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NY Times article on how home ownership afects medicaid eligibility

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baghag
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NY Times article on how home ownership afects medicaid eligibility

New Medicaid Rules on Home Ownership
By JAY ROMANO
THE Deficit Reduction Act of 2005, signed by President Bush last Wednesday, makes significant changes in the rules regarding home ownership and its effect on eligibility for Medicaid, which is often used to pay for nursing-home care.

Ronald Fatoullah, a lawyer in Great Neck, on Long Island, said that in determining an applicant's assets, the value of an individual's home was usually exempt. But under the new law, he said, a person with more than $500,000 in home equity is ineligible for nursing-home care under Medicaid. (Homes occupied by a spouse or a disabled or minor child are exempt. And the law allows states to increase the threshold to $750,000.)

Mr. Fatoullah said that while the $500,000 limit on equity might seem reasonable for some parts of the country, it is not realistic for homeowners in the New York area.

Indeed, he said, many of his clients are elderly individuals who bought their houses or apartments years ago and who now have equity far exceeding $500,000. And unless they do something to change their situation, he said, they could find themselves ineligible for Medicaid when they need it.

Two other provisions of the new law, Mr. Fatoullah said, make Medicaid planning even more difficult.

Previously, he said, a three-year look-back period was used to determine eligibility. Basically, this meant that while any asset transferred more than three years before applying for benefits would be ignored, assets transferred during that three-year period would result in a penalty. For example, Mr. Fatoullah said, in New York City, every $9,132 in assets transferred during the look-back period renders an individual ineligible for benefits for one month.

So if a person transferred, say, $27,396 in assets one year before applying for Medicaid, that person would be ineligible for three months. But under the old law, such a transfer would have had no practical impact, since the ineligibility period would have begun on the first day of the month after the transfer and ended months before benefits were sought.

Under the new law, Mr. Fatoullah said, the look-back period is increased to five years, and the ineligibility period starts when the person is in a nursing home and applies for benefits rather than shortly after the transfer was made. So, with that same $27,396 transfer in assets one year before applying for benefits, the three-month ineligibility begins with the application and can have the practical effect of losing three months of benefits.

As a result, estate planners say, individuals — especially homeowners — need to plan carefully and early.

Linnea Levine, a lawyer in Harrison, N.Y., said that homeowners, including those with more than $500,000 in equity, can use a life estate to protect the home while remaining eligible for Medicaid.

With a life estate, Ms. Levine said, a person deeds a property to someone else while retaining the right to live in the home until death. With such a transfer, she said, Medicaid uses tables to determine the value of the asset being transferred. If a 75-year-old transfers title to a $600,000 home and retains a life estate, for example, Medicaid would value the transfer at $287,106.

And though that amount would still be subject to the five-year look-back period, the $500,000 threshold would not apply. "So early planning is essential," Ms. Levine said.

Ralph M. Engel, a Manhattan lawyer, said that another option for a homeowner with more than $500,000 in equity would be to take out a mortgage to reduce that equity.

And what should one do with the proceeds of that mortgage? "You could give it to your kids and hope you won't need Medicaid in the next five years," he said. "Or you could take a trip around the world."

Posted 2/14/06 9:28 AM
 
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baghag
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Member since 5/05

10278 total posts

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Re: NY Times article on how home ownership afects medicaid eligibility

SOURCE

Posted 2/14/06 9:28 AM
 

schnapy
LIF Adolescent

Member since 9/05

766 total posts

Name:
Diana

Re: NY Times article on how home ownership afects medicaid eligibility

Thats why many people gift their homes to their kids.

We are trying to get my mom to do this also, so whent he time should ever come, we dont have to worry.

I thijnk its disgusting, it takes people 30 years to pay off the damn thing, and in the end they govt wants your house to pay for your bills. What happened to the taxes you paid all your life??

Posted 2/14/06 10:02 AM
 

MrsProfessor
hi

Member since 5/05

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Re: NY Times article on how home ownership afects medicaid eligibility

That is why my ILs now rent. Can't say I blame them.

Posted 2/14/06 10:12 AM
 

baghag
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Member since 5/05

10278 total posts

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Re: NY Times article on how home ownership afects medicaid eligibility

I was so disgusted reading that article. Chat Icon i had no idea there were conditions for receiving medicaid.

Posted 2/14/06 10:12 AM
 

schnapy
LIF Adolescent

Member since 9/05

766 total posts

Name:
Diana

Re: NY Times article on how home ownership afects medicaid eligibility

You have to know how to work the system, you must be really destitue to recieve medicaid or lie like most people do.

