How will being in charge of my mother's assets and care affect Medicaid when she goes on it?

1 answer | Last updated: Sep 14, 2017
Concerned in indiana asked...

My mother has dementia/Alzheimers and refuses to leave her home. She is limited on income as I am also. The only asset she has is her home, which isn't worth much (under 30K). She transferred ownership to me with a written contract, witnessed by my siblings; where I would be responsible for taking care of her until her demise. This way, she has enough from social security to pay for food, utilities and phone and cable. How would this affect medicaid when she goes on it?

Expert Answers

Whether your mother's transfer of the house to you affects her Medicaid eligibility may depend on which Medicaid program she applies for. But probably it would not affect her in any way.

Medicaid medical coverage, pays for doctor, hospital and prescription drug costs and can include some home care as well. To qualify for this Medicaid medical coverage, Medicaid will only look at the level of your mother's income and her current assets. If she no longer owns the house, it would not be counted as an asset when considering her eligibility. (As a house she still lives in, it would be exempt anyway from Medicaid consideration.) The fact that she now lives in the house but pays no rent, however, may mean that Medicaid will add to her income the value of what that rent would be when they determine her eligibility.

If your mother winds up having to enter a nursing home someday and applies for Medicaid nursing home coverage, the rules are a bit different. If her application for Medicaid nursing home coverage comes within five years of the date she transferred the house to you, Medicaid will look to see whether the transfer was for a fair market value. In other words, Medicaid would decide whether the amount of care you provide her is economically worth the value of the house (the value at the time she transferred it to you). If you are her primary caregiver for any length of time (more than a year, certainly) and that means you must spend many hours a week taking care of her, then the transfer should certainly be considered legitimate by Medicaid and it should not affect your mother's eligibility for nursing home coverage.

There is yet another Medicaid rule, which applies only to the adult child of the person applying for coverage, that can protect your mother's eligibility for Medicaid nursing home coverage. It has three parts: (1) If you live in the home with her for at least two years prior to her application for Medicaid nursing home coverage; (2) You are her primary caregiver; and
(3) Your caregiving allows her to remain at home for those two years rather than go into a nursing home.

If you and your mother meet those three requirements, Medicaid will not even bother to look at the terms of the transfer of the house when deciding your mother's eligibility for Medicaid nursing home coverage.