Every so often, I come across a situation that illustrates so clearly the dangers of going it alone or getting bad advice when dealing with the common issues and dilemmas that seniors and their families so frequently face. I received a call last week from a son living out of state. Mom and Dad, living in New Jersey, were no longer able to live alone. They transferred their home to their son, and moved in with him. That’s when the plan fell apart.
Dad’s health deteriorated more rapidly than anticipated and needed nursing home care. The couple then spent down their remaining assets and applied for nursing home care for Dad. Meanwhile, Son placed the New Jersey home up for sale.
Much to their surprise, the family was informed that the state Medicaid office denied Dad’s application. Why? Because the transfer of the home to Son caused a Medicaid ineligibility period. Dad cannot receive Medicaid for 4 and ½ years. They were told that Son must give the money back to Mom and Dad and they must spend it down before Dad will receive Medicaid.
Son said that he was prepared to pay for Dad’s care, if that was necessary. I told him he would probably need to transfer back the money from the sale to reduce the transfer penalty but that his parents would not necessarily have to spend down the assets.
It may make more sense for Mom to take some of the money and buy a new home which would be exempt for Medicaid purposes. There are other strategies that may be beneficial as well and should be explored in greater detail.
The lesson to be learned is to consult with a professional before making any decisions. There is a maze of laws and services in this country that affect seniors. It is easy to get tripped up by them and the cost to your family could be enormous.
