Should I continue paying the mortgage if I am living in my grandmother's home while she is in a nursing home?

Igloo: I know that Gran pays her SS to the NH.

The person applying for Medicaid-primary home does not get counted as the person's Medicaid assets.

I agree about it getting complicated. On Medicaid, Granny is allowed to own under 2K in assets.

KingConger, this could get complicated.
And it depends on the laws in your State.
And depends on whether G'ma is no longer able to sign legal papers.
My Mom lived in CA, and owned her house outright, before she married her last spouse. Therefore, it was _only_ her asset, not his. So when Medicaid looked for assets to cover his care, later, there were none of his to attach.
Since Mom herself was living on extra-low income, they didn't attach her assets, because that would have forced her to become a dependent on the State--which she'd avoided most of her life.
Mom's MIL had simply signed her own house and assets over to the State, to cover her facility care, which meant the State never came looking for her sons to repay State...not that either of them could have...but they would have tried.
State will only be able to get whatever Equity exists on that property.
IF there is insufficient equity, they might leave it alone, and it would simply default to her surviving heirs..._IF it's still mortgage-heavy_.
OR they will place a lien on it, and just wait for it to be sold or defaulted on. Liens are ranked in who gets paid first--lenders holding the mortgage get paid 1st; others stand in line. Probably State ranks second to the mortgage holder.
Also to consider:
Some states have a law like one in WA, which allows disabled family members _who have been living in the home_, to remain in the home, hopefully preventing those from becoming a welfare recipient.......of course, the heirs would have to keep paying the mortgage and bills...but that might be a better deal than moving and paying rent, if this can be arranged--in which case, you would want to keep those payments current!
IF you figure there's enough equity to pay the facility [but you have no idea how much the final bills will be], you could help arrange that.
Selling the house, or signing it over, would mean you and Dad move to a different house or apartment.
IF you are strapped and trapped, there is a potential that you could stop payments, yet continue to live in the house for a time---how long, is a gamble. Friends who did this a few years ago, lived in the house they were in for over 3 years, without paying any mortgage. They kept up utilities and insurance, just stopped paying the mortgage...knowing that at any moment, authorities could have come to evict them.
Then they got VERY lucky, to finally [after ten years waiting], got their Section 8 HUD housing assistance...and moved into an apartment that allowed them to use that...totally saved their bacon. That old house is still not sold, and they are still trying to get the last bits of their stuff out of there.....but then, many old properties in dire need of serious repairs, kinda have sat on the market for a long time around our region. Total gamble, but for them, it really helped them survive some very harsh circumstances.
Please seek legal advice in your State, to make sure this is handled properly!
Elder and estate attorneys would be a good place to start.
Area Agency on Aging [or whatever that has changed into these days], usually has volunteer lawyers you can make 30-minute appointments with, for free...but those are all kinds...most of those volunteering, may have little knowledge or expertise in this specialty....but they can sure point you in a better direction, and might be able to give good answers to basic questions.
Write up your questions ahead of time, keep them simple as possible...then be prepared to keep the lawyer on track to get answer....they like to go off on tangents!
Elder/Estate attorneys should be well-versed in knowing what, if any, exemptions apply in your case, and how best to preserve the property if that is more beneficial than giving it up.

Llama - to me its not a ? on the NH being paid....if gran is on Medicaid she is required to pay her monthly income (like her SS) to the NH as her copay or SOC (share of cost) with state's Medicaid program paying the rest to the NH. It's more a ? of what happens with Grans house expenses while she is alive and then after she dies to reinburse Medicaid from any assets of Grans estate -which still has a mortgage! - via MERP.

KingConger - 2.5 years, that's not too too big of a period of time.
Although probability is gran will pass away before 2.5 years...I'm remembering reading that life expectancy once moved into a NH is 10 mo as they are ill & needing skilled nursing to be in the NH in the first place.

