Will Medicaid count the gross rent or the net rent against my mother?

net rents as shown on your schedule E Supplemental Income and Loss. BUT if the property is showing a loss, they expect you to sell it.

you can have an allowance to maintain your home?

If you or those who read this are living in NYS, you might want to know about this program.
health.ny.gov/facilities/long_term_care/waiver/nhtd_manual/

If and only if you are planning to return home you can have an allowance to maintain, the house, taxes, utilities, house payment and insurance. If you cannot return home after 12 months that allowance stops.
If the property is a rental, the net rent counts as income and is absorbed for care. Each state can set different rules regarding this. Check with your local Medicaid office or look on Medicaid.gov.
Good Luck.

The Medicaid regulations in your state should explain how you can calculate the rental income that must be contributed to payment for your mother's care.

In my state (Massachusetts) the regulations explain that (C) Rental Income is reduced by allowable business expenses:
"(1) Allowable business expenses from rental income include carrying charges, cost of fuel and utilities provided to tenants, and any maintenance and repair costs."

Property taxes would be a carrying charge.

You would benefit by consulting an elder law attorney in your local area who can help you plan for continued eligibility, and the reporting requirements in your state.

What is allowed will be dependent on just how your state administers its Medicaid program. Each state does this uniquely.

Like for TX, they can keep their primary with homestead residence for the rest of their lifetime. When the initial Medicaid application is done, they can fill out a TX HHS/TXdads form H1280 -mandatory benefit optional benefits (really it has benefit twice!) to request for some of the required SOC for 6 months be waived to pay for mortgage & utilities (no phone).

For the H1280 to happen, it has to have supporting documentation as to the amount (like mortgage payment info & past utility bills); and it must be signed by owner AND their attending physician who has to certify they are anticipated to return home. Getting the MD who is the medical director of the NH to sign this could be totally problematic would be my guess. Property must be vacant. The way TX info on this reads is that any continuing costs like taxes, insurance, yard work, repairs are not included. Those costs all fall to family to pay. Only mortgage or rent & some utilities. Only 6 mos of waiver of part of SOC allowed.

For TX, if the house is kept, They will need to do a annual right of return statement along with the annual Medicaid renewal. The statement is usually sent to dpoa after the renewal & it's required documents (like tax assessor annual bill to show continued ownership) is mailed to state. I imagine caseworker looks at assessor document and cross references it via state database to see of all unchanged & verified, then sends out the right of return letter to the DPOA to sign off on.

For TX, if the house is empty, then the normal costs on the home (taxes, insurance, repairs, maintenance, utilities) paid by family on the behalf of the property owner is a deductible expense under TX Administrative Code from the Medicaid tally & MERP/MERS after death. Normal & usual costs, so roof repair is a yes but putting in a pool is a no. Plumbing repair is a yes but bathroom renovation is a no. If the house is kept - for whatever reason - it is centrally important to keep every receipt, contract, bill, etc on the house cost as you need it to offset MERP but also to possibly enter your own claims against the estate for probate if MERP won't provide an inital release of claim. All these costs come in to establish value of overall estate in probate. If the property is lower value to begin with (based on $ either by assessor value or valid appraisal), it could be there is no recoverable estate or not cost effective for recovery. If you do probate and MERP does not file a claim against the estate, the house can be transferred as per the will.

Keeping your parents home is like having a 2nd or 3rd home but without any guarantee of ownership so runs a risk and has costs for family to pay for the elders lifetime on the property and then for however long to settle probate & estate recovery. Renting the property is an option to consider.

What comes up on this site over & over, is that neither the Medicaid applicant or their DPOA or family are aware of the required co-pay or SOC of the elders monthly income to the NH. It comes as a surprise. Family at first is all "guvmint not gonna take maw's house", but in short order brother stops cutting the grass, Sissy won't pay house insurance, taxes are in arrears, etc. House gets sold with all proceeds going towards NH as they are now ineligible for Medicaid & family is usually out all those costs paid.

