My Mom gifted me a car 2 years ago. How is the car value determined?

Chi - you are absolutely spot-on about not being able to get around all this.

NH Medicaid is horrendously expensive to do. I just don't see how the state's program can deal with the oncoming tsunami that we baby boomers are going to place on the system. Most of us who still work and worked in the 1990's and 2000's will never qualify for Medicaid as our SS monthly income will be over the 2K that most states have the limit set for monthly income. And just who has the savings to pay 10-15K a month for a NH?? Not gonna be pretty…..

There is really no way to get around the medicaid requirements.

My friend's mother had to be in an Alzheimer's ward for many years. Now, that their father is also dead, the farm land is for sale, to pay back the care that her mother received. This was known all along. The headache is the trying to sell the land, when none of them no longer live there.

If you sold the car, then the $ from the sale will be an asset for mom.

When you sell or transfer the ownership on a car, you have to indicate somewhere on the form what it sold for. The price whether it's $ 1.00 or $ 10K has to be indicated somewhere on the state required paperwork. Vehicle ownership is recorded by the local or county tax assessor and then dovetailed into the state system. It will show up eventually. Medicaid can easily do a match up on real property ownership as all this is in the state's database. So if mom "sold" the car for 5K, then 5K should be in her bank account around that period of time. If not, then Medicaid could do a transfer penalty inquiry on this in which you have to document where the 5K in order to get out from a transfer penalty.

Also if the Kelly Blue book fair market value on the car was 10K, but nephew paid mom only 5K, it would be 10K transfer penalty = $ 5K in $ & 5K in gifting.

I have a question. If we transfer my mom's car to a family member, saying they bought it for whatever amount, it is no longer a gift. Would it still be considered in the asset look back for medicaid in that situation?

Dear csimp - I am so glad you're going to see a lawyer. Marital property laws vary significantly from state to state and can even be altered by prenuptial agreements. Your situation is "nested" in that there are so many "IF's", each YES or NO answer branching off to a new question.

My dad had Alz from about 1984 until he died in 1995. From 1993-95, he had to be in a nursing home. At the time, they were only on the horizon of changing some practices regarding anti-impoverishment of the well spouse. At the time, the well spouse, my mom, had to "spend down" too in order for my father to qualify for Medi-Cal (the CA version of MedicAid). This would have left her impoverished, stripping her of any assets if we had just "been good citizens and followed the rules" as one county social worker blindly & arrogantly put it to me!

Now, b/c the "rules" have changed, this is no longer necessary but at the time, savings that were held in certain types of annuities that had a monthly payout were not counted unless they exceeded what would have been an enormous amount of money for my mom (in other words, my mom had a small, reasonable nest egg).

Without advice we never would have known or understood that we could have conserved my mother's savings. That social worker mentioned above was still obnoxiously stubborn about approving my dad's MediCal; even when presented with the real "rules" and proper documentation, she thought it should be the way she thought it was FOR 4 MONTHS. I eventually had to get her supervisor to sign off on my dad's coverage, who was horrified that her subordinate had put my mom and me through such a nightmare of a waiting game.

Thank goodness it IS somewhat different now, but as always you cannot unring a bell. It is so important to do the right thing, from the get go if possible, or at least as soon as you can. Once you have innocently made a "transgression" in their eyes, you don't want to be scrambling to correct it in the wrong way. Proper legal advice is needed.

Carol. I'm going to set up an appointment with an elder law attorney. what i meant by spend down. Having my father and mothers assets within Ohio community resource allowance so my mother will not be denied Medicaid.My main concern is we don't have to pay 10000 out of pocket the 1st couple months of long term Medicaid care because of this gift.I think one of the better options will be to give the car back to them and let it count on the the allowance.The car value has decreased close to 3000 over the last 2.5 years.I will discuss this when i talk to an attorney .I posted this question to see if anybody has came across this situation.

