I'm in Louisiana, has anyone had to deal with Medicaid Estate Recovery (MERP) after the death of a family member? Do they always come after you? Is there a certain amount they look for? Does this happen when you try to sell the home after the death?
If the house is owed to them I'm fine with that. I just don't want the amount to be more that what the house is worth. I don't have other funds to pay it if the amount owed is more than the house will be worth. She is not deceased, I am trying to gather information for future use.
That's where the "recovery" comes in. The Fed and the state are trying to recover the money they shelled out for the person's care before there is any inheritance claimed by heirs.
Is there a spouse involved?
I am in New Orleans. I see that you are in Lutcher. That’s not terribly far from me. Isn’t Lutcher where the huge bonfires are burning during Christmas celebrations? I have never been but have heard of it.
I suppose that you know this. Parents or in your case grandparents are not obligated to leave any money or property to you.
Many years ago, the forced inheritance law was abolished. It doesn’t matter if you are a relative.
Your grandmother can legally leave her money to whomever she chooses.
Is there a will involved? Is grandma coherent?
Speak to an elder attorney about this matter.
Best wishes and your grandmother.
Just read other replies regarding Medicaid. Still, speak to attorney and a social worker for future health care questions.
But I digress, before you get in the weeds of worry on Estate recovery, I’d suggest that you very seriously look at the costs on having moms property as a first step if this makes sense to do. This is going to be a 3 part answer:
First, although mom is allowed to continue to own her home (with a valid homestead exemption) as an exempt asset for LTC Medicaid program while she is alive, Medicaid has a copay requirement. Copay is that basically all her monthly income less a small personal needs allowance ($60 a mo) MUST BECOME THE COPAY to the NH. So mom will have zero - nothing - ziltch of $ to realistically pay a penny on her old home from day 1 of Medicaid application to beyond the grave. Beyond the grave is because your going to have to deal with the house in some way even after she dies.... could be several months to work thru settling issues if you deal with MERP or years if you open probate.
Personally if there is still a mortgage, HELOC or any other lending on the place, I’d fold it and put it up for sale and just do a spend down from the $. Reason being is that having secured lending on it, like a mortgage, is going to require full insurance on the property. And that’s going to be costly especially as she has moved out so her old homeowners will not be valid anymore and that means getting a vacant dwelling policy which r expensive. If house is somewhere that needs NFIP or wind pool plus vacant dwelling, plus the monthly mortgage payment gonna be a lot of $. Sell it imo.
If it has a reverse mortgage on it, forget wasting time on even thinking about keeping it.
Now if it’s owned outright and has no NFIP or wind pool needed and its costs are minimal for utilities, yard & maintenance so it can kind be basically be empty till after she dies, that might make sense to do. You’d still have costs (property taxes, insurance, utilities etc.) to pay for an unknown period of time, but if there is a good probability that the heirs or the Executor (if probate opened) have exemptions or exclusions to estate recovery or their own claims for probate, could make sense. This still runs risk but if you have the wallet and ok on risk, go for it.
Keep in mind, you do NOT have a set end point, mom could live 6 months or 6 years. Imho if you do this, you have to, like have to, be able to see it thru to beyond the grave. Why? well if u stop like 14 months in as costs gets too whack, siblings flat do not do whatever they promised they would and your husband is beyond hearing another issue with the place, all that $ you spent on the house cannot be easily reimbursed to you from the sale of the home. It’s still moms house, so when it sells all the $ is hers. You’d need some sort of property management agreement to deal with this way ahead of spending a penny on the place or applying for Medicaid and that’s not a DIY to do; need to speak w/ atty that does real estate law.
2. Property occupancy, Medicaid is going to ask specific if property is empty. In theory if someone living there they need to be paying rent. Fair Market value rent. I’m in Orleans parish and FMV rent here is easily over 2k a mo for most non sketchy places which likely takes the owner past the monthly income threshold. Rent becomes income to the Medicaid applicant, aka your mom. And there’s tax stuff when you rent as well as insurance issues.
now if there is a dependent family member already living at the house, or a disabled family member, they can get grandfathered in to stay rent free. There is someone on this forum who had just this situation with a disabled nephew, I’llPM her as she has lots of good insight on how this ran.
Also if property is empty, some costs can be filed with MERP to be deducted from the Medicaid tally. But have to keep meticulous records.
on to next post..
3. Estate recovery aka MERP is required to be attempted by all states in some way. Who does it depends on the states. LA, like TX, uses an outside contractor who approach it very much like a debt collection co. But just how it runs & what can actually happen is very very interdependent on state property rights laws and probate laws. Some states do Tefra, which allow lien placed proactively and others are not. LA doesn’t as far as I’m aware. For non Tefra states, it’s a after death lein or a claim against the estate if you open probate.
