Does mortgage affect medicaid eligibility?

Dennis, thanks for the update. OK so this is all theoretical, your 61 yr old parents are not at all currently “at need” for a facility, this is all about your doing things now to change documents on the property that you used your parents credit worthiness to be able to buy a decade ago. My suggestion remains the same, none of this is DIY, they need a CELA level of elder law attorney that has a Real Estate attorney affiliated with the practice.
Personally I feel at a minimum parents should be compensated in some way financially for you using their creditworthiness so you could buy that property; just what that would be I don’t know. Perhaps others on this forum have suggestions.

You mention “lookback is 2.5 years” well.. while that may seem to be accurate, please, pls keep in mind that rules like this are not hard and fast. All a work in progress. All related to Medicaid (federal aspect run by CMS) ultimately revert to federal law (a P.L) and then whatever amendments that flow from them over time. This is important because……federal law allows for up to a 10 yr lookback. States can do a 10 yr look back if they think something is hinky or there’s misappropriation or fraud.

States, like the IRS & other authorities, have discretionary ability to do less than the maximum if they show CMS it makes sense to do and without jeopardizing program. A 10 yr look back is cumbersome. States simply do not have the manpower. Most States did little to zero lookback or recovery till mid 1990’s; then scattershot what was done by States till 2005. Only until Bush era Deficit Reduction Act put into law in 2005 was a lookback and an attempt by estate recovery required to be placed into each States administrative code in order for each State to get their % of federal share of Medicaid $ did it happen. DRA 2005 is why it’s done now; no federal Medicaid share of $ otherwise. States have some leeway in the lookback: like if elder was in a facility (IL, AL) prior to entering a SNF then 3 yr look-back makes sense. So a States provides to the feds a rationale as to why 3 yrs this makes sense to do and feds sign off on it. Everybody happy!

Most States have a system as to what they look for to clear eligibility. For States that have caseworker assigned by zip code, they know the area and know if elder continuing to own their home has one in a higher value or adjacent zip code. Some have actual algorithm they enter data into & this is why if late in submitting info, your elder is toast on being approved. Some states that are tech savvy have internal database they X reference in a few keystrokes.

I’ll bet you a case of Prosecco that CA is such a state. CA can look at info on applicants & find out in detail info like property & tax record, etc. This was shown to CMS; they approved CA 2.5 instead of a full 5. But if CA finds something hinky, they can go full 10. By applying for LTC Medicaid for your parents it basically allows for an All Access Pass.
But this All Access Pass does not come with tour T shirts, hotel suites & seats on a net-jet. This all access means the State can access taxes, banking, property records and whatever other information regarding income and assets or other details that the State may deem an interest in. Could be your financial info as assets (& money likely as well) was commingled, which is big no-no for elders financials. You cannot DIY this. You have a decade of commingling. CELA attorney expertise ASAP.

You cannot on your own change the title. Mortgage Co. has to do a formal legal document, Release of Deed of Trust, that once recorded at the courthouse will allow for a clear title change. Release done once mortgage paid off. How many more years do you have on the mortgage?

Mortgage companies tend to be loathe to remove (strike) anyone from the paperwork. All 3 on loan cause all 3 credit history needed for loan securitization. To change mortgage now likely means a new mortgage. Review your mortgage; should be a paragraph as to what happens (as to reporting to them) when someone dies. Usually what this section reads is what this mortgage holder will expect of solo mortgage holder.

It’s kinda the same should you want to remove a person. Tend to read mortgage co will do: eval of debt ratio, so if at a certain % will be ok on rolling over mortgage to you solo (70% paid & remaining borrowers credit score is high), they’ll reissue & good luck on keeping a older lower rate; more likely will want a new mortgage, fresh to you application & hopefully you’ll be able to be at whatever is the lower rate.

Please whatever you do, pay mortgage on time AND make sure that all your insurance policies are paid up and exterior of the house looks nice and maintained. You do NOT want anything to be in question at all should anyone decide to take a deeper look at the property.