So have you added up all the costs? and can you & your dad easily & consistently all pay everything (taxes, mortgage, new insurance policies, etc)? Grannie will have zero -ziltch -no $$ to ever again pay on anything house.
Can you also save any $ as well? This is going to be quite important for a couple of reasons......some states allow the elders homestead to be an exempt asset for their lifetime BUT some states do not and require the home to be listed with a Realtor & MLS and placed on market within 6 mos or after the first year of NH residency as they are medically determined not returning home. If AL does this, you have to pay off the mortgage & buy the house at FMV from grannie if you & dad want to stay there. An elder law atty should know how all this works for Alabama, I'd get one who was NAELA certified as you have a lot of intricate issues. It's not a DIY project.

Do you have any idea of the tax assessor value on the house? You need to find the tax bill to see what amount of $ you are looking at for FMV & if it's accurate.

Your not likely to get any break either from mortgage co or Medicaid for staying & paying. Mortgage co doesn't care if a zombie pays the mortgage, only that it gets paid on time and house is properly insured. Some states Administrative code allow for regular & normal property related expenses (taxes, insurance, etc ) to be deducted from the Medicaid tally but this seems to only be allowed for vacant properties.

To me, family keeping a NH medicaid elders house is a lot like having a second home but without actual ownership so runs a risk. But if you have the purse or wallet to do this, are pretty OCD on tracking & documenting every penny and don't mind risk, then go for it! Most families seem to be all gung-ho at the beginning but run out of $, patience & humor with the house going up for sale within the first 6 mos. of NH admission unless they likely can qualify for an exemption or exclusion. Good luck.

I believe Medicaid will want the house, else how is the Nursing Home going to get paid?

The short answer is YES. Paying the mortgage on this home and having a verifiable paper trail is your insurance. You will be able to show other family members and Probate NO manipulation or stolen any asset has taken place.

Even if your Grandmother is on Medicaid you will be covered. However, If your Grandmother's property is being used to provide for her care, it is best to notify them of the circumstances. Looking at the entire picture if a Reverse Mortgage is in place you will need to contact the lender to notify of your Grandmother's move into a nursing home. Often with a Reverse Mortgage there is specific amount of time the home will remain hers. I have found most Reverse Mortgage holders allow only 30 days to provide access to begin to recoup their money.

The rule in 'how to handle property belonging to your Grandmother's is to dot your eyes and cross your tees. I believe having a lawyer involved is sometimes best and least expensive of all. Many states have legal aid available for just such situations. Know your rights and laws applicable in your personal circumstance.

My grandmother is 82. She refinanced the house several times. It will be paid off in 2.5 years

NJCinderella, if Grandma died ten years ago, this cannot possibly be a Medicaid lien, especially with tenants in there. Maybe some other kind of lien?
In 2006 property values were artificially high, possibly double what they are now. Compare nearby houses on Zillow or Trulia to get an idea.

my grandmother's house has a lien on it...she died in 2006. house market crashed, can't sell it. there are tenants in it renting but it's been price reduced. 50% reduction since 2006! crazy! at this rate won't be much left if anything for Medicaid. then what, do they come after my 85 yr old dad?

Susan - yeah property insurance for a NH resident or their estate property is totally sticky. I mentioned this in my earlier post on this thread. What insurers can do is really dependent on your states insurance laws.

I have a Vacant Dwelling Policy on my moms house. VDP are not cheap and mine done by an independent agent. The state farms, usaa's won't underwrite them I found. I got maybe 5 estimates and they varied wildly in cost and period. Some underwriters seem to require a verifiable (tax assessor value) of 100k or more. For VDP coverage is just fire. No theft. 100k for about 2k for a year coverage for my situation. If there are workers doing repairs or house is listed & being shown then I would have to add on a liability rider for this. Insurance agent had to take photos of property and I had to sign off on roof condition (lucky here as total replacement cpuole of years prior) as well and submit to the carrier, took about 3 weeks to place and I was lucky that the old homeowners was winding up so no "uninsured" gap otherwise there would have been an surcharge. I can't imagine how much more expensive and involved this would be if the property was rented!!

