Can we rent home while mom on medicaid?

by Larry
(Texas )

Question: We all live in Texas. Mom's house was set up as living estate in 2000. Deed to Brother and I. Mom is now on medicaid in nursing home. Can we rent the home while she is still alive or will the income from the rent be taken by a medicaid recovery?




Answer:

The correct term for the deed your mother signed is a "life estate." Such a deed transfers the property upon your mother's death to you and your brother, while your mother retains the lifetime ownership and use of the house. When she signed such a deed she made a gift to you and your brother of the "remainder interest," an amount that is a percentage of the value of the house on the date she signed the deed. Once the penalty period following such gift has passed (which is five years under current law), then it cannot count against your mother when she applies for Medicaid.

It sounds like your mother is already on Medicaid, so your next issue is "estate recovery," where the state attempts to recoup the full value of its Medicaid payments from the estate of your mother, after her death. Renting out the house generates income that must be paid to the nursing home, and this will reduce the amount of money that Medicaid will pay the nursing home. In fact, renting out the house actually will reduce the amount of money the state will seek to recoup following your mother's death.

However, if the only asset in her name is her life estate interest in the home, then the state will be out of luck, since in Texas such a claim may only be made against a person's "probate assets," which does not include a life estate interest.



You can find a great book with many other medicaid questions and answers at Medicaid Secrets.com.

Comments for Can we rent home while mom on medicaid?

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Apr 05, 2011
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medicaid, renting house, expenses
by: Anonymous

I have a question related to this. Does 100% of the rent from a house go pay the nursing home cost or is some money from the rent allowed to pay house expenses like insurance and realtor maintenance costs (the realtor would manage the rent house). The house is in Texas and is homesteaded - so I know Medicaid can not take the house while the owner is in the nursing home.

Say you get $1000 rent - the nursing home costs more than that - so does all $1000 of the rent go to the nursing home or does some of it go for house expenses?

Apr 08, 2011
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Net Rental Income to Medicaid
by: Gabriel Heiser


If a person leaves their residence to enter a nursing home and goes on Medicaid, the home will be exempt, in most cases. Most states will allow the home to be rented out but would then require the net income to be applied to the monthly nursing home bill before Medicaid picks up the difference.

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