Some are very pro property rights, FL & TX, as to how exclusions & exemptions are done. Like TX has a lot of things that can be deducted from the Medicaid tally. But heirs have to do what’s needed and if that doesn’t work out totally then you open probate and then how probate runs comes into play. Louisiana is very different than what any other state does as we follow French law rather than English law. Like the forced inheritance (now repealed as NeedHelp wrote) laws were unique to LA. Another thing we have is usufructs & my understanding is that if you have a usufruct on the house as per valid will, you cannot be forced to leave the place. Medicaid cannot make you, the executor can’t make you either. You can just stay at the house till you decide you don’t want to anymore (or the heirs make you an offer you really really like & with a bow on it). If you pay the utilities, this could be quite a long time.
I’m digressing, but LA laws tend to favor the family or as indicated as per the will UNLESS there is a secured creditor. Secured would be the bank that holds the mortgage, or SBA who had you place the property as collateral for their loan; secured lenders can require the property to be sold. Medicaid is a unsecured creditor. Medicaid in my understanding cannot force it to be sold.
But remember, the costs to keep the house exist & get added to each day. One thing to keep in mind for the future, is when mom dies the property taxes will increase. It could be huge as no homestead exemption. Could increase substantially. For Orleans & St Tammany & Plaq. it will triple. I think the for the river parishes not so much. The one good thing abt delinquent property taxes in LA is that it’s hard to ever actually acquire the property by tax sale. So you don’t have that worry (btw in MS it’s a 3 yr tax sale redemption & it transfers ownership).
If your goal is you want to keep the place, & you have the wallet & sense of humor to deal with stuff for years and have a reasonable expectation of having exemption, exclusions or claims, it can be done. I’d suggest that you just plan on opening probate & get a probate atty who understands MERP.
About your ? if the property is worth way way less that the Medicaid tally; it’s not your debt. Your not required to make up the difference.
When my Mom passed she had her house. Because Moms house was For Sale I needed to know the amount of the lean. I called State recovery. Even before COVID the state is slow placing a lean. I was sent a letter telling me the amount owed. Plus paperwork to fill out, part asking questions about if anyone was residing there. Had they been a resident before Mom was placed in a facility. Was this considered the persons main residence. It went on to say that the person residing there maybe allowed to stay, that a lean would be placed on the house but would need to be satisfied if that person dies, leaves, or sells the house. I would think that if "yes" was marked the person would get further paperwork to establish residency. Were they the caregiver, were they disabled, a spouse, able to pay taxes, bills, do upkeep. My disabled nephew was living in Moms house when she passed. Being a big old farmhouse, there was no way he could have afforded the taxes alone the bills and upkeep. I found him an apt with a voucher. He is doing well on his own.
Mom only owed 6k for the 3 months she was on Medicaid. The house was sold 2 yrs after her passing. I had stopped paying taxes when she went into the NH. The offer was enough to cover the 6k, taxes and my out of pocket and a about 10k left split 3 ways.
The lean will not be placed on Moms house until after her death. If the house is sold prior to her death, it has to be sold for market value. The proceeds needing to go to her care. If house is sold after her death, it has to be sold at Market Value. If what is owed to Medicaid is more than the Market Value, that's Medicaid's loss not yours. No child can be held responsible for a Medicaid debt. They will not come after you. If Mom had no house, you still would receive a recovery letter. The State is required to try and recover what they can. If there is nothing, then you tell them there is nothing. Again, they cannot hold you liable for Moms care costs.
And in some way, although a lot of things you just might be able to DIY, it is going to involve needing an atty and not necessarily an just an elder law one, but also one who does probate work (as the elder is dead) and understands real estate laws for your state. So again thanks for your post!
Each state has its own rules. In Ohio the applicant can have about $2,000 in the bank and a small monthly allowance. Medicaid covers what SS and pensions do not. And if a couple own a house the non-applicant spouse is allowed to keep about &25k in assets as well as the home until he/she dies or moves out. This may have changed since I last dealt with it a few years ago.
When my mother was widowed she moved to Assisted Living and we sold her house. My parents had little savings and their only income was SS so the only asset she had was the house. That money was used to pay her fees, and our plan was to apply for Medicaid when that money was spent.
If you are anticipating putting your dad on Medicaid I suggestion you consult an eldercare attorney for estate planning as each state has variations of such laws.
or
Special Needs Alliance www.specialneedsalliance.org.
It doesn't hurt to prepare and understand what Medicaid involves. However, while learning, be sure to encourage her to work on the PT, while the therapist is there AND other times during the day. It is in her best interest (and yours on some level) for her to make progress and be able to go home!
If someone isn't making progress, they will end the therapy and discharge her from rehab. It might also be possible to have in-home therapy. This might be better, as you can be there to encourage her, watch/learn from the therapist and work with her during the day to make more progress. Perhaps if she is stabilized, you can ask the doctor about ordering in-home therapy.
If she is home-bound, Medicare might also provide some assistance, such as help bathing, toileting, etc. It won't be 24/7, but any help you can get for her will be worth it.
The goal should be to get back as much ability as possible, so that she can remain at home. The concerns about Medicaid won't come up unless she doesn't recover. HOWEVER, she might not meet the requirements for a NH, even if she qualifies for Medicaid.