For Medicaid, if you were to try to remove your parents from mortgage without paying them FMV for the house, it looks like “gifting”. If tax assessor value is 525K and your folks own 2/3 that’s 350K. Even with 100K allowed still 250K over so a transfer penalty possible by Medicaid. Imho transfer penalty are not something to DIY especially if it involves property issues like this. This is real estate attorney & elder law attorney who know Medicaid rules work

To get around this, the attorneys would have to provide details in depth to Medicaid to show that zero of the money on the house was ever from your parents. If you submitted squishy banking documents to get the mortgage, that may not be something you would want to become known. Medicaid caseworker looking at the application if they see things that seem to be red flags on financial misappropriation have to send the application off to a higher level for more scrutiny as far as I’m aware in 2 states Medicaid programs. If CA has this requirement, I’d be cautious as this looks like financial improprieties done to an elder. If you are their POA that has the requirement of fiduciary duty which carries legal ramifications.
Really truly stop right now thinking you can DIY some of this….. start calling around to find a CELA elder law practice and ask if they have a Real Estate atty affiliated as home co-owned with your still on the younger side mid 60’s parents with an outstanding mortgage (tell them the # of years still on the mortgage and who holds it as the mortgage co will make a big time difference).

You cannot on your own change the title. The mortgage company has to do a formal legal document, a Release of Deed of Trust, that once recorded at the courthouse will allow for a clear, clean title change. Mortgage company isn’t doing a Release till that mortgage is paid off; then they send you the release. It’s a very important document. How many more years do you have on the mortgage?

Mortgage companies tend to be loathe to remove (strike) anyone from the paperwork. All 3 on the loan cause all 3 credit history needed for loan securitization. To change mortgage now likely means a new mortgage. Review your mortgage and there should be a paragraph as to what happens (as to reporting to them) when someone dies. Usually what this section reads is what this mortgage holder will expect of whomever left standing.

It’s kinda the same for should you want to remove a person. They tend to read that the mortgage co will do: usually an eval of debt ratio, so if it’s at a certain % they will be ok on rolling over the mortgage, like if 70% paid & the remaining borrowers credit score is high, mortgage Co is good, they’ll reissue & good luck on keeping a older lower rate; but more likely is they will want a new mortgage done, fresh just to you mortgage application through & hopefully you’ll be able to be at whatever is the lower rate.

Please whatever you do, right now, pay mortgage on time AND make sure that all your insurance policies are also paid up and the exterior of the house looks nice and maintained p. You do NOT want anything to be in question at all should anyone decide to take a deeper look at the property.

For Medicaid, if you were to try to remove your parents from the mortgage without your paying them FMV for the house, it looks like “gifting” from them. If the house tax assessor value is 525K and your folks own 2/3 that’s 350K. Even with 100K allowed still 250K over so a transfer penalty possible by Medicaid. Imho transfer penalty are not something to DIY especially if it involves property issues like this. This is real estate attorney & elder law attorney who know Medicaid rules work

To get around this, the attorneys would have to provide details in depth to Medicaid to show that zero of the money on the house was ever from your parents. If you submitted squishy banking documents to get the mortgage, that may not be something you would want to become known. The Medicaid caseworker looking at the application if they see things that seem to be red flags on financial misappropriation have to send the application off to a higher level for more scrutiny as far as I’m aware in 2 states Medicaid programs. If CA has this requirement, I’d be cautious as this looks like financial improprieties done to an elder. If you are their POA that has the requirement of fiduciary duty which carries legal ramifications.
Really truly stop right now thinking you can DIY some of this….. start calling around to find a CELA elder law practice and ask if they have a Real Estate atty affiliated as you home co-owned with your still on the younger side mid 60’s parents with an outstanding mortgage (tell them the # of years still on the mortgage and who holds it as the mortgage co will make a big time difference).

