How To Sell Nebraska Property For Medicaid Eligibility
I’m Ben Souchek with The Sierra Group and Home Downsizing Solutions, and we provide multiple solutions for home sellers, such as, of course, our primary solution is to buy houses direct for individuals to make that as easy as possible. Through our affiliated agents, we also provide traditional home selling services, to list the property on the market and sell it in a conventional manner.
And today I’d like to welcome Nate Watson, who is with the Nebraska Department of Health and Human Services. And the reason I wanted to bring Mr. Watson on today, is that from time to time, we work with individuals that have a home, probably their last asset that they need to sell to become eligible for Medicaid.
And I don’t know all the ins and outs of that. And so I wanted to bring an expert on today, and would also just like to state that as we’re recording this, it’s in July of 2020. And so what may happen next week or next month or 12 months from now may not be applicable to what we’re discussing today, since laws are always changing.
But Nate, welcome to our call today. And if you’d like to, introduce yourself and then we’ll get started on questions.
Nate Watson: Sure. Thank you for inviting me to speak with you today, Ben. I’m Nate Watson, I’m the Deputy Director for Policy and Regulations within the Division of Medicaid Longterm Care, which is itself a part of the Nebraska Department of Health and Human Services. And so I predominantly work on the policy that we enact to ensure that Nebraska Medicaid stays in compliance with the various and myriad state and federal laws that apply. And there are a lot that apply to Medicaid, both on the state and federal level.
Plus we also write the state level regulations. And we also work with the other parts of Medicaid and across the whole department of DHHS on the various policies, how we implement our policies. And so we’re always very pleased to provide good customer service, to provide general information to folks.
I just need to say that I, of course, can’t give a business, I’m a lawyer by trade, I can’t give legal advice in these situations of course. Or can endorse private products. And no one’s asking me to, but I need to say that. Just so the expectations are clear. But I really want you to know that I’m very pleased to provide you some general information about this important topic.
Ben Souchek: And yes, I thank you for stating that and I will state it too, just so that if anybody is watching, there’s no misunderstandings that Mr. Watson is not on here to endorse our company. But because we deal with these situations from time to time, I wanted to have someone that was an expert in this field to provide the education and information to our potential clients. So, yes, we’ll make sure we state that very clearly.
Nate Watson: All right. Thank you.
What Are Some Common Items Home Owners Need to Know To Become Medicaid Eligible?
Nate Watson: So it’s important to know that there are some federal rules that start to apply in a situation where someone is either applying for Medicaid for the first time and wants to go into a skilled nursing facility. That’s what in the trade they are called, and what in Medicaid speak, if you will, it’s called. In regular English, a lot of people say nursing home. In this context, they mean the same thing. And so, if an individual is wanting to go into a nursing home or any other sort of what we call institutionalized care, and they want Medicaid to pay for it, there are certain rules that start to apply called the Deprivation of Resources rules.
Deprivation of Resources Rules
And usually we just shorthand that as Deprivation. And what we mean by that is ever since 1993 Congress, when they passed a law and then they further tightened it in a law that’s from 05 that was signed by the then president in February of 06. It restricts the ability of folks to apply for Medicaid and then seek to have a nursing home paid for by Medicaid, if they’ve divested themselves of any resources. And by that, I mean real property or a lot of personal property. They’ve done that for less than fair market value. So they’ve either given something away, just flat out giving it away for free, say to a relative or whoever, maybe a grandkid or a adult child, or what have you. Or they part with it for less than fair market value like you sell a, I don’t know, $700,000 worth of farm ground for $1,000. Okay. So, that wouldn’t be fair market value.
So, that’s what we’re talking about to the extent something’s parted with for less than fair market value. If you do that within 60 months of either applying for Medicaid and you’re going into the nursing home, or let’s say you’re already on Medicaid and you were getting some services that weren’t institutionalized care, you were getting some help maybe with your doctor bills and stuff like that. But you weren’t going into a nursing home and now you are.
If you’ve parted with any of your resources, you or your spouse, by the way, if that applies, if that’s your situation and you’re married. You or your spouse part with resources for less than fair market value within 60 months of the month in which you apply, you’re going to face some considerable penalties where you’re going to have to, even if you’re found otherwise eligible, you’re going to have to sit out eligibility for, it really depends on how much you gave away.
Like if you sold, let me just give an example. You sold a farm that was worth for ease of math, a million dollars, and you sold it for 100,000, but it was really worth a million. Then the deprivation there is, in this example, 900,000. So you you’d have to just, even if you’re found otherwise eligible, you’d have to sit out the number of months.
And let’s say for the sake of math, the nursing home is 5,000 a month, which could be low, unfortunately things are expensive. But the cost of everything keeps going up. But in that example, the deprivation is 900,000. Let’s say the nursing home would otherwise cost 5,000 a month. So let’s say in that example, five goes into 120 times, and then 20 times nine, if you can see that the number of months there is substantial. And by my count, I believe that’s 180 months. Hopefully my math in my head is right. That 20 times the 900. But the number of months there that the person will be having to find ways to private pay is substantial.
