Can we get reimbursed for household expenses when the house sells, prior to Medicad getting the money?

1 answer | Last updated: Oct 07, 2016
Mas5176 asked...

My mother is applying to Medicaid for assistance in Assisted Living. Her home is her only asset. We are putting it up for sale while she lives in Assisted Living. We will pay the costs of property taxes, insurance, association fees, heat, etc. Can we get reimbursed for these expenses when the home sells, prior to Medicaid getting the money?

Expert Answers

Generally, state Medicaid programs don't seek reimbursement for care until after the death of the person who's received Medicaid coverage. If that's the case in your mother's state, Medicaid would not even make a claim on the house.

But there's a different problem for you to consider. Normally, when deciding whether someone is eligible for Medicaid home and community coverage, which has different rules from Medicaid nursing home coverage, the value of a house is not counted when Medicaid determines how much assets someone has. But if the person no longer lives in the house, Medicaid may consider the value of the house as an asset, which might then disqualify the person from any Medicaid coverage. So, if your mother is living in assisted living rather than in her home, her ownership of the house might actually disqualify her from Medicaid eligibility.

This possibility of disqualification because of having too much in assets would certainly be a problem once the house is sold. The sale converts the value of the house to money, which would belong to your mother (after you are reimbursed for your costs and any other house bills are paid). Once the money goes to your mother, it may disqualify her from Medicaid eligibility (because she'd have too much in assets) until she spends the money down to Medicaid eligibility limits (usually only about $2,000). She would not have to give the money to Medicaid once the house is sold, but she may have to spend almost all of it, toward her assisted living costs or on anything else she chooses, before she becomes eligible for Medicaid.

One more thing to consider. If your mother might get Medicaid coverage in an assisted living facility, it would probably be under the state's Medicaid home and community care program, rather than under the Medicaid nursing home coverage program. These two different Medicaid coverage have different sets of eligibility rules that might affect how your mother should spend the money she gets from the sale of the house. Although assisted living might be the right level of care for your mother right now, she might need nursing home care in the future. If she spends the money she gets from the sale of the house, she can qualify for either Medicaid home care or for nursing home care as soon as her assets are down to the Medicaid limit of $2,000. One of the temptations with the proceeds from sale of the house might be for your mother to GIVE AWAY the money to you or others so as to immediately reach the Medicaid asset eligibility limit. This is permissible for Medicaid home care coverage but NOT allowed for Medicaid nursing home coverage within the five years previous to applying for that coverage. If she gives away the money from the sale of the house and then needs to go into a nursing home within the next five years, her Medicaid nursing home coverage might be delayed -- the amount of the delay would depend on how much money she gave away and how much nursing home residence costs in her state.