Medicaid and Home Foreclosure

Stella_LunaJanuary 8, 2014

My father recently had a stroke and is in Nursing Rehab. My mother, a breast cancer survivor, had to be hospitalized recently because of a high fever and low WBC count. She is undergoing tests, but all signs point to cancer again. Both are headed toward some type of Long Term Care.

They have been unable to pay their property taxes for over a year, and recently decided to stop paying their mortgage (because they can't afford to any more). Before they became ill, the plan was to pay down some debts, save up for a security deposit for an apartment, allow the bank to foreclose on their house, and move somewhere more affordable.

Now, however, we are trying to figure out how to coordinate the loss of their home, with their ability to qualify for Medicaid. They have zero equity in the home, it is in a state of beyond disrepair, and there is a lien on the home for the unpaid property taxes.

When I spoke to their county Medicaid office (in the state of NJ), they said the home would have to be up for sale if the foreclosure was still pending, in order for them to determine if it is an asset. We don't want to go through the trouble of trying to sell the home, since we are almost positive there is no equity. If we call the bank and say we're just going to sign over the house to them, will this have a negative effect on their Medicaid eligibility? Any experience anyone has with Medicaid and home sale/foreclosure would be helpful. Thanks!

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Why not just put a FOR SALE sign on the house?

Can you get a document from the county showing the value of the house, the amount of back taxes; a document from the bank showing the amount of arrears on the mortgage?

At that point you can show how much they would get from a sale IF THE HOUSE WERE IN GOOD CONDITION

    Bookmark   January 8, 2014 at 5:29PM
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Please please please consult with an elder care attorney who specializes in Medicaid. It will be worth it.

You can just google New Jersey elder care attorney and find someone close by.

    Bookmark   January 8, 2014 at 6:06PM
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CA Kate

I agree with Sushipup.... Get a lawyer!

    Bookmark   January 8, 2014 at 10:15PM
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I agree with Sushipup & Westelle. The issues are too complex to gather advice from friends, relatives, forums, or even Medicaid telephone representatives. Don't try to figure this out on your own either. You need to engage the services of an elder care attorney who specializes in Medicaid issues. The money spent will be worth it. If you've got a council on aging in your county, they often offer free to very low cost legal assistance. You might consider looking into that.

    Bookmark   January 10, 2014 at 12:58AM
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I "fourth" on getting a lawyer. There are times when free advice is worth exactly that: nothing.

Get an expert, and don't waste time on the Web. Opinions from strangers are not a substitute for specific expertise.

    Bookmark   January 12, 2014 at 1:22PM
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I agree with all the above.
But, I can tell you that in my state, any home owned, even if in arrears on taxes and mortgage, MUST be put up for sale before one can qualify for Medicaid. They will not look at and compare market value with what is owed on it (In my mom's case, it was worth less than she owed). They will consider it an asset. Medicaid does not care about what other expenses you have when evaluating your eligibility. The only exception would be if one spouse is still living in the home.

In your case, if both are trying to qualify, you just need to contact a real estate agent and list it, as is!

    Bookmark   January 16, 2014 at 8:20PM
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Raee - Actually, under Federal law "a person's home is an EXCLUDED resource in determining medicaid eligibility." Federal law trumps state laws when it comes to things like the above statement is true in every state.

HOWEVER, different states use different criteria to determine whether a person's house is their "HOME" (i.e., permanent residence) and your state may have more stringent requirements than others. In theory, if a person subjectively INTENDS to return to their home, then it remains their home - and therefore excluded from a Medicare eligibility determination regardless of how long the person is in the hospital or a nursing home AND regardless of whether the person has any real likelihood of ever really being able to return home. As long as the person says "I intend to return home someday" that should be sufficient to keep Medicaid from claiming that the house must be sold and the equity used to pay medical expenses.

I'm linking to the best explanation I have been able to find online regarding how Medicaid looks at a house owned by a medicaid applicant. It is from the U.S. Department of Health and Human Services so should be reasonably accurate. Hope this is helpful.

BTW - the eleven states that are 209(b) states mentioned in the linked article are Connecticut, Hawaii, Illinois, Indiana, Minnesota, Missouri, New Hampshire, North Dakota, Ohio, Oklahoma, and Virginia.

Here is a link that might be useful: Medicaid's treatment of applicant's home...

    Bookmark   January 21, 2014 at 4:30PM
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modern life interiors


    Bookmark   March 1, 2014 at 11:23AM
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Most states have attorneys who work for the elderly free of charge. Find one. In my state they are called Pro Seniors. They are a United Appeal Agency. They were a god-send to my family.

    Bookmark   April 10, 2014 at 2:16AM
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The reason you need a lawyer is that Medicaid is a state-regulated program, not a federal one. Medicaid is financed 50% by state funds and 50% by federal. So state-to-state, rules differ on eligibility and details.

That's why I agreed with the others that whenever it comes to Medicaid, ALWAYS talk to a local lawyer who specializes in this area. State laws are always changing depending on their budget issues, so there is no "one size fits all" answer to these kinds of questions. What worked for someone five years ago in your home state may no longer be applicable now.

The web is good for many things...but not everything. It's best to know the difference.

    Bookmark   April 11, 2014 at 4:16PM
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