Medicare/Medicaid Transition

[dm0329]

Back story: I will be transitioning into Medicare (SLMB with Extra Help for Part D) July 2011. My brother and I will be selling our deceased parents home (that I have been living in the past two years as my primary residence).

Is there a way I cannot be penalized for acquiring 50% in assets from the sale of the house? Could we (brother and I) sell it since we own it 50/50 and he get 100% of the proceeds with a legal contract to pay my "rental payments" over time? Say, instead of $40,000 I get $600 rent payments for five (5) years?

Does anyone have any insight on this issue? I don't want to loose the ability for me to maintain my Extra Help assistance for my Avonex through Medicare Part D? I will be "loosing my residence" but I don't want to loose my medical assistance. Help!

I greatly appreciate help from my fellow MSers!

[Mamabug]

If there is someone that you work with at your local social services office, to obtain services, in our state, they are usually well-versed in how all of that works. I don't know the answer to your question, but, would suggest them as a possible source of information.

I found this website, but, dm, it probably doesn't answer the specific question you have regarding assets from the sale of the house, and being able to keep your "Extra Help". (It's not a link; you have to copy/paste it into your browser.)
http://www.ssa.gov/prescriptionhelp/

Regarding Sparky's comment, I suspect that, yes, it would not be considered "earned income". However, according to the website, in order to "qualify for the Extra Help, a person must be on Medicare, [and] have limited income and resources". It would be considered a resource, unless, as suggested, some kind of legal agreement worked out with the brother would allow it not to be counted as a resource.

~ Faith

[Scooter24]

An agrrement like that could be considered "asset hiding"which some agencies frown upon.

[David]

Disability Trust

I looked into an agreement known as a disability trust. It's a contract that others can leave you money in a will or maybe even gift you. This was many months ago I looked into it so I might not have it all right. It sounds like you can be helped by one so it might be worth taking to a financial planner or attorney in seeing one getting set up for you.

[Redwings]

Is there a way I cannot be penalized for acquiring 50% in assets from the sale of the house? Could we (brother and I) sell it since we own it 50/50 and he get 100% of the proceeds with a legal contract to pay my "rental payments" over time? Say, instead of $40,000 I get $600 rent payments for five (5) years?

Hi dm0329:
This is an area where you need financial/legal advice from someone who understands Medicare/Medicaid rules about assets and resources. On paper, all of what you're referring to has about the same value. The key to your situation is in how the programs treat the differences between cash and other assets.

When your house is sold, you won't be gaining an asset. You already have that asset in the value of real estate. You gained the asset when you inherited your half of the house. When you sell the house, the value becomes a cash asset. If you make a contract with your brother about using the cash proceeds in distributions rather than a lump sum, that becomes a different kind of asset. $40K is still $40K. The value doesn't go away unless you give it away or it's somehow lost.

The operant questions here are whether you told Medicaid about your half-ownership of the house when you applied or at the time of inheritance, and whether/how the real estate value was figured into your resources when your aid package was calculated.

What you need to find out from a reliable source is how the Medicare/Medicaid rules consider the value of an asset when it changes from real estate to cash or contract. And you'll also need to find out about penalties in the programs. From the way you've described the situation, if there's a penalty involved, it won't come from owning an asset and not getting a benefit you were hoping for but aren't entitled to, but instead from not declaring, or trying to divert, an asset or resource.

[akafearless]

assets

It is my understanding Medicare and Medicaid allow you to have a home (real estate). However, Medicaid on most states does not allow any more than $2,000 in cash, etc.

Your brother might be able to set up a SNT (supplemental needs trust). Get a lawyer well versed in them. That would then protect any assistance you receive.
-s