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Correcting a Medicaid Mistake from 15 Years Ago (Part 2) #Medicaid, #MondayMorningBlog

            Last week I was telling you about Monica’s dilemma.  She thought the home she and her husband, Paul bought together with her mom had been retitled to them 15 years ago with Mom retaining a legal right to live there for her life time.  But, that’s not what happened.  The deed instead lists Mom as a co-owner of a 50% interest.

            Monica insists that wasn’t what was intended.  Now they are concerned that if Mom needs long term care she doesn’t have enough money to cover it and will need Medicaid.  Can the home still be protected even though it appears that Mom still owns a half interest?  Her contention is that the attorney made a mistake.  Can she simply “fix” the mistake with a corrective deed?

             I told her that without any objective evidence that the attorney made a mistake Medicaid won’t accept her explanation at face value.  If, for example, she can get the attorney’s file from 15 years ago and it indicates that Mom wanted to transfer her interest and only keep a right to live there then she might have an argument.  There must be some objective evidence to support her verbal assertion.

             Without proof, a deed transfer now will be subject to Medicaid’s 5 year look back and penalty period.  If Mom applies for Medicaid within 5 years from the date of the deed transfer, Medicaid will impose a penalty #MedicaidPenalty – or waiting period for benefits – equal to the value of the transfer divided by what the state deems to be the average monthly cost of nursing home in New Jersey.

             So, if they can’t fix the transfer or get thru a new 5 year look back (not likely given Mom’s current state of health) what will happen to the home if Mom applies for Medicaid?  Nothing as long as she is alive.  Medicaid will not make Mom sell the home since she co-owns it with Monica and Paul.  When she dies Medicaid will place a lien on the home equivalent to the amount of Medicaid benefits it paid out, however, that lien will only be on Mom’s half.  But, the State will have to wait until Monica and Paul decide to sell the home to get paid.  It can’t force them to sell the home.

             Not the result Monica and her family were hoping for when they visited the attorney 15 years ago but that’s why Medicaid can be so tricky and getting the wrong advice can be so costly.