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Elder Care Journey: Part 4 of 7

If you want to experience the journey from the beginning, you may read the first three parts of the story here: . Part three concluded last week with Bill feeling lonely and depressed because he missed the cheerful presence of his wife, Sue, in the home they had shared until an unexpected stroke caused her to become bedridden a year before, just as they were beginning to enjoy their retirement.

Bill asked the Keystone care coordinator and elder law attorney if there was a way he could invite his son, Joe, and Joe’s wife, Gail, to live with him without creating a problem with Sue’s ability to remain eligible for Medicaid funds to subsidize the $12,000 per month cost of the skilled nursing care Sue was receiving at the Regal facility.

Sue and Bill’s two children, Joe and Mary, were supportive and worked well together. Mary had a professional job in a distant state, owned a home, and was married with no children. Joe and Gail had Bill and Sue’s only grandchild, Mark, who lived at home with them in their apartment, and was enrolled in community college.

Just prior to the submission of the application to DHS for Medicaid funds to pay for Sue’s care at Regal, the Keystone attorney had helped Bill and Sue transfer ownership of the home into Bill’s name alone. The reason for this was that, if Bill were to die before Sue, the couple wanted the house or the value of it to be an inheritance for their children, Joe and Mary. If such a transfer had not been made, and Bill were to precede Sue in death, then Sue would have automatically assumed sole ownership.

If Sue would unnecessarily own the home while receiving Medicaid funds for nursing care, she would have no funds to pay for the usual monthly expenses that a homeowner incurs, such as taxes and utilities. While Sue would be permitted to retain ownership of the home, upon Sue’s death, the Commonwealth would impose a lien against the house to recover all costs paid for Sue’s care before her children could receive any inheritance.

Bill asked the Keystone lawyer if he could give Joe and Gail the house, or maybe add them to the deed, with the condition that they would allow Bill to live with them as long as he was able. The lawyer explained that, generally, gifts between parents and children would violate the Medicaid rules and could result in financial hardship for the family.

Therefore, an uncompensated transfer of even a fraction of the house would create an eligibility issue so that, if Bill would need nursing care within five years of giving Joe and Gail part of the house, Bill would be ineligible to receive Medicaid funds to pay for his care. Additionally, if Joe

were to have an unexpected problem such as divorce, bankruptcy, or serious illness, Bill’s ability to remain in the home would be compromised unnecessarily. Instead of giving the house to Joe, the lawyer explained the concept of a “life estate” arrangement, whereby Joe and Gail could buy “the remainder interest” of Bill’s home at a discounted price compared to the fair market value. They could even finance the cost of the remainder interest with Bill at a low interest rate over the life expectancy of Bill. Bill would remain in the home as a “life estate tenant.”

As long as Bill would live in the house for one year following Joe and Gail’s purchase by deed of a remainder interest in the house, then this life estate strategy would avoid the potential future problem of being disqualified from receiving Medicaid because of how ownership of the house had been changed.

The life estate deed also exempted the house from any future need for the probate process. The attorney drafted the note and mortgage with special language to enable Joe and Gail to purchase their remainder interest in the home without violating Medicaid or IRS regulations.

Before doing this, the lawyer met with Bill, Joe and Gail to speak openly about foreseeable conflicts and tensions that could occur from sharing the home. There was also discussion about how Keystone’s care coordinator could, in the future, prepare a care plan to allow Joe, Gail, and even their son, Mark, to be compensated on an hourly basis to provide care for Bill if he developed a need for help with his Activities of Daily Living (ADLs).

Fortunately, Bill was healthy enough that, for over two years, he did not require assistance with his ADLs at home. There were some tensions among the house co-tenants, but it worked out as reasonably expected. Then, one day Bill fell at home and needed hospitalization.

Bill’s fall occurred due to his increased frailty, and as a complication of his chronic illness. He was initially discharged from the hospital to a sub-acute rehabilitation hospital for therapy before transitioning to a Personal Care Home near the family residence. Shortly after Bill was admitted to the PCH, he required another hospitalization due to continued falls.

The care coordinator facilitated Bill’s transfer from the hospital to a Continuing Care Retirement Community which provides rehabilitation facilities, independent living, personal care, and skilled nursing. This community allowed Bill to have a full range of living options available to him, since the outcome of additional therapy was uncertain. It soon became clear that Bill required a skilled nursing environment.

Bill’s income was over $6,000 per month, but the cost of skilled care was $3,000 per month more than that. His children were concerned that the facility would either force their father out, or put a lien on Joe and Gail’s house when the remaining money ran out.

Next week, this elder care journey will explain how Keystone was able to obtain Medicaid eligibility for Bill, allow Joe and Gail to keep the home, and even get an “early inheritance” for Joe and his sister, Mary.