This is in Florida..."Medicaid considers one motor vehicle to be an exempt asset, regardless of the vehicle's age or type. Medicaid also considers exempt a second vehicle over 7 years old, except for certain luxury and antique cars or customized vehicles (except for use by person with a physical disability.)" Karplaw

I have a question regarding cars if anyone can help??? My mother was involved in an accident about 7 years ago. At the time the repairs on the car exceeded the KB value of the car by $200. The insurance company paid my mother the value of the car about $1400 and she paid the $200 and had the car fixed. The insurance company would no longer allow her to have comprehensive coverage because they considered it "totaled". Fast forward to 2012, mom drove the car over to my sister's house and told her she could keep the car that she could no longer drive. My sister used it only to take mom out for her errands and Drs. appt.. The title for the car was just transferred to my sister's name 6 months ago. Does anyone think that this will be caught up in a "look back" situation for Medicaid? The car is a 1994 Chevy Prism. Thank you to anybody who can advise me, I am the POA as of 2012 for my mom who is now been in asst. living for 1 year.

I am concerned about something I just read in your most recent response that prompts me to ask if you have seen an elder care lawyer:

"My father will be the communities spouse and already has a vehicle. We are in the process of spending him down."

Perhaps I misunderstood or you misstated, you shouldn't be having to spend HIM down. Every state applies Medicaid regulations in its own way and it's possible in Ohio that you may have to spend down her share of the community assets, I'm not sure. It's not that way in California. You maybe thinking that the car you have now was your MOTHER's car, because SHE drove it. And maybe SHE signed the car over to you. But wasn't the car registered in BOTH of their names, so community property?

If you're getting ready to put your mom on Medicaid in a nursing home, you likely are trying to conserve your father's assets. If he doesn't have an overabundance of wealth, perhaps the car could have been counted in their joint wealth and your father could have chosen to give it to you.

There are many well-spouse anti-impoverishment features in the laws that weren't there 20 years ago. There are Medicaid regulations as to the asset limits of the well spouse, but there are other financial instruments that can't even protect asset value above and beyond the regulated limits.

All of to reinforce the need to see an elder care attorney. Check into NAELA, where you can find an attorney certified in elder care.

CS - you know what you face is pretty common. Medicaid allows for couple to only have 1 car and so often they give the extra car to the kids or grandkids. And then there will be a transfer penalty. For most couples what makes the best sense is to trade in both cars and get one newer and more dependable car. This may not work or be feasible for you & your dad but think about it if you can make 1 car work for you & dad so there is no transfer penalty issue.

So dad is the "community spouse"? please make sure you clearly understand the amount of assets he is allowed to keep. For most states it is about $ 112,000.00 in his assets (excluding their home, 1 car and their funeral & burial policies) allowed for the staying in the community spouse. It is only the Medicaid recipient who needs to be at impoverishment (usually 2K in her assets and under whatever your state has set as their maximum monthly income). Dad does not have to impoverish himself for mom to get on Medicaid. If there are things for the home to be used to get the spend down to 112K in assets, you kinda need to make sure that all this is done and cleared through the bank before the application is done. For couples, Medicaid seems to be done based on the couples financial "snapshot" day which usually is day 1 of the NH stay or the date of the Medicaid application. So if dad is paying off on the mortgage or getting a new roof or whatever else needs to be done & paid for & moved out of their bank account before the snapshot day. It makes for a cleaner & easier Medicaid application review.

Also review their finances to see if Dad may need some of mom's monthly income in order for his to stay living at the house and in the community. The community spouse can be entitled to MMNA - monthly maintenance needs allowance. Usually MMNA happens when the spouse is a younger wife who has debt on the community property (like a mortgage) and needs the now in the NH SS or retirement income to make ends meet. The community spouse can apply for MMNA to have the NH spouse's monthly income go to them rather than become the required co-pay to the NH by the NH spouse. MMNA tends to be set pretty low and if dad needs it to be higher then realistically you need an attorney to get it done so that they can get it to be higher or all all of their monthly income. But it can be done. Think of it kinda like old-school alimony for dad.

Also you want to check their life insurance polices. If, like most couples, they have each other as their beneficiary. You need to have that changed so that the beneficiary is you or your siblings or their grandkids. You don't want it to happen that dad has an accident and now all of a sudden mom get's the insurance $$ pay off and is booted off of Medicaid as she now has assets under Medicaid. Understand? Good luck & keep a sense of humor in being an advocate for them.

