Every time you visit your dad you notice that he spends the majority of his time in his recliner or his bed. The rest of the house remains unused and neglected. Your adult eyes have shrunk your childhood home, but it still seems too big for your dad’s needs. There is no mortgage and the STAR exemption has reduced the property taxes, but the cost of current and anticipated repairs and landscaping is something to think about. You have been told that it is a seller’s market. Dad’s 50 year old raised ranch with the faded peach Formica kitchen should incite a bidding war.
Selling the home makes sense from a property management and basic financial perspective. From a Medicaid framework, selling the home means losing the exempt status that allows your dad to remain in his home while receiving Medicaid Community Home Care benefits. Once the house is sold, the proceeds of the sale are considered an available resource and must be transferred to allow the Medicaid recipient to retain benefits. Under the old Medicaid Home Care rules that did not penalize asset transfers to third parties or trusts, this home sale and proceeds transfer would require documentation, but would not significantly impair continuation of home care Medicaid services. Starting October 1, 2020 and with an eye towards implementation beginning on January 1, 2021, asset transfers for Medicaid Home Care will be penalized in a similar fashion to Institutional Medicaid. Even with advanced Medicaid Planning, selling your dad’s home and transferring the proceeds under the new rules would trigger a penalty period requiring the family to privately pay for home care for an extended period of time.
Leaving the home alone and not selling would allow your dad’s Medicaid to continue unchanged. The downside is the cost of upkeep and the potential threat of a Medicaid lien on the home or a Medicaid Estate recovery action if the home ends up in your father’s estate.
Long Term Care Planning in 2020 means choosing the least objectionable path forward. New York’s historical flexibility with regards to Medicaid and the protection of the middle class is being chipped away. The most logical approaches are early planning and taking advantage of the spousal protection rules. Once a spouse dies, the surviving spouse with adult children is subject to asset transfer penalties. A person’s home is usually their primary asset. Protecting the equity in the home should be a focus for families with aging parents and not left to the last second.
For more information on Medicaid Planning for the home and adult children caregiving contact the professionals at Sloan and Feller today.