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It's my understanding that Medicaid can put a lien on a house, even if you are an heir to that house in a Will. There are some exceptions, you would need to contact the State Medicaid office as not all States have the same rules and regulations.
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The typical scenario is that there is recovery after the death of a Medicaid recipient who is over 55. A lien will be put on the house. When it is sold, the recovery team will take whatever money is owed. If there is anything left over, it will go to the estate. There are some exceptions that are considered when it comes to recovery, such as is the community spouse living there, is a long-term caregiver living there, are dependent children living there, will it create an undue hardship... You can check to see if the house may be covered by the different exceptions and if your state gives up the title outright or gives a life estate. As you can tell, you asked a complex question.
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Look up probate rules for your state. The Executor has to pay all bills against the estate and sometimes the funeral alone can be $10K. Unless there are savings, things have to be sold, lawyers have to paid, property taxes etc. Usually a Will says "After all the bills are paid, I bequeath the following...."
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What can be done by MERP (estate recovery) will very much be interdependent on your states probate laws, property rights, etc. If you get Medicaid for a long term service (not just NH stays) and over 55, then your state Medicaid program is required to attempt to do a recovery or recoup. The program has all sorts of exemptions and exclusions and it is up to family or heirs to get the documentation together and submit to get them. Now just how probate is done can also make a huge difference - some states allow MERP to place a lien; other states its a claim and within that your state could be a Level of Claim state so if MERP is a Class 7 claim and there are others ahead in Classes 1 -6, they get paid first.

MERP is limited to recover only what the real $ is for the estate. Usually they only have their home. Recovery is limited to whatever it sells for less any other claims. Family doesn;t have to sell property either. There is someone on this site that settled with HMS for 4K to get MERP done as the property was modest and she had over 50% of value in documented valid expenses on the house but it took about 2 years to do. A low value home with exemptions, exclusions or others claims may not meet the required cost-effectiveness for the state (or the states contractors like PNG or HMS) to go after the recovery.

Also just because there is a lien on the property doesn't mean that it has to be sold. Folks own property with judgements, liens, etc on them all the time. There is a train of thought, that you just wait out the statute of limitations on the states claim. You pay taxes to keep it from going to tax sale but other than that do nothing. There is someone on this site who is doing this approach for a property in NYS and he is in it for the long haul. The state is really not set up to deal with old, with decades of delayed maintenance old folks homes. Its a hard-ball approach and with risk. Also if you go probate, that too has situations where the judge could dismiss the MERP claim - this happens frequently in FL against MERP there. I've found that MERP since it's relatively new is constantly morphing with what states are doing. States are more & more outsourcing the MERP process and the contractors seem to do this from aggressive debt collectors playbook - now most folks don't deal well with debt collectors and their hounding but if you're gutsy and stuff like that is not an issue / doesn't get under your skin, then dealing with MERP is just another day.

But whatever the long term plan is, one issue that is overlooked is that once the elder who owns the property goes onto Medicaid, is that they are required to do a co-pay or SOC (share of cost) to the facility of all their income less a small personal needs allowance (ranges from $ 35 - $ 105 a mo). So they will have zero - nada - zilch of their $ to ever pay on anything on the house from now till death and beyond to probate or the property transfer process. Family will have to pay for all and without a guarantee of ownership so runs a risk. A house still with a mortgage may be not affordable for years & years as so much legally required due to mortgage. To me keeping their home is a lot like having a 2nd or 3rd home and for most that is totally not financially an option.
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