Really think hard with a solid idea on costs for possibly years & years IF keeping the property is feasible.

wonder if this explains why I've always heard that after 6 mos. in a nursing home, the house has to be sold; I'd never heard of being able to keep some money out of their income - SOC - to cover - what hopefully wouldn't be a mortgage but I know some still do - the mortgage and especially, maybe, utilities, which hopefully, wouldn't be much if they're not there but guess good idea to keep on at minimum at least to prevent damage to the house; guess that does give time to think in terms of the nh not being permanent, with hope of returning, but if I'm understanding, that can be extending if it's still thought that, even after that length of time, that they still might be able to eventually, or maybe at that point, in another 6 mos., return home? I wonder how often this actually happens, either that the possibility is real, or that, like I think you're trying to present, that the family is willing to continue to keep up the cost of maintaining the home, though not entirely sure re the guarantee of ownership; seems even if no will, the probate process would say how that would work, but of course guess the issue is the equality then of who's doing what vs the property being divided equally, or is it that if the nh resident never goes back home, that then the MERP recovery process possibly kicks in to get that money out of the house? so that nobody of the family is guaranteed to get that house after they've spent all that money on it? know have a friend who, though not sure if knew anything about any of this but pretty sure know didn't keep out any money to cover the expense of her mom's home after she put her in the nh, but anything that wouldn't have been allowed to be covered out of her check she wouldn't have - or been able to, although there are some other issues now - covered anyway, so it's already been let go because of the mortgage, which is another issue as well, isn't it, if there's a mortgage that doesn't get paid - wonder if MERP recovery thinks about that

Thank you for your input. The property is in a life estate with an end of life clause (as opposed to an occupancy clause). Currently the Medicaid formula has my mother contributing all but $80 of her retirement income (social security & annuity). Their are no liens against the property. We are working with the Dept. of Social Services in Virgina

The life estate covers a small farm and her home. The land is rented to a neighbor for less than the annual $2100 state Medicaid limit (retained assets) and reported to Social Services. The rent on the land almost covers the taxes, insurance, the utilities and fuel oil. Currently, I am paying the difference.

My brother, who will receive the house and 5 acres at my mother's death (I receive the remaining 25 acres), wants to rent the house. I am not totally opposed to renting if it is allowable especially since I am paying for what Mom cannot. My opposition is mostly due to the fact that I live the closest and I know who the tenants will be calling. And, that dealing with the proper handling of money and my brother never ends well.

When I met with the case worker, I asked if we could rent the house and turn over the net. The case worker said that it would put her over her income limit and disqualify her. She said there was no need to discuss the fact that I was more than willing to turn over any excess money after expenses were paid. I realize receiving the rent would initially put her over the $2100 limit but if she did not retain the excess, I thought they would be happy. SS answer was, "she would make too much". I was left to assume that SS was referring to her retirement income which is less than $24,000 a year. I also attribute the case worker's terse manner to the fact that my brother had called several times and was less than happy with the answers he received.

I scheduled this meeting with SS because my brother was getting ready to rent the house and I a suspect, pocket the money. I am pretty sure that would cause a Medicaid nightmare and might even be fraud. He had mentioned months ago that he thought we should consider renting. We had been told it was a paperwork nightmare that might not be worth the effort. I thought he met with SS and had all the details of "how" from SS. When I stopped by to check the house a few weeks ago, he was there showing the house. I then had a hint of his real plan. That is when I made an appointment with SS and discovered he had only made a few inquiries. The inquiries were such that the case worked had a ruling from the state office that "renting the house will put her over the limit".

I didn't know if I was phrasing my request to SS incorrectly or if I was missing something in the stack of paperwork that covers Medicaid. I speak "accounting" so I know I was phrasing my part correctly, but the case worker seemed to not want to speak at all.

