaust the benefits under the policy for long-term care services, you can apply for Medicaid benefits even though you haven’t sold and used your assets. Each dollar paid by the insurance company is a dollar of assets you can keep in addition to the minimums permitted by your state’s Medicaid rules."
Here is how the National Association of Insurance Commissioners explain Long-Term Care Insurance Partnership Policies:
"In some states, there are long-term care insurance partnership policies that help you manage the financial impact of spending down to meet Medicaid eligibility standards. When you buy a partnership policy, you’re protected from the normal Medicaid requirement to spend down your income and assets to become eligible."
An Elder Law Attorney in your state could help you coordinate LTC policy benefits with the Medicaid spend down, application for eligibility, and your plans for the house.
A complete discussion of LTC Insurance Partnership Policies is at:
https://www.ltcfeds.com/epAssets/documents/NAIC_Shoppers_Guide.pdf
personally I think they are super unwieldy to deal with. But maybe it’s me. They to me are like figuring out remainderman interest for LE and taxes. Eyes glaze over...reach for drink. A win for insurance co tho’.
I think this is how they are they are supposed to work.... Jane Smith is 62 has $102k in savings but needs LTC. She could do a spend down & then apply for LTC Medicaid but she’s in a state that’s doing LtcPP. So Jane can take 100k today and buy a long term care policy manana & she’s eligible for LTC Medicaid day after. It’s gonna be expensive LTC insurance to buy cause she’s older & ill, so no lower rates for Jane. Bet the insurance co love 💕 these. But is quick way to get Medicaid eligible in 1 fell swoop. Medicaid draws from the LtcPP on a $ for $ basis till $ used up or Jane dies. So Medicaid & the LtcPP both pay for her care. If she dies before her LtcPP runs out, the $ left becomes asset of her estate & unencumbered by a Estate Recovery.
BUT if the LtcPP runs dry & Jane still alive, then LTC Medicaid takes over as the payor. Just like for regular LTC NH Medicaid. And it reads like if that happens, then the usual MERP recovery system happens. So Medicaid pays but will attempt recovery from assets of her estate. Like her home.
Home isn’t directly involved in whether or not Jane can do a LtcPP. Home is able to be an exempt asset for Janes lifetime according to standard Medicaid rules. Now Jane still has to do the required copay of her income to the NH, so there’s the no $ from her to pay property costs. But if ForKing wants to pay house stuff, they can.
If state requires rent to be paid if house house is occupied by anyone who do not have exemptions or exclusion to MERP recovery - like caregiver exemption is the one living in home or handicapped family member - then FMV rent is gonna need to Be paid to Jane & added to whatever other income she receives (like SS$) as her copay or SOC. It a ? that ForKing should ask in writing to whomever is Janes caseworker.
I’d be concerned that the LtcPP $ amount isn’t huge enough to cover her stay from now till death.
Average NH stay is 2.10-2.25 years.
ForKing, what was the amount of $ in your mom’s LTCPP?
& what is daily cost of room & board @ the NH?
Based on day rate above, how soon will the LtcPP defund?
If it’s less than 2.5 years, regular LTC Medicaid is going to come into play as it’ll be paying for her NH stay. So state will have to attempt estate recovery. I’d suggest you keep meticulous records on property costs and expect to file for and challenged MERP in the future.