Medicaid strictly evaluates patient’s current, old assets

Q: My parents own two homes with mortgages, and my father may need to move into a long-term-care facility soon. I live in the second home rent-free with my girlfriend; I am on Medicaid Disability and am unable to work. My girlfriend wants to purchase the home to care for me for the value of the mortgage, around $30,000, but my mother fears Medicaid will penalize my parents if they agree to such a sale. Would that happen?

A: Medicaid wants to make sure people have used all their available assets to pay for their care before government funds are used. Medicaid also wants to make sure that the patient has not given away assets to avoid using them to pay for that care.

For this reason, Medicaid will evaluate what assets the patient has sold, given away or disposed of in the past five years. If Medicaid determines the patient should have gotten more for certain assets, it will attempt to go after those assets.

In your situation, if the home is worth $50,000 and you buy it for $30,000, Medicaid will want to collect on the difference. If the home is worth only $30,000 and you take over the mortgage with a $30,000 balance, you should be fine. We presume that’s not the case.

You need to figure out what the home would sell for in the marketplace. If you paid your mother that amount, you would be safe; anything less could pose a problem.

You might consider buying the home on an installment basis. Start with the market value, deduct expenses you have put into the home, and figure out what else your mom might save by selling to you, such as a broker’s commission. You might come up with a price that will work for all parties, including Medicaid.

If the value of the home is much higher than the mortgage, we suggest you talk to a local elder-care-practice attorney.