I had spoken with an attorney in early spring when the "maintenance allowance" ended. That was when my brother wanted our mother to sign to change the life estate to an "occupancy" clause so he could take possession. This attorney was recommended by the attorney that actually drew up the life estate. My brother was not happy when the attorney said that changing the terms would reset the "look back". Then my brother asked about renting it. The attorney also said we could rent but he thought Medicaid would take all of the rent and we would have to apply and get approval to be reimbursed for any expenses out of future rents. He said it would be a paperwork nightmare.

I am not complaining about SS/Medicaid. My mother is happy where she is and unless she has a medical issue will live a good while. There is no way she could afford her care without it. My worry is that my brother will not let this go. He is still insisting that we rent the house for just the cost of the taxes and insurance "to help someone who needs a home out". He said he would have the tenants sign a lease saying what they were paying as rent so SS would be satisfied. That would mean we are renting a house for $150 a month that should rent for about $800-$1000 in our area. I am sure that means he would be getting a large sum of money under the table. I do not have proof but I don't think I need or want an admission of his plans on this. If there is a need for a repair, I would never get a dime from him. And, what will happen if they decide to stop paying him under the table? After all they have a lease for a lot less. It will be more than a can of worms that is opened, it will be a bucket full of rattlesnakes.

There is probably no solution but it helps to vent.

Bear in mind that she does not own the property, she just had life estate for living in the house. So the property owners collect the rents for and must fill out a schedule E on their tax return.
Now if you rent out the part she was living in, that is her income, and must be declared to Medicaid but only the NET rental, after expenses are paid. It might increase her share of cost, but I don't see how it could possibly put her over a limit, because nursing homes get about $12K a month.
Virginia regulation M0730.505 states:
"Net rental/boarder income from the rental of real property, or rooms, or
board paid when the applicant/recipient is not engaged in a business
enterprise or actively involved in management is unearned income.
Rental/room and board income is counted in the month in which it is
received."
Notice it said NET rental, not gross rents.

We have a similar situation; my mil's- if it is, pamstegma, based on your comment - according to what I'd read, they value and ownership is based on mil's age - property is also in a life estate, with no clause written into it, but been told that has nothing to do with occupancy, so is still valid even though she has remarried and moved off the property.

It covers 10 acres and the home. The home has been rented out but they've just served an eviction notice on the renter, which I'm assuming the rent has been covering the taxes, not sure if there's even been any insurance, with I'm assuming the renter covering the utilities.

The property has actually already been divided up among the heirs, with a daughter having gotten the house that's been being rented out. She's not the one who lives closest, however; that privilege belongs to another heir, who may partially be behind the eviction notice, plus she's also the POA, which might also have something to do with it, plus she also works in collections at the biggest credit union in the area, where probably the whole family does business (except me; I won't, at least as far as I can avoid it).

I don't believe mil has been getting any of the rent proceeds. Thanks, in that sense, to a change in rules, she's still been able to her fil's pension from his Civil Service job, even though she's remarried - otherwise, she probably wouldn't have and used to be she wouldn't have been able to continue to receive it - so, incomewise, not sure she'd ever be eligible for Medicaid, but not entirely sure re nh, since I understand the eligibility requirements for that are different than community. Not sure how much entirely the POA understands about nh requirements, or exactly what the thoughts are there but do know she and especially the one who has the home who's been renting it out have been discussing mil's deteriorating situation. At this point don't think she's been controlling the income, or how that would work if the began to feel that she needed to, because at this point, wouldn't that still be mil's decision? But to muddy the waters even more, all the rest of the property is also in life estate, including what's supposed to be ours.

I'm wondering if any of them even know anything about the whole Medicaid lookback period if she would even be eligible based on her income. But I'm also wondering how this would even all work with her, since we're not even talking about Social Security but the old Civil Service retirement plan.

Both of mil's sons work at the same installation where fil worked, but they both work for contractors, so are not under the same plan, so don't know if either one of them would even know who or how to contact the administrator of mil's plan.

