If Mom sells her house, does she have to reimburse Medicaid?

A fellow caregiver asked...

My mother, age 80, lives by herself and currently has 24-hr long term in-home care since she is eligible for Medicaid. However, my mother is planning to sell the house (she is the only person on the deed) since she wants to move in with me. My question is will she have to pay back Medicaid with the proceeds from the sale of the house? She's been receiving in-home care for five years, diapers, ensure suppliments, etc. Thanks!

Expert Answer

If your mother who's on Medicaid sells her house, she may have an even more immediate problem than paying back Medicaid -- that is, the money she gets for the house may make her ineligible for Medicaid altogether, at least for awhile. That's because Medicaid eligibility is only for people with very low income and few assets. Under a special rule to help people stay in their homes, when deciding your mother's eligibility Medicaid did not count her home as an asset. But as soon as she sells that home and moves out, Medicaid will consider as an asset any money your mother gets from the sale. If that money puts her over the asset limit for Medicaid eligibility -- usually only about $2,000 for a single person -- she may lose that eligibility, at least until she spends or otherwise disposes of the money (down to the $2,000 eligibility limit). Unlike Medicaid nursing home coverage, however, for Medicaid in-home care there are no rules about what your mother does with the money. She can spend it on anything she wants, or even give it away, and as soon as her assets are down to the eligibility limits, she can again be immediately eligible for Medicaid in-home coverage.

As for paying back Medicaid the money it has spent on her for in-home care over the years, Medicaid can only try to get reimbursement from your mother's estate after she dies. As long as she's alive, they cannot attempt to recover that money. So, what matters for Medicaid reimbursement is the money in your mother's estate when she passes away, not the money that passes through her hands while she's alive.

There's another Medicaid issue you should be aware of. Once your mother moves in with you, Medicaid may consider the value of the free housing she receives -- as well as regular meals and other things you provide her -- as "income" to your mother. If so, when combining it with her Social Security and any other pension money or other income she receives, this may put her above the income eligibility limits for your state's Medicaid program. So, before your mother makes the move to your house, check with her current Medicaid caseworker to find out what value Medicaid would put on the free housing and meals you provide her, to see if it would disqualify her from Medicaid coverage of in-home care. If this presents a problem, you may want to consider an arrangement whereby your mother pays you for room and board, the amount being whatever Medicaid considers the "value" of what she's receiving from you.