Low value property in marginal areas probably can't get underwritten I'd bet.

If you are still getting this done, please pay attention to how the policy reads by name. If there is a claim, the check will be written this way. So "Jane jones" or "estate of Jane smith jones" could be more of a butt-rash to deposit & deal with than one written as Mary Jones as DPOA / or executor for Jane Smith Jones.

Also if you are doing probate & the executor, paying property taxes & having insurance coverage is very very important. If there are heirs less than excited on you being named executor as per will, and they find out you haven't paid both, they can ask for a sanction or your removal as executrix & the judge could name an administrator. not good, not pretty....

This has nothing to do with the mortgage, but an important matter, nonetheless.

If your grandmother has homeowner's insurance on the house and is in the nursing home permanently, you can expect a letter from the insurance company as soon as they find out she's not living there. The homeowner is required to live in the insured dwelling in order to have coverage. If she is not living there and has moved into the nursing home permanently, they will most likely cancel her coverage.

The only solution offered by most insurance companies is a dwelling fire policy - or a "landlord" policy, where the homeowner is considered a landlord and the dwelling is considered a rental, so the relatives living there would be tenants and would have to obtain a renter's policy to protect their possessions that are in the house - because the dwelling fire policy will not cover it.

Just something else to be aware of. I'm dealing with this myself right now, and I know many people would be unaware that this would happen.

I located the MERP FAQs for handling liens in Alabama. The link is below. The state commits to delay recovery if there is a qualifying caregiving child living there, but does not drop the lien. I imagine if a property is very inexpensive or if there is a hardship exemption, then the state would not pursue recovery. The description of the hardship exemption, however, sounds like it would fit many caregivers to a T. A hardship exemption can be applied for if the resident family makes less than twice the federal poverty amount, or the residence is the site of a family business that is the primary source of income.

http://medicaid.alabama.gov/documents/6.0_Providers/6.1_Benefit_Coordination_3rd_Party/6.1.5_Payment_Review/6.1.5_Estate_Recovery_FAQs_4-29-16.pdf

Igloo and FF, I wondered the same thing, but then thought that perhaps King's grandmother is only in her 60s or so. I typically think of grandmothers as being at least in their 60's! I've met women as young as in their 50's who are already grandmothers.

It could also be that she has a HELOC in the paydown phase. Or maybe she had moved into a retirement community.

I was wondering also if the grandmother refinanced or remodeled when the OP and his/her father moved in.

Hopefully King will come back and enlighten us.

igloo572, I was thinking the same thing, why does Grandma still has a mortgage [depending on her age]. Wonder if she had refinanced to get some equity out and used up that equity.

JessieBelle has brought up a very VERY important point. As state laws vary for property rights, transfer of ownership, probate, claim V. lien, etc. so your state laws will make a difference. you will need to speak to & have eventually an Alabama atty.

Like for TX, it is a level of claim done by class for probate. MERP is a class 7 claim. Class 1-6 are dealt with before 7. A low value property with class 1-6 claims probably won't meet the cost-benefit standard for recovery to be done.
For MS, which as a very very poor state has huge #'s for Medicaid and other federal funded programs (SSDI), seems to have a threshold of 65k property value to attempt a MERP lien...I'd bet this has been done as property under 65k in value aren't going to likely be worth the time & legal costs to deal with.

King - once you determine if financially keeping Grans house from now till for possibly years can work & if this is a "yes"; the you really need to speak with a elder law atty. in AL to see just exactly how merps recovery is done legally. If it is lien that sits there till forever as JessieBelle read about, then think carefully if all this makes sense. If this is a relatively nice & newer house with good solid bones and all up to code, then staying there paying mortgage, etc. maybe makes sense. But if it's a old house that is totally a money pit, personally I'd walk and Fed Ex the keys to the mortgage co. on the behalf of grannie.