Mil said early on she didn't even want the life estate, unless, possibly on the house, but she didn't want to talk to the attorney about changing it, and she certainly didn't want to pay to make the changes, and the POA didn't want any of that done, although she did talk to the attorney the credit union works with, who said the property couldn't be sold because of the life estate, but maybe that has something to do the Medicaid "lookback", that if she were to go on it they would want to be reimbursed but my understanding is that would only apply to her portion, since it's already been past the lookback period that the life estate was set up.

We're just not sure what would happen; a granddaughter-in-law has said she could come live with her, but now she's just found out that she's expecting so not sure what that does to those plans. Fil left her with money but we think it's gone now. Think it went to another granddaughter, who's wanting to move into the house, with her new husband and stepkids; had thought the renter that was there was supposed to have already been gone, but of course there's more to moving in than just the actual move, so not really sure how that's all going to be working out anyway. She'd already transferred the kids school to mil's house's school district, though. I'm somewhat concerned re all this false signing all these people are doing, between this and the IRS, both for this type thing and on a somewhat unrelated note, those that are still working and W-2's and 1099's. But, otoh, how is rent determined anyway? I don't guess I mind all the work we put in on the house for his mom after fil passed away but I do wonder if we would have done it had we known she wasn't going to stay there. But it is true that the one who's been renting it their son did move in after that and did a lot more work as well, but then he was living there for free, and she lived there as well with her first husband.

I'm just concerned about the whole situation but I guess maybe I don't need to be because I was told fil didn't even have a valid deed for the property we supposedly inherited anyway, so may just not even matter on our end.

Marie - honey, your bro is a scheming piece of work & you are right be be concerned. It sounds like this will be a constant cycle of underhanded dealings and jeapordizing of moms Medicaid. I bet moms file is already red-flagged by the caseworker. not good....

Couple of ?s:
- do you know if LE are within recovery rules for MERP / Medicaid estate recovery? If so, every day mom is in a NH places an amount against the property that will need to be settled one way or the other for the property to ever be transferred to you as a 25% heir & bro as a75% heir. The trend with recovery is for a wider view of after death assets to be allowed by MERP. So LE can get a MERP claim or lien placed on property.
- what is the value of the property right now?
- what is your states daily reinbursement rate paid by Medicaid to moms NH?
- how many days so far is mom on Medicaid?

By looking at the above, it gives you an idea of what sort of MERP claim or lein exists right now and what it could get to every year mom is still alive.

To me, there are kinda 3 paths with merp if LE are subject to recovery:
-low value may not be cost effective for claim to be done if probate done & you need to document every penny ever spent on the house & all rental income in detail & with rental agreements as required.
-high value (like close to the Medicaid maximum of 550k or 750k)could be sold with MERP being paid off and family still gets some funds. Family could maybe borrow against the property to pay off MERP & keep it within family.
- property in the middle, well those likely are a loose-loose position for family as the MERP tally could easily be 100K -300k or more if mom lives a long time. You mentioned mom could live a good while.
Do the reinbursement math for 3 years in a NH. How does it compare to the assessor value of the property? If LE are subject to estate recovery, I'd bet no matter how logical & with documentation you present this to Bro, he will never accept that the likelihood of his inheriting is nil.

I'd be more concerned about you. You are already fronting all extra costs on the property now, & in the past & likely in the future. Can you afford all this no matter what all the costs end up at? If you want all this to be your gift to mom & brother, then continue to pay. But if not, you may want to do something legally to safeguard that these costs paid by you are to be reinbursed from the sale of the property or by your own claim or lien against the property. Just what needs to be done is really a ? for you to ask of your atty.

You may hear that mom could do a Miller Trust to deal with the excess income. Miller are quite terrific but require the income to be qualified (like guaranteed income), so rental income can't meet that qualification as renters move out and cannot be compelled to pay.

