Will Medicaid force me to sell the house I jointly own with my mother?

A fellow caregiver asked...

Hello, my mother of 78 had a serve stroke October 17, 2010 since then I had to place her in a nursing home. She is 300lbs and filled with arthritis and the stroke affected her left side she is unable to walk. The stroke also affected her short term memory; she's needs 24/7 care which I'm unable to give. I'm 48 I work a full time job and I have two grown children and an 8 year old, I'm single parent. At 70 my mother retired we bought a house together, I went in on this cause she need a place to live and the interest rate was better if I bought with her, this was in 2003 and our interest rate was 6%. I've paid all the bills in the house; she's received Social Security on a fix income no extra because she always works as a nanny and never set up any kind of retirement. For the last 8 years I've been her caretaker now that she's in the nursing home I was forced to apply for Medicaid, this has been the worst 6 months of my life after paper work and paper work, the Medicaid office said they will be putting a claim on my house and once she is deceased I will have to sell and they will get all the profits for my mothers care to the state of Texas. Both our names are on the deed, I did a quick claim transfer of assets and they made me transfer them back in order for her to get nursing home Medicaid, which they still haven't approved. I worked hard for this home and have put everything I had into, and to think I will loose it all is so depressing and will not even have a down payment on another home. If anyone can give me some insight on what to do I would appreciate it. Thank you! I feel like I'm loosing my mind.

Expert Answer

When a Medicaid beneficiary dies, the Medicaid program has a right to be repaid, out of the beneficiary's estate, the amount it has paid for nursing home care. In your mother's case, as with most other people, her estate will likely consist only of her stake in the house. However, if your mother does qualify for Medicaid coverage of her nursing home bills, two different Medicaid rules might help you save your house from a later Medicaid claim.

The first Medicaid rule to understand is that the state's Medicaid program can only demand repayment up to the limit of the financial interest your mother has in the house. In other words, Medicaid cannot make any claim against your separate interest in the house, and cannot simply "take" the house. Despite the fact that the deed is in both your names, you may be able to show (through financial records) that you have paid for a much greater share of the house than your mother has, and under special "equitable" legal principles, this might legally raise the value of your interest in the house and reduce your mother's.

When, after your mother is deceased, Medicaid finally makes a claim against your mother's financial interest in the house (however much that interest turns out to be), you may be able to pay it off by refinancing the house, or by making arrangements with Medicaid to pay off your mother's debt a little at a time. Also, if you have financial difficulties of your own at the time, it is possible to file a "hardship" claim that asks Medicaid to reduce the debt.

There is a different Medicaid rule that might -- depending on your specific circumstances -- allow your mother to transfer the full title of the house to you now, without Medicaid having any claim against the house when your mother dies. This rule protects the house from any Medicaid repayment if the home is given by the parent to an adult child who spent at least two years living in the house and taking care of the parent immediately before the parent entered the nursing home, and if the parent would have needed nursing home care during those two years (or more) without the adult child's caretaking.

You might qualify for this two-year caretaking exemption if (1) you were the primary caregiver for your mother during the two years before she entered the nursing home, and (2) she would have needed nursing home care during those two years if you had not been living with her and acting as her caregiver. If you think you might qualify for this exemption, you should start documenting it immediately. Sworn, notarized statements by other family members, friends, neighbors or part-time paid caregivers with personal knowledge that you were the primary caregiver, and of your mother's incapacity to fully care for herself during those two years, could be very helpful. These statements should indicate the time-span you and your mother lived together, the care you provided, and your mother's physical condition that would have required her to move to a nursing home without your caregiving. A statement by your mother's primary care physician, indicating the medical conditions that led to her need for care, could also be important.

Qualifying for this exemption is not usually easy. And because you have so much riding on it, it is probably worth it for you to consult with a lawyer where you live who regularly handles Medicaid claims. An experienced Medicaid lawyer can help you assemble the documents and other evidence to prove your claim. The lawyer can also help sort out for you what the extent is of your mother's financial interest in the house under Texas law.