Hello all, so I would like to inquire on another issue please. Mom has a legal 2-family home but since COVID with everything being very costly here in NY, it's very difficult to keep up with hefty mortgage and utility bills, not to mention food and house repairs.
Question is if she should rent the 2nd floor to a voucher program would she still be able to keep her Medicaid please?
The majority of Medicaid programs - Medicaid as health insurance, CHIP, Mat/WIC, community Medicaid (In Home health, PACE) - look at overall income (to be relatively poor) + your “at need” medical status and do not look at assets at all. As long as your combined income sources can be under whatever income maximum is for the specific Medicaid program one is applying to, you’re eligible financially. Or if somewhat over, you do a copay or pay for your premium. Lots of folks get really low SS income so even with rent, still kinda poor.
FMV Rental income is ok as long as when added to other income all combined is under the income max or used for copays.
Now the LTC Medicaid program - the one that pays custodial care in a facility either directly or via a waiver - that one does look at BOTH income and assets. Income max for most States LTC Medicaid is fixed @ $2742 & can come from multiple sources, like SSA retirement income, rent, annuities in payout mode. One’s home can be kept as an asset if under maximum value (550/600K to 800/900K depending on the State), & can be FMV rented but needs to be a primary residence &/or have a homestead exemption to stay exempt asset. This part can get sticky, family need imo a CELA level of atty to deal with this plus have their own $ to cover their elders property costs, as not simple. Realistically are outlier problems for just a few folks. Most sell their place, spend down & once impoverished, apply.
What mainly happens - based on years of posts on this site - is the applicant has a second home or co-owns another home with a family member or owns a zoned commercial property (even if they live in a section, it’s zoned overall commercial). These are nonexempt & no way around it unless transfers done 5+ years prior, so get sold with all $ from Act of Sale spent down to impoverishment of $2,000 nonexempt assets for most States to be LTC Medicaid eligible.
Medicaid is not intended for people so well off they have properties to rent out.
This is truly a question about which you cannot be wrong. This is a question for an elder law attorney in your are who knows the medicaid rules for your state. Don't depend on the non-expert opinions of a Forum.
Best to you Mike. Let us know what you find out from the attorney.
What does she get in the way of Medicaid, Health Insurance or in home help? The criteria for each is quite different. You can have a certain amount of income with Health insurance but in home has a capped income. Renting out means income on her part. Also, more taxes. I think this something that needs to be gone over with Medicaid caseworker.
The exact “at need” requirements for eligibility will depend upon your State. Most for Medicaid as health insurance only look at income not at assets. And to be medically “at need” for health insurance coverage.
So that being said, rent is income. And rent is added to whatever other income they receive, like SSA retirement income. But this “rent” isn’t necessarily the amount paid as rent. Rent needs to be reportable income on taxes as you are a landlord. AND As a landlord you can net out the difference between a mortgage (if one exists) and the rent, plus depreciation and other property expenses. That is the net profit and the reported rental income. If the net profit is under 138% FPL limit, then it should be ok.
There is an app called Tax Caster that some folks use for a quick DIY to get a rough estimate on this. Imo realistically you do not want to depend on this alone, as it’s way too important, you want a tax pro to go over all the details on the property (mortgage, insurance, taxes, utilities, whatever voucher pays) and let the tax pro see if it falls under the 138%. And they do the IRS and any State /local tax filing.
FPL is Federal Poverty Limit. Is the benchmark that is fixed and used to determine baseline eligibility for all “at need” programs that get ANY federal funding. 2023 single FPL is $14,580.
As an aside, might want to look at the fine print on requirements on the voucher program. May require fire extinguishers and other safety feature's which is on the owner to do. It may require property have full current value coverage hazard insurance so homeowners and if your area needs flood, windstorm, earthquake then those also. And if property & its mortgage is older, she may be underinsured & will need coverage updated to cover current replacement costs. Updated premiums significantly higher. Really go over the voucher participation requirements in detail before your mom does this.
The voucher, I bet, has a set & fixed rent so if your mom’s prop costs exceed the voucher, too bad for her.
Quite honestly dealing with renters isn’t easy. The voucher program, I bet, removes any screening ability from your mom, so if she gets stuck with less than ideal tenants too bad for her. Plus she or rather you! will have to - HAVE TO - keep up with all the bookkeeping on the costs, mortgage, taxes, insurance, reporting etc. need for her taxes and for her Medicaid renewals. As a suggestion, You might want to put pen to paper to see what the costs are and what the place could reasonably sell for and if mom could buy something more manageable for her to age in place. This is NYC right? Find an elder law attorney experienced in LTC Medicaid and estate recovery to discuss what she might could buy that would allow for the property to have asset protection. I think co-op’s do and there are co-ops in all price ranges throughout the boroughs. None of this is a DIY, ya need legal. Good luck in all this!
Anyways so yes Medicaid is way too important and is priority so thanks for all of the info and advice given. I was confused on exactly 'who' to go to here in NY in order to get 100% accurate advice, should it be a tax preparer or attorney or medicaid office?
If an attorney, they are expensive to get only advice or consultation but I guess if that's the best route then so be it, appreciate the help!
and
have you reviewed in detail the voucher program as to if the conditions of your mom’s property is 100% as it currently is OK for participation? Like mom does not have to do any repairs, does not have to add any equipment or safety features, does not have to do any painting or ensure paint is lead free, does not have to have egress all ADA capable, be fully insured, etc.
Personally I’d go over the voucher stuff b4 anything else to see if it even makes sense to do. It may be better for her to sell the building, buy a smaller place that is a co-op where she can age in place. NYC as how co-op are structured are an outlier for estate recovery as can’t be done in my understanding. It would be real estate atty work to set it up.