Q: My boyfriend’s father recently had a stroke. He is unable to write or speak. My question is regarding his home.
In the father’s will, he left his home to my boyfriend. But I’m wondering what’s going to happen now. I was told that MedicaidMedicaid comprises state public assistance programs to persons who are unable to pay for health care. Title XIX of the federal Social Security Act provides matching federal funds for financing state Medicaid programs. can take the home for payment since his father is probably going to have to live in an assisted living facility.
Is this true? What should we do about this?
A: When a person has little or no money to pay for medical care and nursing home expenses, Medicaid picks up the costs for that care. But when a person has assets and a means to pay for his or her medical expenses, the government expects that person to use up his or her money first and when his or her assets have been exhausted, then Medicaid picks up the rest of the costs. Unfortunately, in most states MedicareMedicare is a program of Hospital Insurance (Part A) and Supplementary Medical Insurance (Part B) protection provided under the Social Security Act. is not required to help pay for assisted living, only nursing home facilities.
If your boyfriend’s father ends up requiring care and that care is prolonged, his assets will be at risk, including the home.
There are a couple of things that you should keep in mind: First, if your boyfriend’s father is the sole owner of the property and the home is worth a significant amount of cash and has lots of equityYour share of ownership in a company. Stockholders are often referred to as equity investors, because they invest in the equity of a company. , the government may require whoever is now managing your boyfriend’s father’s affairs to sell the property and use the funds to pay for his care.
If the home has a mortgageA Mortgage is a document granting a lien on a home in exchange for financing granted by a lender. The mortgage is the means by which the lender secures the loan and has the ability to foreclose on the home., or if the home has little equity value, or the home is co-owned with his wife or someone else, it is possible that government won’t force the sale of the home. In this case, the government might put a lienA Lien is an encumbrance against the property, which may be voluntary or involuntary. There are many different kinds of liens, including a tax lien (for unpaid federal, state, or real estate taxes), a judgment lien (for monetary judgments by a court of law), a mortgage lien (when you take out a mortgage), and a mechanic's lien (for work done by a contractor on the property that has not been paid for). For a lien to be attached to the property's title, it must usually be filed or recorded with a local county government office. on the property for the cost that it incurs for medical care. When the home is sold, the government will get paid off from the proceeds and what is left will go to the heirs.
If, however, your boyfriend’s father and his wife or partner own the home jointly, Medicaid may not require the sale of the home to force the spouse or partner out of the home. If the father were to die, the home should pass automatically to his spouse or partner and bypass any Medicaid issues.
You should also know that you can’t just transfer the home to a relative and expect the government not to care.
If necessary, Medicaid will perform a type of audit on your boyfriend’s father’s assets to determine if his assets were given away in order to avoid paying the tab for his medical care. If assets were given away, then Medicare has the right to go after those assets. So, if the home went to your boyfriend now, and his father required those funds to satisfy his medical bills, Medicaid could come after him for the money.
Frequently, when faced with these situations, some people will sell the home and use the proceeds from the sale to pay for expenses that may be coming from outside sources. For example, if he was using retirement funds to live on, he could use the proceeds from the sale to pay for living expenses. If family members were helping out with his living expenses and caring for him, those family members could get paid or reimbursed for those expenses.
While Medicaid rules are tricky, your boyfriend should talk to an estate planner to see what assets his father has and how he should proceed. The family may need to obtain a guardianship order to handle the affairs of his father’s estate while he is living to make sure that the proper decisions are being made.
Please drop us a line and tell us how things proceed and what he decides to do.