Its really a shame

Posted 2/14/06 10:37 AM
 

DjPiLL

Member since 5/05

3664 total posts

Name:
Richard

Re: NY Times article on how home ownership afects medicaid eligibility

Posted by schnapy

Thats why many people gift their homes to their kids.





Its not as easy as it seems.

Don't you have to pay taxes on a house that is "gifted" to you? You can't just walk away without paying a dime by doing this.

Posted 2/14/06 11:04 AM
 

schnapy
LIF Adolescent

Member since 9/05

766 total posts

Name:
Diana

Re: NY Times article on how home ownership afects medicaid eligibility

Im not sure of the logistics but know several people who have done this and they said it was def for the best. They all went to a elder law attorney.

I wouldnt mind paying taxes as long as my mom doesnt lose her house to uncle sam.

Posted 2/14/06 11:08 AM
 

CathyB

Member since 5/05

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Re: NY Times article on how home ownership afects medicaid eligibility

Posted by DjPiLL

Posted by schnapy

Thats why many people gift their homes to their kids.





Its not as easy as it seems.

Don't you have to pay taxes on a house that is "gifted" to you? You can't just walk away without paying a dime by doing this.



You pay taxes, but it usually puts the senior citizen under the minimums you need for medicaid.

Anyone who is going through this should definately see an elder care lawyer. We have been going through all this with my grandmother. She got on one form of medicaid 1 year ago which allowed her to get home healthcare aides, but she deteriorated more and needed to move to a nursing home and now we have to get her on a different version of medicaid. So we have to submit all the same paperwork all over again, and we have to rush to get it in before the 5 year lookback kicks in. It's so rediculous that the goverment makes people jump through hoops to get the help they need.

Posted 2/14/06 11:30 AM
 

CookiePuss
Cake from Outer Space!

Member since 5/05

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Re: NY Times article on how home ownership afects medicaid eligibility

Posted by DjPiLL

Posted by schnapy

Thats why many people gift their homes to their kids.





Its not as easy as it seems.

Don't you have to pay taxes on a house that is "gifted" to you? You can't just walk away without paying a dime by doing this.



Yes, you would pay gift taxes of anything over $11,000 unless you uses your gift tax exemption which equals a lifetime gift of 1.0 million dollars. The giftee retains the original cost basis and this could mean a huge tax liability for the giftee.

I'm not saying that I agree or disagree with this change but Medicaid's purpose is to provide medical benefits for those that are destitute. If you own a home that you have equity of over $500,000, you really aren't destitute.

For those of you that are concerned for your parents, there are some planning techniques that they can take advantage of prior to becoming sick. I suggest you really looking into a good Elder Care attorney to help with planning.

Posted 2/14/06 2:50 PM
 

schnapy
LIF Adolescent

Member since 9/05

766 total posts

Name:
Diana

Re: NY Times article on how home ownership afects medicaid eligibility

You arent really destitute should you have to be deathly ill and then borrow hundreds of thousands of dollars against your house.

If you are not able to go back to work who will pay the loan?

THis I dont think is fair..

Posted 2/14/06 3:26 PM
 

CathyB

Member since 5/05

19403 total posts

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Re: NY Times article on how home ownership afects medicaid eligibility

Posted by shamrock12472

Posted by DjPiLL

Posted by schnapy

Thats why many people gift their homes to their kids.





Its not as easy as it seems.

Don't you have to pay taxes on a house that is "gifted" to you? You can't just walk away without paying a dime by doing this.



If you own a home that you have equity of over $500,000, you really aren't destitute.




Do you know how fast $500,000 goes when you need 24 hour care? And with the recent changes to Medicare Part D many people are finding that they can not find a drug plan that covers all of their medication and they may not be able to afford both the medication and food, paying for bills, etc.

It really burns me that all of these super wealthy politicians (like Bush) who will NEVER need to utilize the system make these sweeping changes with no regard to how it will really affect Americans. And now that modern medicine can keep us all alive longer, the situation it only going to get worse.

Posted 2/14/06 3:26 PM
 

schnapy
LIF Adolescent

Member since 9/05

766 total posts

Name:
Diana

Re: NY Times article on how home ownership afects medicaid eligibility

I totally agree.....

Posted 2/14/06 3:59 PM
 

Beth
The Key to your new home....

Member since 2/06

24849 total posts

Name:
Beth

Re: NY Times article on how home ownership afects medicaid eligibility

we have been trying to get my Grandma to take her house out of her name- I am not sure what what the final outcome was

it's so sad that our government does this

Posted 2/15/06 11:16 AM
 
 
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