That said, what the others have said is generally what I've read - they can put a lien on the house, to recoup costs after she passes. It wouldn't matter how much Medicaid paid, they can only get back what the house is worth.
One of the KEY things to keep in mind, if she were to qualify for Medicaid and NH is SHE should sign everything, not you. The rehab, NH or Medicaid might try to get you to sign paperwork - DON'T. The only time someone else should sign is if the person is deemed incompetent. Then it would be best to be DPOA and have the attorney read everything before signing as REPRESENTATIVE for her care. There are ways to sign even if not DPOA that negate responsibility for payment - attorney would be best to advise then.
Try as they might, they CANNOT force you to pay or repay anything. You are NOT the responsible party.
As for spend-down and the house:
1) spend down has to be for appropriate needs, such as a burial/funeral plan.
2) you asked about supplemental medical plan - that and Medicare cost would be deducted from her income before NH can take the balance of it.
3) IF she were to move to NH and there's no chance of ever returning home, it would be best to sell it.
IF she has assets, spend down also can include payment for the NH while Medicaid is being applied for. It doesn't mean just spending it on anything to get below the threshold. Medicaid will review all the spend down and can deny some!
If the house is sold, it would have to be for at least the appraised value, so have an appraisal done. The net from the sale would also be used to pay the NH before Medicaid kicks in.
If the house isn't sold, there will be upkeep, utilities, special insurance if no one lives there, RE taxes (possible resumption if she isn't living there), maintenance, etc. It is BAD to have a house sitting and can be expensive. NOTE: they will allow the medical insurance, but they likely won't allow any of her income to be applied to maintaining the house, so either someone pays these bills or the house could be taken by the town at some point, for back taxes. It would be best to sell it if she qualifies for NH and won't ever go home again. No point to hanging on to it.
The only caveat, already touched on, is you need to be absolutely SURE that she would qualify for NH care, for the rest of her life. If you spend down, sell the house and use the proceeds to cover the NH costs and then she is denied Medicaid, she would have no assets and no home to go back to.
Always good to learn before one has to tackle something, and knowledge is never lost, but before worrying about these issues, focus on helping grandma get better and hopefully return home, sooner not later! If sometime in the future NH is in her cards, you'll know what to do.
What is likely happening in my not-an-attorney opinion, but been an executor, is that they are trying to force you to assume or perhaps acknowledge / establish a “lineal heirship”.
Stick with me on this..... Right now as there is no executor (as y’all didn’t open probate) and there is no valid legal will (as your mom in a fit of pique probably burned it); there isn’t anyone for state & taxing authorities to quickly fix onto to deal with on your mom’s MERP or property. It all sits in limbo as nobody to legally sign off on stuff. Whatever DPOA existed is over once mom died. But your her daughter as per state records & so in their sights as possible heir.
When someone dies this way they are considered to have died “intestate”. In theory the state assumes authority over the assets of the state until heirs established or until whatever time period & legal filings needed to get beyond that. But it sounds like mom really had no assets to speak of for the state to assume, it’s heavily debts & debts that collide with local tax authorities. There’s no $ advantage for state to assume stuff, but they can’t clear things till that happens. So they want to find somebody to do this. & it’s you as they have your name & contact info from other state agencies, like Medicaid.
If it was a mobile home or a trailer that she had in her name, they are notorious for loosing value & hard to sell except for low $. If she did own the land, and it has years of delinquent prop taxes w interest, it may be worth little. So for heirs, in this scenario, none of this is enough to be worthwhile to ever deal with as it’s all debts.
it’s the “deal with” part that enters this drama. The state wants to find someone to legally deal with all this so they don’t have to.
When someone dies intestate and if there’s heirs who want to establish an inheritance, they do a “lineal heirship”. What lineal does is a deep dive to find all possible heirs, like look at prior marriages or relationships, to ferret out heirs & old assets. Not especially expensive, but very specific steps that need to be done and takes t..i..m..e as the attys need to post Notices in newspapers of records for wherever the deceased &/or their old spouse(s) lived &/or owned real property. Even if decades ago. Then once established the heirs have to all get along & be agreeable to the division of assets / debts. If there were old divorces or out of marriage kids, or old business partners, it can get mucky. But once “lineal” is established, they as a group can do whatever is needed to settle the estate.
Makes sense to do if there’s $ & assets.
Makes no sense to do if all debt.
State & tax guys want to find someone to deal with all this as otherwise they have to deal with things. Tax assessor/ collector imo has upper hand as they place property up at annual delinquent tax sale. If you know it’s delinquent since 2017 or 2018 taxes, & if your state is one that does 3 - 4 years tax redemptions (so tax sale deed done), it might be that the land can transfer ownership to whomever hold the redemptions. New tax deed owner might have MERP lien lurking so they can’t get clear title & Warranty Deed, but they can fix & flip and sell it w/out WD to unsophisticated buyer. I’d suggest that you look to see where the taxes are in delinquency. I bet it’s way beyond property value. Don’t let them place your name to any of this. If they have send a certified letter stating you are not owner or responsible party.