Additional Benefits for a Single Individual Owning Home Jointly with a Protected Transferee

Additional Benefits for a Single Individual Owning Home
Jointly with a Protected Transferee

Medicaid planning must consider three interrelated goals: to establish Medicaid eligibility, to avoid disqualification after eligibility and to avoid the Medicaid lien after the death of a recipient of benefits. The discussion in Post 6 relating to a child who “resided” in the home for at least two years prior to institutionalization and provided care which permitted the individual to reside at home rather than go in a nursing home addresses mainly the issue of Medicaid eligibility. The prior post involved related to the transfer of the home to a “protected transferee” and that addressed mainly the issue of Medicaid eligibility. However, the planning issues involved when there is joint ownership by the parent and the child relate to the disqualification of Medicaid after eligibility and avoiding the Medicaid lien. For purposes of this discussion, joint ownership shall refer to a joint tenancy with right of survivorship (i.e., property passes to the survivor upon the death of the first of parent or child).

A. Assuming the requirements of eligibility are met, joint ownership of applicant’s residence with a child who is a protected transferee (or even a child who is not a protected transferee) will not preclude eligibility. N.J.A.C. 10:71-4.4(b)6. treats real property which cannot be sold because of the refusal of a co-owner to liquidate as an inaccessible resource.

B. However, disqualification from eligibility and the Medicaid lien are avoided by a transfer of applicant’s joint interest to a “protected transferee” child.

1. The Medicaid lien is avoided by terminating ownership, and, thereby removing the property from a Medicaid recipient’s “estate.” That is, assets that are part of one’s estate after the individual dies and receives Medicaid are subject to the Medicaid lien. It is noted that the lien statute expressly applies to joint tenancies.

2. Assuming the child disinherits the transferor parent, the problem of inadvertent disqualification is eliminated (joint ownership, child dies first and property passes to parent by operation of law).

3. If both individuals are alive and joint ownership were not terminated and the parent had qualified for Medicaid, a sale of the property would result in one-half the net proceeds being allocated to the parent with subsequent loss of eligibility.

Note: Another category of protected transferee is a (i) sibling who has an equity interest in the home; and (ii) who was residing in the home for at least one year prior to the date of institutionalization. The situation usually arises when sibling is joint owner of a two-family dwelling. The need to avoid the Medicaid lien is not as compelling in this situation as in the circumstances of joint ownership with a child.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.


© April 2009, Post #23