Also ask the atty. about if the state does a lien on it, even if you are allowed to have a life estate, if the lien will keep you from ever getting any equity lending on or use of property for collateral on the house from any bank. So no home improvement loans, no HELOC, no borrowing against property value. I would try to find out about this before you decide on staying & paying.

? for you, if you don't mind answering...? It's kinda unusual for those in their 80's or 90's (which i assume grannie is) to still have a mortgage. Is the mortgage right close to the end of its 20 or 30 year run? Or does grannie owe years & years or decades (horrors!) more on it? Is the house 200k, 300k in value?, or a modest maybe 100/150k value? or a low value under 75k house? Is house underwater?

Oh, Alabama. I have read that Alabama delays recovery if there is an exemption, but keeps the lien on the house if there is a spouse, sibling, or caregiver that qualifies for exemption. The person is given a life estate that ends when they die or move. I have not verified that this is true. I know we can't believe everything we read on the internet, and some things can be hard to interpret correctly. I would check with someone who knows for sure. I suspect it is true, since Alabama is not a friendly state when it comes to Medicaid matters.

If it is cheaper to pay the mortgage than pay rent somewhere else, I would do that and keep close records. But YOU must make the payment because ALL of grandma's check has to go to the nursing home. That means you pay the mortgage, taxes, utilities and insurance and upkeep.

King - I was assuming the Grans mortgage is a traditional mortgage. If its not and it's a Reverse Mortgage....well forget what I wrote. RMs require them to live in and occupy the property. So grannie moving to a NH means she is no longer compliant for RM agreement so the RM is called in. If so, you & dad face stark & limited choices....either find a way to pay completely the RM within 6 mos if it's a federally backed RM or move out ASAP. Spending a penny by family on a RM property is IMHO a total waste unless you can fully pay off the RM ASAP & want to. Often for elderly who die with a RM house, family just walk on dealing with it or probate as all costs to deal with probate or with the house, they can never get reinbursed for as executor as there are no assets just secured debt held by the RM.

King - keeping the elders home once they go into a NH and are on Medicaid can be done but it will mean family will have to assume all house costs from day 1 of NH till beyond death & probate / post death costs and runs a risk of not getting the home due to the required estate recovery - MERP - aspect of Medicaid. And it will get complicated.....As 1 who has done this and am amidst probate, I will say it is not for the faint of heart and you must have the $, time, patience and sense of humor to deal with a house that you do not have ownership on.

Gran has to pay the NH her monthly income to the NH under Medicaid rules. So if she keeps the home, all house costs - property tax, insurance, utlities, maintenance, etc - will need to be paid by family and paid until the house is sold or transferred to family (if you get through MERP). Your situation is that you all have a mortgage atop all this as well. It could be affordable or expensive. I'd suggest you ASAP do the math as to all house costs and see if it's affordable each month. If so, yeah, it's a lot like paying "rent"....if the mortgage, house costs etc are low, it could be less than rental in your area so a good thing even if later on - perhaps even years later - the property is sold to reinburse Medicaid.

Now I'd also suggest you look as to what exemptions & exclusions are available to heirs under MERP rules for ALabama. These should be on your states medicaid website. AL has outsourced MERP to HMS and HMS is very VERY very proactive in recovery & very detail oriented. For states that now are using outside contractors - like HMS & PCG - they get a % of recovery plus contract fees so are incentivized to get recovery done but have to do this within MERP rules. Now within MERP rules are all sorts of exemptions & exclusions & cost-benefit requirements, one is for caregivers so if you / dad have been providing care and did this full-time for probably at least 2years prior to Grans NH entry and can provide a letter documenting need from Grans MD or SW written by them on their letterhead with state registration & licensing info then you probably should qualify for caregiver exemption. But 1 sticky with this is when the caregiver exemption is done.....if it can't be done till after grannie dies well that could be years from now & getting the documentation could be difficult. I'd try to find out clearly & definetly from Medicaid as to how AL does the caregiver exemption and you /dad do whatever now to set it in place.