So the real takeaway is that if an individual tries to part with something, if they’re thinking they’re going to need to have Medicaid and it’s within 60 months of going into the nursing home, and you would like to have Medicaid pay for it, and you’re otherwise eligible, then you can’t part for stuff for less than it’s worth, is the short answer.
Situations Where One Spouse Can Be On Medicaid and the Other Spouse Can Remain In The Home
Ben Souchek: And a follow-up question to that. Are there circumstances where if you do have a married couple and one of the spouses really should be in a care community or facility, but the other individual is just fine and wants to remain in the home. Are there circumstances that that can happen?
Nate Watson: Yes. That happens quite often. And so in that situation, what’s done is, and here’s some Medicaid speak. These terms are important, but I’ll explain what I mean. One spouse who needs to go into the nursing home. And then there’s another spouse who can still stay at home, in the family home. We call the person who stays home the community spouse. That’s just the name we give to it. So there’s the community spouse. And then the institutionalized spouse. That’s the Medicaid speak.
And in that situation, federal law, since 93 as well, has said to states, “Look, you can expect the person, you can expect the couple to pay a certain amount. If they’re able to, for the nursing home care of the spouse who needs it.” But let’s say there’s just enough money. Let’s pick an extreme example. But unfortunately it happens a lot. There’s just enough money that if they sold everything, they sold all their spousal assets. And for many folks, especially in that situation, you may have a house and you may have a car or two. And that’s probably the extent of your assets that are ones that would be worth a great deal in an arm’s length transaction.
We’re not talking about family keepsakes that are worth a great deal to all of us, me included. But that really don’t have a lot of financial value. We’re talking about things that could be bought and sold to arm’s length transaction. So in that situation, as long as there is a community spouse, and there are a couple other exceptions. If they have a child who happens to be under the age of 21, or they have a child of any age who has SSI, which is a type of disability you can get from the Social Security Administration.
If you have that category and you’re having a child of any age, even if they’re an adult now, or they’re blind. As long as those three things are present. So a community spouse or a child under the age of 21, or a child of any age who is SSI, disabled or blind, as long as one of those exceptions applies, then the house is safe for now. The house we do not, cannot, nor would we make the couple sell the house so that they can pay for the nursing home for the one spouse.
And Congress’s rationale was a pretty straightforward one, that may solve one problem of the nursing home getting paid and the taxpayers not having to pay for it. But then the other spouse is effectively homeless. I mean, literally homeless. And so what good does that do? Obviously that’s not good.
The flip side of that is once there is no longer a community spouse, if the community spouse passes away too. And usually we’re talking about situations, not always, but usually we’re talking about folks who are at an age in their life where they probably don’t have children under 21. Because I mean, it could happen because it’s not just older folks are in nursing facilities. But that’s usually who we’re talking about.
So, most of the time there’s not a child under 21 anymore. If there are children, they’re considerably older than that at that point. And in most cases they do not have a child who is SSI, disabled or blind, though of course people do have that happen. But most don’t. And so usually we’re talking about a community spouse.
Once the community spouse passes, before any heirs would inherit, whether there’s a will or if there isn’t a will they inherit by what’s called intestacy, which is how each state defines who gets things after all the bills are paid if there’s no will, who gets what and what proportions. And every state’s different in how they do that.
But before anybody gets paid, when you die, you have to pay everything. Your last bills to the hospital. Usually people have some medical expenses. And if you’ve got a mortgage or at the very least you’re going to have property taxes. If you’ve got a house or ground or what have you. You might even have, I don’t know, the cable bill, for example, to the extent you’ve got money, your state pays them.
And one of the things you have to pay as well is, to the extent you have anything left at that point, the law says, “Well, we’ve given you an exception because we didn’t want to make your spouse who was still at home homeless. But at the same time, if you die and you had gotten care.” And in many cases, the spouse eventually ends up in a nursing home too. Not always, but many cases. If that happens, well, then the taxpayer’s provided a great benefit for you. And so to the extent you have any of those assets left, that are sellable, then they ought to be sold. And then the taxpayers ought to get at least a few cents on the dollar back so that we have some more money available to help other folks, because we’ve got a lot of people who need assistance, and it’s very expensive. And we ask a lot of the taxpayers.
And so we think in that situation, is it fair to ask them if there’s something left to pay for it? Yes. Now some folks get a little sore at that thinking that they’re having to pay their grandparents or their parents bills. That’s definitely not true. You’re not responsible for paying your parents, your grandparents bills, unless you co-signed, or made yourself legally responsible through some action. But if you didn’t do that, well, you’re not having to pay your parents’ bills. Your inheritance is going to be less, but your parents or your grandparents have to pay their bills even when they die, to the extent they can.
So we’re not making you pay for it. It does lower your inheritance. If you were to get one, and a lot of folks don’t get one. There’s no right to it. But if your parents, your grandparents decided to leave you something, it’s reduced first by your bills. Because we all got to pay our bills to the extent we can. So it’s important for people to know that. And so sometimes people think the government’s coming to take the house.
