My parents what to sell their home and build on to ours and live with us. If Medicaid is ever needed, will there be a penalty for money spent on addition?

I would go with them to an elder lawyer to discuss the legal things. As for them to sell their house and add on to yours that might be the solution-it sounds like since you and your husband are doing everything for them that you all are able to get along. If they have their own space it could very well work-a friend of mine lives with her daughter in her daughter home with her family and she has a large room with her own bathroom and it works well for them. The lawyer will tell you what it means for medicaide and they might be able to receive help at home when on medicaide which would be helpful good luck and let us know how it goes because here we learn from eavh other.

Austin's answer is very good. I think you need an elder law attorney or an estate attorney in on this. Every state has slightly different laws and this is tricky territory. I'm sure you can get this done with everything in place for their eventual move to Medicaid if necessary, but you need legal advice to make sure it's done right. You don't want your kindness to turn into a financial nightmare.
Take care,
Carol

I think Austin's answer has a great deal of important legal considerations. I would like to suggest that you consider a way to keep your family separate from the addition. It can still be attached to your house but might have a tiny hallway or common room that will allow your family to maintain a sense of privacy. The lack of privacy has been the main problem for my sister-in-law and my mother-in-law. The legal aspects of who owns what should also be considered very carefully. Best wishes. This can be a great solution. Rebecca

Medicade has rules regarding "gifting of assets." There is, at least in Washington state, a penalty period of 5 years. This means that should your parents use their assets to build onto your home, the funds they provide will be considered a gift of their assets to you. If your parents do not require the services of Medicade for 5 years after this "transfer of assets" you will be ok. Unfortunately, if one of them needs care that involves Medicade before the 5 years is up, you will find that there is a penalty phase and it may likely keep them from receiving help from Medicade.

When my husband and I retired and relocated to Washington state, my parents were struggling to manage their lives. All my younger siblings still worked full time, so my husband and I, with the help of my younger brother, built a home on our 10 acres and moved my parents up. It was perfect for them, a small new house, fenced yard for their dogs, and I cooked their meals, cleaned their home, got them to numerous doc appointments, etc.

My mom was in need of assistance getting to the bathroom, washing her hair, brushing her teeth, showering. My dad had lost much of his vision due to a previous stroke. Their lives were absolutely blessed with the opportunity to live across the driveway from our home.

My mother died in December of 2008, after 3 years of being with us. My dad suffered another major stroke this past July, 2011. He is now 89 and lives under our roof as he is completely in need of full time 24/7 care.

So here is the point; my parents had a home they lived in prior to moving here. The idea was that the proceeds from the sale of their place would cover the cost of the new house on our property. It took 2 1/2 years for their place to sell. All the time they were living here getting good care. Upon the close of escrow, the proceeds then went to my brother who financed the building of their small home. Medicare sees the "transfer of assets" taking place at the time their house sold, escrow closed, and funds were released to reimburse my brother. I've been taking care of them since they arrived 6 years ago and now I would like to have some help from Medicade for my dad. But that is not coming because the transfer of assets occured in 2007. It doesn't matter that they came here in 2005 and received, and my dad continues to receive the best of care that I and my husband can provide. The penalty phase began in 2007 when the transfer of assets took place.

It's good to understand all of this ahead of time. We didn't understand any of this and were just trying to give them a safe place to live and the opportunity to receive the best possible care. The fact that their new home was on our property didn't cause any problems with my siblings. All of us wanted to have them someplace where they would be safe and secure and my siblings were relieved to see them moved to our location and confident that it was best for them. That was always the guiding light. Nevertheless, Medicade has issues with the "transfer of assets" which amounted to $130,000.00. I don't know where my parents could have gone for 6 years and received the care and quality of live they had here for that amount of money.

I feel much older now. I'm tired and a bit put off by the attitude of those who think I was gifted. It's been a long haul and a tremendous amount of work. My husband and I have not had a night off since my parents arrived.

I have no regrets about taking them on, but I would caution you to investigate what could become a problem for you in the future should your parents contribute to your property in providing for their personal welfare.

Maureen

mlogan - "Medicade has issues with the "transfer of assets" which amounted to $130,000.00. I don't know where my parents could have gone for 6 years and received the care and quality of live they had here for that amount of money."

Well said! They couldn't have.

Thank You.