Noway60 Asked August 2014
Mom's at home and would like to downsize into an independant living. Can she rent the home to her granddaughter?
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Dad receives medicaid, and mom still lives in family home. Mom is on oxygen and cannot maintain the home and would like to move into a low income elder independent living facility. She would like to rent her home to her granddaughter and in turn the granddaughter would pay for her stay at the independentt living facility. Does this jeopardize Dads medicaid?
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There are some things you can & should do in advance though:
- get the exact costs of the IL. the full costs too not just the monthly charge but all those extra's that can creep in (parking, trips to Doctors offices,shopping or touristy trips that she will end up spending $ at, etc). To keep the home and pay for IL can be done but they likely need to have pretty substantial resources for the near future even with granddaughter paying rent.
- figure out the costs on the house for the past couple of years. Again everything on this from taxes, insurance, utilities. If mom is getting homestead exemption, look to see what happens if she rents the house. The exemption may be revoked and the taxes skyrocket if this happens usually. This all pretty dependent on how your city/county does stuff. Often neighbors will report renters too.
- Look at the majors on the house (roof, AC, heat, water heater) to see which will likely need to be replaced & the costs. Mom probably is gentle on the house and the granddaughter likely will not be, especially if it's an older house and she is used to living in a newer home and has friends over and the house is now busy.
- insurance issues - mom will need to let them know the property is now being rented. The policy could increase. If something happens and a claim is filed and they find moms renting it, the policy could be voided and claim not paid. Bad.
- review mom's income & assets and see if what she has can totally support both the costs of IL and everything on the house. & for how long. Granddaughter may be totally responsible but renters by & large are not, so you want to make sure that grannie isn't placed in a tight spot if she does this.
- Dad is Medicaid already, correct? Then the house is subject to a MERP claim or lien on the property. Now as mom is living in the home, she is viewed as the community spouse for Medicaid and as long as this stays this way, MERP will not be done on the home after dad dies as mom is still living in the community. You need to find out if her moving to IL changes the homes status for MERP. The elder lawyer will help you on this as it's totally sticky.
and lastly, is it realistic that mom can stay in IL for a long, long period of time? Or is this just a bandaid for right now and really mom will need AL or NH pretty soon?
If mom needs to go into a NH and onto Medicaid to pay for it, she will have NO income to pay for anything on the house. Medicaid requires a co-pay or a "SOC" of all their monthly income to go to the facility. Mom's community spouse status for Medicaid is over and she too will have to get to the 2K in nonexempt assets and the 2K or whatever income is set at in your state. Now they get a small personal needs allowance ($ 35 - 90 a month, depends on state) which is just enough for hair salon, some clothing replacement, etc. You dad is getting this right now since he is on Medicaid, probably placed in a fund @ the NH in his name. Mom & Dad can keep the house as an exempt asset for Medicaid, but family will have to pay on everything on the house till the day they both die. Can you do that for possibly years? Now the state can make a claim or a lien on the house after death too via MERP - Medicaid Estate Recovery Program . If you or any heirs can qualify for the many exemptions to MERP, and you have the deeper pockets to pay for all on the home, and the home & its costs are modest, then keeping the home can make sense. But for most families it just doesn't work over time.
It's a lot to consider both emotionally and financially, by taking all this data to the attorney, it will help in really figuring out what is the most feasible approach and how much time you may have to do things allowable under your states Medicaid rules. Good luck & keep a sense of humor going in all this.