The car was worth aprox 10k two years ago.My father will be the community spouse and already has a vehicle. We are in the process of spending him down.Assuming we might be penalized for this car would we better to go ahead and apply for Medicaid and take the penalty and wait the 2 months out.We have the resources to take care of her at home but her condition is slowly declining. From what I've understood, the penalty would be appied after she was acceptted on medicaid and we would have about two months in Ohio before we could use medicaid.

Camp - I think so much of this will hinge on what the value of the car is. If it is newer and worth a good bit then either you pay the Medicaid transfer penalty or transfer it back to mom. They are allowed a car & a homestead under Medicaid. Mom then continues to "own" the care although it would be used by you. You will have to pay for everything on the car for mom too as she will not have any of her income to do any of this once she is on Medicaid. But if this is an old, old car with low value you may be able to get the value to be under the 2K asset limit.

I had a transfer penalty inquiry for my mom's car. She gifted the car almost 5 years prior to the Medicaid application to worthless nephew when she moved into IL and found she just didn't need or use her car anymore. But the transfer was just within the Medicaid lookback of 5 years. The inquiry came at about month 4 of her stay @ the NH in which she was "Medicaid Pending". My mom's application was all about everything asset-wise for 3 years & 6 months (that is what I had to turn in for mom and it was over 100 pages of documents too) so I didn't even think about the old car of hers. Oh well, live & learn...

Here's what I did:
1. got the Kellly Blue book value on the car for today (mom's Medicaid application date) and then what it would have been at the actual date mom transferred the vehicle to worthless. Depending on how your state runs Medicaid, they could place the value on the actual date of application OR the transfer date. This could make a huge difference on the penalty. So you want to know what it is $$, so you can make your valid point in your favor either way. Understand?

The Kelly is at all local libraries, so go there to get this info if you can't get it on-line.
Make sure it is for the exact car make & model. Make a copy of the value page for the exact car you now have. For us, the model Medicaid used the value for wasn't exactly the same as my mom's; it was slightly higher value car. So again, having the true data made a difference in reducing the penalty.

Now Kelly is based on a clean nice car. If the car has had significant damage or has other issues for it's drivability then it will be less than the Kelly BB value. Now my mom's car was a older model and I had cancelled checks to the mechanic for lots of work she had done on the car years prior to getting rid of it. The mechanic is one she used forever and in her neighborhood. I went over & told them what was going on & if they remembered her & her car. Lots of laughter later, he did a letter stating that the car had signifianct issues (based on all the repair receipts I had that he did) and worth in his opinion only it's parts value. I faxed all over with a cover letter to the Medicaid caseworker and basically he called it a wash as the value with her assets could realistically be under 2K. Happiness all around as caseworker had the documentation he needed for her file.

Yeah it does seem like a lot of work but please realize that cars like homes & land are all within the local tax assessors database and in turn all this gets dovetailed with the state system. So all ownership and transferring or sale of all real property are just keystrokes for Medicaid to find out. You sign off in the Medicaid application for the state to get an all access pass on their life basically. Now it may not come up in the initial application data you provide with the application. But don't think that the state will overlook ownership as it seems most states run a simple program for real property matchup's based on name, SS and addresses. The car will show up…eventually. Transfer penalty inquiry can be a total panic situation to deal with as all the info has to be provided within just a few days to the caseworker before they get ineligible for Medicaid to pay for their NH stay. AND for even more fun the NH gets the letter too so they will likely want someone within the family to sign off to be financially responsible to private pay for mom's stay. So it is well worth your time to do whatever now to not have a transfer penalty inquiry later.

The only thing I've heard of that is under the radar is O & G (minerals) revenues and old-school style savings bonds. I imagine this is due to how ownership is recorded or actually not recorded to be able to show up easily.

I don't believe that the inability to drive, comes into play, as Medicaid just doesn't care. Are we talking about an expensive car?

Couldn't they also be told that mom was no longer able to drive?

Medicaid uses the median Kelly Blue Book Value to calculate the penalty. You could gift the care back if you still have it or you could ask for a hardship waiver. You can indicate on the waiver that the car was gifted 2 years ago w/o the anticipation of the need for Medicaid.