Medicaid rules can complicate decisions about property

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Dear John, My son is 62, and I am 80. When I bought my house in 1997, I put his name on it, and he is also on the mortgage. We did this so that if something happened to me, he would get the house. I have made all the payments and have paid for the upkeep.

My son has been in a nursing home for about five years. He would like to return home someday, if possible. He is receiving Medicaid benefits.

I worry about his benefits if I were to sell the house. Much of the money from a sale will probably go toward paying off the mortgage, but how would the remaining equity be handled?

Sincerely,

Bewildered Betty

Dear Betty,

Medicaid is a federal program administered by the state Department of Social and Health Services. To qualify, you must meet certain requirements for income and resources. Once a person qualifies for Medicaid, there are requirements to remain qualified. These rules are complicated, so you should consult an attorney familiar with them before taking any action.

A primary residence is generally exempt from calculation of eligibility. However, this is subject to factors, such as the amount of equity, who else lives there, whether the Medicaid recipient intends to return to the house and when the application for Medicaid was submitted. If an exempt primary residence is sold, the proceeds may also be exempt if used to purchase another exempt home within three months of receiving them.

If your son were to transfer or gift the property to someone, this may trigger a period of Medicaid ineligibility, depending on the circumstances surrounding the transfer. The period of ineligibility is calculated by Medicaid.

You may want to consider transferring your interest to him. You are allowed to make an exempt transfer to a disabled child that is not subject to calculation for your Medicaid eligibility. However, the benefit of making this type of transfer would be more about establishing your eligibility than maintaining your son's.

When it comes to Medicaid, each situation and set of facts influences the determination of eligibility. Deciphering the rules and applying them to a given scenario is something that goes beyond the scope of this column. Please, do not take any action without discussing your circumstances with an attorney who is knowledgeable with Medicaid rules.

Sincerely,

John

John Hartzell is a practicing Walla Walla attorney. No attorney-client relationship is established via this column, which is for educational purposes only and is not intended as legal advice. Any information given is to illustrate basic legal concepts and does not state how any court would decide any matter. Have a question? Ask John at askjohn@wwub.com.

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