Find an elder law practice that has an affiliated real estate attorney. ASAP. Like next week. You & your parents will need both to get this mess unthreaded. Do not try to DIY this.

Imho the whole situation past as to “what we meant by” does not matter. Medicaid DNGAF. Your folks legally are owners either 50% or 66% on all the paperwork so legally are their % owners and responsible. That you have been paying 100% is terrific but the mortgage holder doesn’t care who pays the note only that it gets paid. If you got hit by a bus mañana, mortgage co fully expects your folks to pay the mortgage or they will foreclose.
Medicaid does not care at all about an applicants debt’s; the house as it is right now is an asset of theirs at either 50% for 2/3 %. Medicaid is all about their ASSETS and INCOME as those 2 items are central for their eligibility & copays. This holds true for all States Medicaid programs. Just how each state administers its Medicaid program is unique to each state under overall federal guidelines.

State of CA just underwent a huge sea change as to their whole approach to their LTC (aka long term custodial care Medicaid program like in a nursing home) and it’s eligibility. So you & your folks need to get with a law firm that is CELA level and up with current CA regs. They need a real estate atty as that house poses it’s own issues as the asset limits seem to now have increase for CA to 100K but seem to be now “all in” for assets & you have muddled / commingled ownership. & I bet you have commingled costs on the property besides the mortgage payments as well. It’s a mess.

The change to $100K in assets seems fabulous, right! Well, maybe not so if, IF, I’m right on interpreting this, IF it means the value of the house counts towards the asset tally. If I’m right, this is a huge difference to having a home as an asset. No longer will a home be able to continue to exist as an exempt asset for their lifetime and remain out there existing in a limbo like state for possibly years while the elder is in a NH on LTC Medicaid and beyond their death. Why? Well, because MOST HOMES VALUES WILL BE OVER THE LIMIT.

So IF I’m right on this, this makes great sense from planning perspective to do. It forces elder to sell home & a spend down BUT get to keep 100K from home sale. So as CA real estate is high $$$$, a win-win. Everybody happy! For State, especially good as no longer does State have to go through after death MERP attempt to do a recoup process against the estate on a property that likely had decades of delayed maintenance, deal with heirs or family who have zero incentive or requirement to bother with the place, or even answer MERP letters; deal with county tax collectors who place their own liens on the property due to unpaid taxes & sell it off, issue titles & basically circumvent the State.

To me, what the new “CA Medicaid 100K asset” means is what y’all need to know & asap from your new CELA attorney group. And then they advise how % ownership shakes out from that and what can legitimately be done now on the house that will be ok for their future Medicaid application. Attorneys will suggest some split of costs on property document. Really that’s why you are hiring them.

Also assume this firm will be doing your folks Medicaid applications. Really you need someone to shepherd their application. You will have way way too much commingling movement past years to ever DIY their application on your own.

You need the advice of an attorney here, not a Forum, because this could become dangerously muddy for your Mother. If she now switches the title to you she will have GIFTED a house to you, or a portion of a home. She cannot do that and get medicaid. Medicaid will look on this home as an asset of hers. While she may have done a title quit claim 5 years ago she cannot do it now and pass lookback.
Igloo, on our site is best for these questions and she may be around and able to answer your question better than me for sure, or better than others.
The crucial thing here is that you CANNOT now make a mistake as it can't be undone and will follow your Mom, perhaps prevent her from getting medicaid. If she gets medicaid while being on partial title to this home, then when she passes and medicaid does claw back to get the funds expended, they (medicaid) may be entitled on sale of the home or transfer of the home's deed from Mom to you. They will want their money back from this asset.
There may be a way for Mom, but you need a good ELDER LAW attorney for this. We are just ordinary people on the forum and you can't afford to be guided wrong.
I wish you the best.

Your parents can’t ‘mortgage’ the house if they are not co-owners on the title. The chances are that they signed as guarantors, not as mortgagors. Get a copy of the document to double check. Giving a guarantee isn’t an asset and shouldn’t affect Medicaid, but check.