Can I move into my father's condo and pay them rent equal to the mortgage payment without affecting his Medicaid application?

JoAnn - regarding the whole lien / claim scenarios due to MERP, just what can happen is really tied into a # of factors - imo - besides what the Medicaid $$ tally is. Like if there are any exemptions or exclusions to MERP (like caregiver exemption, low income heirs, etc); the cost-benefit analysis of the property and the tally; and your states property & probate laws. Some states allow for a lein placed before they die and others not till after death which are very different ways to deal with recovery. And if probate is opened then however probate runs gets to be very much a determining factor. There just isn't 1 path on how to deal with estate recovery as each state runs its Medicaid program uniquely and state laws vary. The sticky part to me is that the initial response to Medicaid NOI has to be done in a pretty narrow time frame from when NOI (Notice of Intent) is sent to whomever Medicaid has on file for contact for the deceased; often family has not been keeping detailed files on all costs paid for mom's care or her property and they are still grieving and unable to move to do whatever to respond to the NOI.

But even if that happens or if MERP is disinclined to accept the exemptions or exclusions or reduced property value, family can open probate. If you do probate, then whatever rules / laws for probate enter. Now some states have probate as a Level of Claim by Class and MERP has to fall into a specific class. Like for TX probate MERP is a Class 7 claim and all other claims in 1 - 6 must be paid or settled first and foremost before a 7 can, so poses less recovery ability for states like this. The executors cost to maintain the property and all other estate costs are going to be Class 1 or 2 or even maybe 3. Depending on property value, those executor costs could be at or more than the property is worth & if so then the cost-benefit requirement for recovery can be used by heirs to have claim go away. Also for some states the $ paid on property maintenance is an exclusion to be made by Medicaid for property costs paid by family on the vacant property that remained the elders homestead during their NH stay (must be able to document in detail). Ditto for exclusions to any payments made by family that kept the elder off Medicaid. But all documentation falls to family to do.

Say there are 3 heirs as per your mom's valid will in which mom named you as executor; you, your brother and your Sister who is disabled. Now say you paid taxes & insurance on the house (say 10K) for the 2 years while mom was in the NH & your brother paid for home-health care for a yr (20K) that kept mom out of the NH the year before. You & brother could file for an exemption for those costs to be deducted. Lets say house worth 75K. So the assets of the estate are 75K as mom died with no $ left from her personal needs allowance and had no life insurance with her estate as beneficiary. So asset less deductions is 45k (75 - 10 - 20). Anything over the asset value of the estate is an unpayable by the estate to Medicaid. There are 3 heirs and your disabled sister qualifies for a total MERP exemption for her 1/3 share (15k). So value of estate subject to recovery down to 30k. If you opened probate, then executor costs (10k) likely get paid first. So in theory, it could be that when all in, the most recovery could be paid comes to 20K. You & bro agree to pay MERP 20k and get a release of the claim and 75k value house is owned by the heirs by payment of 20k. Which gets placed into a trust for Sissy's benefit & done within the distribution of the estate done by the probate atty. It's not simple and requires someone to stay atop all details & be pretty OCD on documentation and have the wallet to afford costs, but can be done and is within medicaid compliance as most states allow Medicaid applicants home to remain as an exempt asset for their lifetime.

Both elder law atty & probate atty will be needed if you do this.

JC - to me the ?'s are…..  just what is the longterm plan for the condo? how realistic is it? And is whomever is Dads DPOA all on board with the plan?

Keeping NH Medicaid family members home can be done. But someone - usually DPOA - is going to have to be quite adept at dealing with Medicaid & property management plus have the wallet and sense of humor & not mind risk to do whatever for however long Dad lives and then through MERP (estate recovery) & likely done through a probate process. It can be done, but if there is a mortgage, HELOC, HOA fees, absentee co-owner (your sister) & rental income involved it may not make any sense to do.

Pls Realize that once dad does his "spend down" & goes onto Medicaid, he will be required to have all his monthly income to be paid to NH as his SOC (share of cost). So dad will have no-none-nada of his $ to ever pay on anything condo anymore. It more than just mortgage & HOA fees. Someone will need to pay utilities, insurance, taxes, etc. If Medicaid involved, has to be rented at FMV (fair market value) AND rent paid becomes income for dad. If FMV are high, rental income added to his regular monthly income could take him over maximum monthly income allowed by your state for Medicaid. Dad would be ineligible for Medicaid. Now there are operating expenses allowed for rental property but likely even with this there still will be income to dad from rental AND someone will need to understand how to do property management to deal with operating expenses. Please realize renting involves reporting to Medicaid, to HOA board, to IRS & perhaps to state/city as well. And then when eventually dad dies, there will be a lien or claim on the property by MERP that will have to be dealt with.

So who is going to take on the responsibility & any costs on this?

Speaking of HOA board, as a first step I'd see if "renters" are even allowed. 

Personally to me, keeping property with mortgage doesn't make sense financially. One with mortgage, HOA fees & under whatever constraints the HOA places on units really really doesn't make sense. Now their keeping modest fully paid house with low costs & great neighbors can make sense if family have the ability to find a way to pay all property costs from day 1 of Medicaid till forever and is all ok on the risks possible due to estate recovery.

Sissy as co-owner needs to be the main person involved in any decision. Is she paying her share of mortgage, HOA fees, taxes, etc? If not, why not?

John, don't really think u answered her question.
I would check this out with Medicaid. With my Mom she owned her house so if my nephew, who lived with her, paid rent while she was in a NH it would have effected her Medicaid filing. It becomes income. Now ur keeping up a Mortgage so is a different thing. Just keep this in mind. You probably will not be able to recoup any money you put into the condo. I was just told a Medicaid lean is applied after the owners death. So, u will either have to sell the condo to satisfy the lean or pay off the lean yourself. Because Mom had a house, I got a lawyer so I make the right decision.

You next call should be to an elder law attorney in your state. Medicaid regulations provide ways to help family members who have cared for an elder who ends up needing nursing home care. One example is the child caregiver exception to the Medicaid transfer rules: Section 1396p(c)(2)(A)(iv)

https://www.law.cornell.edu/uscode/text/42/1396p

You mentioned that your father is paying "down his remaining funds." Legal representation during the application process is a valid expense that can be covered by your father's funds.

You'll likely learn of more ways you can protect your father, provide supplemental care for him in the nursing home, structure the best arrangement for the condo ownership, and get immediate approval of the Medicaid application, if you have an elder law attorney working for you.