No, that’s not quite what it is. It’s actually a pretty good deal. It keeps … oftentimes it’s the wife, I’m being stereotypical here. Oftentimes it’s the husband who goes into a nursing facility or goes in first. That’s not always true, but that’s what we see. And I think most folks that would comport with their experience. And so in that situation, we’re keeping the spouse, oftentimes the wife, but not always, with a roof over her head. So, it’s really a win-win for everybody. But it’s important people go into that knowing the ground rules of the general information of how all that works. Because it’s easy for that to get confused because it is really complicated stuff.
Home Downsizing Solutions Can Provide Multiple Offers When We Buy Houses
Ben Souchek: Yes. I believe that. One of the ways that we have worked with individuals in the past and they probably were not thinking of Medicaid when they sold the house at the time. But one of the ways that we’ve purchased houses in the past, and I think that sets us apart a little bit, is most companies that are similar to ours will just make one offer, a cash offer right when you close. But one of the ways that we’ve been able to pay more for houses is to make payments to the seller, which makes it easier for us to buy, but allows us to pay a more higher overall price when we buy that house.
But what we don’t want to do, though, is affect them negatively for Medicaid later on when we made the deal, so to speak, we weren’t thinking about that. And they weren’t thinking about that. But are there circumstances where if a person has entered that type of agreement, or even when they’re selling the house to become eligible, that they can set a sale up so that they can receive monthly payments and would they keep those monthly payments or would the monthly payments go to the state or the community or nursing care community that is providing those services? If that makes sense.
Nate Watson: Sure. It’s really hard to give a general one-size-fits-all answer. Because there really isn’t one. It really depends on the specific facts and circumstances of every case, exactly where they are versus where the lines are for the different income thresholds and assets, the resource thresholds and so forth. But the short answer is before engaging in any activity like that, it’s important to note that any change in someone’s income or their assets, the resources we call assets, any change in either of those things have to be reported.
There are many terms and conditions that apply to someone who applies for and then receives Medicaid. One of them is within 10 days of a material change in their circumstances, and the receipt of some additional income would count as that. You have to let us know. Because it could affect one way or the other your continued eligibility.
Or sometimes people are eligible with what’s called a share of cost, where they have to obligate themselves. This is almost like a monthly deductible every month and then Medicaid kicks in to pay the rest. And so it can get pretty complicated.
But the short answer is, if you engage in a transaction it’s best to get some good advice. The two types that come to mind are legal and tax, because those are the two that definitely would be implicated by your question for many folks, not everyone. But it would be good to go into that making sure you fully understand what consequences it may have both to your continued Medicaid eligibility, as well as there could be some tax consequences and it could be positive or negative tax consequences. It really just depends on what your goals are and what your circumstances are.
But definitely the receipts or the conversion of an asset into income could cause, it could cause some difficulties. And so it’s important to make certain that the person, and it may be worth it in a situation, it might be a net positive, there might be more income that comes in than what may be lost. But you really got to do your homework, so to speak, in that situation and find out ahead of time. So I really can’t give you a one-size-fits-all answer to that. That really requires tax and legal advice to the person. But they definitely should look into it.
Additional Items Property Owners Should Know?
Ben Souchek: Okay. Very good. Well, Nate, we’ve gone over a lot of the information here and again, this isn’t a subject that we can take care of in 30 minutes, but thank you for all the information that you have provided for us. Any last minute items that we haven’t covered or questions that I haven’t asked that you think a person should know in a situation like this, of selling an asset, especially a house, to become eligible for Medicaid?
Nate Watson: I think your questions covered the situation in a general information way, very comprehensively. So I really don’t have anything I could add.
Ben Souchek: All right. Well, very good. I did something right today then, that’s good to know. So again, thank you, Nate Watson, for joining us today on our Zoom call. And if anyone has any additional questions or needs additional information, where would you direct them for something like this?
Where To Go For More Information On Medicaid Eligibility
Nate Watson: If an individual wants to learn more about the Medicaid program or the other programs that we provide within the Department of Health and Human Services, the best way to look up that information would be to go to our website. And it’s easier rather than me giving you the address. It’s frankly easier to pick your favorite search engine of choice and search for Nebraska Department of Health and Human Services or Nebraska DHHS. And it’ll come up as the first or second result. And you’ll find quite a bit of comprehensive information there, about all the various programs that we provide all across the state to folks in a variety of circumstances, both not only with Medicaid, but also with food assistance and others. Sometimes some temporary cash assistance or housing assistance or heating assistance in the winter and so forth. So I’d strongly encourage folks to do that.
If they’re thinking that they might be eligible for any service we provide, I would encourage them to go to our one-size-fits-all portal called ACCESSNebraska. You can either search for that online or I’d encourage you to look in the phone book for our 800 number. We have a toll-free number that you can call. And we have call centers all throughout the state with a couple of hundred people who make it a point to work with all of the people that we serve. And so I’d encourage you to speak with them.
Ben Souchek: Very good. Well again, thank you, Nate, for joining us and taking the time today to provide the information and education that I would hope that people watching this would find very informative. So thank you again. Have a great day.
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