Question: My sisters and I worry about our elderly parents and a handicapped sister who all live in the same house in Georgia. We have heard that if one or both of our parents have to move to a nursing home the state can take their home to help pay for the cost. Is this true? Should we talk with them about signing the home over to us while they are both in fairly good health?
Answer: The truth is that, the Medicaid department is not authorized to send anyone over to actually take possession of the house. However, after the death of the second parent the state wants to be paid back and may seek “recovery” from assets owned by the survivor at the time of the survivor’s death. However, the state may only be paid back up to the amount that they actually paid out, but this still may result in the forced sale of your parents’ home.
However, in your case there is an exception to the recovery rules because your parents have a disabled child. When there is a surviving disabled child a recovery claim is prohibited by federal and state laws. The surviving disabled child will need to provide documentation of disability or blindness, such as a Social Security or SSI award letter and a birth certificate showing they are the child of the deceased. If the surviving child does not have documentation of disability from the Social Security Administration, he/she can still file for a disability determination with the Medicaid department. It is important to note that the surviving child does not have to live in the home (or even in the State, for that matter) in order for recovery to be barred.
Signing over the home now may sound like a good idea, but it carries some big risks. First, when your parents sign over the house they lose control and that can mean that the kids can kick them out at anytime. In addition, if a child’s marriage ends in divorce or the child is sued the house can be taken away. Finally, if your parents sign over the house and then need Medicaid within 5 years of the transfer a penalty and ineligibility for Medicaid for a period of time will result with the ineligibility period starting at the time they apply for Medicaid.
As you can see Medicaid planning is filled with traps for the unwary. I encourage you to seek the advice of a qualified elder law attorney in your state who will help guide you through the process.
Heather R. Chubb, Life Transitions Lawyer
The Chubb Law Firm
Gold River, California 95670