If mom becomes ineligible for Medicaid, who is liable for her bill from the NH? If its you, please, please think more proactively in all this. It could be that you need to become moms guardian and so can totally deal with her, her needs and her property without ever dealing with your brother ever again. good luck and try not to get too overwhelmed by all this if you can.

pamstegma - First, thank you for the regulation. I will add it to my file. But, I am still confused. According to the attorney we consulted, the life estate entitles my mother to the "full use and income" from the property until her death. The only "out" was if we filed in court that she had failed to maintain the property and asked the court to allow our remainders to be fully titled to us. According to him unless we do that, she is entitled to any income generated by the property and it must be reported to Social Services.

The house is/was her primary residence and is setting empty at this time. The crop land has been rented for 40+ years. If the attorney is incorrect and she is not entitled to the income, then my brother can rent the house. But if we can do that, why does SS consider the amount received from leasing the crop land as her income, not mine. The gentleman that leases the land issues a 1099 to her as he has always done. We report the 1099 to SS.

The attorney told us that recovering a major expense (one that exceeds the monthly rent) would be where the real paperwork nightmare would start. We would have to pay the costs up front and then apply to SS every month to recover a portion of the expense until it was all recovered. Maybe that was what the caseworker meant when she said renting the house would mean my mother's eligibility would be in question at all times. If we rented, there would be a monthly evaluation of her eligibility and it could even have to be evaluated on a day by day basis.

So I have an attorney telling me it can be done but it will be a headache and a case worker for SS that tells me that she has a ruling from the state office telling us we cannot. (they have a copy of the life estate) And, I have a brother who I am afraid is trying to do something that would jeopardize Mom's care if the case worker is correct. And I admit, I have a selfish interest besides not wanting to deal with my brother and finances. My Mom loves coming "home" for the afternoon. She likes to roll through the house and reminisce. She loves sitting on the porch and waving at cars that pass by even though she can no longer see well enough to recognize anyone. If my brother rents the house, she will lose that little piece of her past. She likes to see that the shrubs are pruned, the yard is groomed and pansies still bloom in her flower beds.

My brother is not going to let go of this so I will try the caseworker one more time since she doesn't charge for information/advice.

Igloo572 - I guess I need to visit the attorney again. I had skimmed through articles about MERP because I thought the life estate protected against that. My parents set this up years and years ago and did not tell us about it until it was done. And, you are right, I am paying and my brother is only looking for a way to line his pockets. The property in total (crop land/house lot) is only worth about 350,000 according to the tax assessment. And an appraiser would probably value the house at less for resale because it needs some updating/work.

She has been in the NH for 15 months. The cost is $250 per day and Medicaid is paying approximately 75%.

Marie -so mom owes about 85k right now. If she had any Medicaid program participation before the NH, those get added in as well.

85 out of 350 is significant. Try to find out clearly & definitely if life estates are now considered a recoverable asset by MERP for your state. Some states in which LEs have been sacrosanct - like NYS - are no longer excluded from estate recovery. Pam can probably shed some light on that. What states are doing is taking a wider view of what an estate is, so some things that in the past would bypass probate, as in theory estate recovery is supposed to be done in probate, are now able to be recovered.

If it is recoverable, really I'd suggest you do a tight financial projection based on 3 years and meet with the atty who did the LE to see what options could be done or not. I'd suggest you do get an appraisal done as you need to get a accurate value and you may want to contest the current value for next years assessor bill.
Good luck.

Check into your particular state and also IRS site.

what if retirement income weren't social security?

Marie, if the life estate said "life tenant" instead of "full use and income", you could collect the crop rent. As it was written, it is her income and that is further substantiated by a 1099 with her name on it. Let it be. You don't want to serve a notice that she abandoned the property and evict her. That would break her heart.

you can do that? what if she really did, or at least would it/could it be considered that she did if she remarried and moved to her husband's house?

You can rent the property and use the NET income from the rental as INCOME.
That is Medicaid law in the state I live in.

Marie07 Please se a Medicaid Planning attorney in your state. If the house is in a Trust then the rent may not be an issue but only an attorney well versed on your states laws can sort it out.