How to Protect a Home from Medi-Cal Recovery Laws

[Joanne Teping]

My question involves estate proceedings in the state of: Calif
Hi, we had some questions regarding our situation and the new Medi-Cal Recovery Laws going into effect Jan. 2017. My brother (55 years old) and I (57 years old) own our home.... tenacy in common....Joe has 80% I have 20%. The home is owned free and clear. Neither one of us has children. Joe is on SSI and Medi-cal due to cirrhosis of the liver. One of his new prescriptions Vitamin K costs $2200 a month! Incredible...we were shocked!
I am on Medi-cal as of last year….so far I have only used my Medi-cal for a few visits to the dentist.

1. As I understand it, if a sibling has been a caregiver and lives in the same house as the Medi-cal recipient for 2 years, the home isn’t subject to Medi-cal recovery. I also read online that only long term care (nursing homes) were subject to recovery under the new law.

2. Currently the home is Joe 80% and myself 20%...we would like to change that to 50/50.

3. We were thinking of taking a Home Equity line of credit out on the house. Joe has very good credit. I do not. I have an unpaid student loan of $2000 from 25 years ago. We would pay this off with the HELOC and help pay our monthly bills.

We are low income. Joe gets his SSI. I have been Joe’s caregiver through IHSS. We also have an ebay store which provides a small income.
We were wondering how this would effect Joe's SSI and Medi-cal?
Would it be a good idea to get a HELOC on the house? Neither of us has children to leave the house to. We might as well use some of the equity in the home to live more comfortably.

[Mr. Knowitall]

The new law, SB 833, limits recovery by Medi-Cal to the minimum recovery required by federal law, which is to say it provides more protection to Medi-Cal recipients, not less.

If a Medi-Cal recipient transfers part of his interest in a home to somebody else, that could create potential issues with the exercise of present exemptions, as well as possible claw-back issues if the recipient dies within five years of the transfer.

I suggest that you both meet with a estate planning lawyer who offers disability planning services to discuss your options, including whether it would be sensible to obtain a reverse mortgage. Even with equity in the home, with the sole income coming to the applicant being SSI, I don't expect that lenders will be eager to extend credit.

[kit cat]

Is the student loan government or private?

If it is government, try signing up for income based repayment. At your income level you may owe $0 per month.

If it is private, it expired approximately 20 years ago. However, if you have been paying it you may be keeping it alive. Look into whether you even owe this money anymore because they will keep calling you forever on dead debt.

Yes, good point above. He should not be giving you part of the house if he is on medicaid. that can be trouble.

the ebay business will cause his SSI check to go down if he makes more than $65/month.

on a related note, you can file IRS difficulty-of-care income tax exclusion and you won't have to pay any taxes on your IHSS income

https://www.taxact.com/support/1199/...care-payments/

Your brother is already in long term care medicaid, but I think that is correct that you will be able to keep the home if he passes away first and you are living there.

I know nothing about home mortgages, so I haven't answered your actual question. However, I think debt attached to your home is one of the worst kind of debt for a poor person to have because you have a lot to lose. Other kinds of debt (credit cards, student loans, medical debt) they can't really do anything to you if you are poor enough. But home debt they can foreclose on your home! So perhaps proceed with care...