If Dad lives in a house owned by Mom and me, can Medicare take it to pay for care and will it count against him for Medicaid?

A fellow caregiver asked...

My dad 56, has end stage renal disease, is on Medicare and has HealthNet (through his employer) as a secondary insurance. He's on disability until Sept 2010 so his HealthNet benefits would end at that time because he cannot return to work. My mom works part-time and her and I are co-owners of the house her and my dad live in. He has nothing to do w/the house. What happens if my mom and dad cannot pay for the 20% Medicare does not cover? Can Medicare take the house from my mom and I as payment? What about Medicaid; if he applies and is eligible, would they see our house as his asset? We're in California. Any information would be greatly appreciated; we've all been going crazy trying to figure this all out. It's all so new to us.

Expert Answer

First, let's talk about Medicare. Medicare Part B (doctors, laboratories, clinics, and other outpatient care) does not seek reimbursement from a patient for anything. You and your mother do not have any financial responsibility to Medicare. In fact, the 20 percent of covered outpatient medical bills that Medicare Part B doesn't pay is not owed to Medicare at all. Instead, that 20 percent is owed to the doctor or other health care provided from whom your father receives care. His Health Net policy has been paying this unpaid 20 percent. But if his Health Net coverage ends, your father will have to find a way to pay it himself. (By the way, make sure to check with your father's employer to see if the company offers a different secondary insurance policy to retirees or those who can no longer work because of disability.) If he does not pay the doctors or other providers the 20 percent they bill him above what Medicare pays, they may refuse to continue treating him and may turn those bills over to collection.

Depending on how much income your father and mother together will have after his disability benefits end and he's no longer working, he might qualify for Medicaid (called Medi-Cal in California) coverage of his medical bills (in addition to Medicare). If so, Medicaid will pay that 20 percent of outpatient bills that Medicare doesn't pay. The house will not be considered by Medicaid when deciding your father's eligibility for Medicaid medical coverage. Although Medicaid will look at your parents' other assets -- such as savings, or investments -- when deciding eligibility, Medicaid doesn't count as an asset a home in which the applicant lives. So, whether or not your father has an ownership interest in the home won't matter when Medicaid decides on his eligibility for medical care coverage. (You should also be aware that if and when the time comes that your father needs long-term nursing home care and the family applies for Medicaid coverage for it, Medicaid can consider the house as an asset if your parents' equity in it (that is, after subtracting your equity in it) is over $750,000.