If you & dad each work full time, you can probably forget qualifing for caregiver exemption. If you or dad were in school or on disability, that too will probably disqualify you for caregiver exemption.

Another factor is who in grannies legal & valid will inherits the house. Each heir has to establish their own exemption or exclusion to MERP. So if dad is one of 3 heirs, but only dad has caregiver exemption, estate recovery - via a claim or lien - can be done on the other 2/3 of value of the home.

Also the value of grannies house will be very important as this is tied into what MERP expects recovery to pay out. If the tax assessor value of the home is whack, I'd suggest you get the house appraised to establish value asap. Often with elderly homeowners, since their taxes are fixed, they do not pay attention to increases in value over the years. If the area has lots of tear downs & new builds, the value could be way WAY way off if grannies is an old house with decades of delayed maintenance. It must be an valid appraisal done by a licensed appraiser with their seal on the document too. Realtor comps are nice but are not legal.

Also grannies homeowners insurance will not be valid anymore if it's viewed as she doesn't live there anymore so not homeowner occupied. Just what policy will be possible depends on insurance carriers in AL. If you or dad is the dpoa, then you have a required fiduciary duty as dpoa to safeguard the house. Also the mortgage agreement will require the property to be fully insured, so take care of insurance asap.

Keeping the house can be done but will require detailed documentation of all costs you must pay over however long grannie lives and then till probate is done & / or MERP releases it's claim or lien. As you live in the house, the empty property costs of maintenance exclusions to MERP - in some states - probably will not be allowed to offset the claim or lien. Also the mortgage holder doesn't care that you have been paying the mortgage, the credit history for prompt payment is only tied to grannie. If she should die before the mortgage is paid off, the whole balance will be due and mortgage payment still made during however long probate runs. Like I said...it gets complicated. Really before this goes on for week$$s, get new insurance estimates & look at ALL house costs & do the math on staying & paying or moving. Good luck dear!

Please have your dad keep records of any money paid for keeping, maintaining, and insuring the house. This money will be deducted from the lien amount if the state does do recovery on the house. I should ask you who was the primary caregiver for your grandmother and if they were there full time. If your father is the heir, but worked full time while other caregivers came in (or you did the care), I don't know how the state would handle it.

The federal government has an exemption for Medicaid recovery on a property if a family member has been a caregiver at least two years and that care allowed the parent to stay out of a nursing home. Like gladimhere said, you have to show documentation that your mother needed care during this time and that you were the full-time caregiver. States can differ in the way they handle this. You may be given the title to the house or you may get a life estate. Check to see how your state handles it. That will help you make a decision about what to do.

Have you seen an elder law attorney? You also need to talk with Medicaid. If you provided medically necessary care for a period of two years in some states Medicaid will allow you to remain in the home. The necessary care would need to be documented by her doctor. But, yes you will have to continue payments or the bank will foreclose.

I imagine that since the house is grandmas asset and Medicaid will want to recoup any possible payment, that yes, the lien will remain. I guess it's a question of how much equity they'll allow you to build until the sale occurs and/or is forced. I suspose you could look at it as rent in the mean time. But if you are making payments thinking they will allow you to keep the house - well, that's not going to happen- sorry!

Medicaid is paying. They are definitely putting a lien on the house. However, doesnt the lien only matter if we ever move/sell it? We have been caring for her in this home for several years, however they are still putting the lien on it.

Yes, you can continue to pay the mortgage even though the mortgage and deed is in your Grandmother's name.... but once the mortgage payments stop the the house will go into foreclosure and the bank will take back the property. I assume the mortgage payments also include the homeowner insurance premiums and the real estate property taxes.... if not, then you and/or your Dad would be responsible for those items.

Question, is your Grandmother self-pay at the nursing home, or is Medicaid helping with the payments? If Medicaid is paying, chances are Medicaid will place a lien on the house so that they can get paid later down the road. But if you and your Dad had been caring for his mother, thus keeping her out of a nursing home [depending on her condition] Medicaid might not do the lien.