If I help pay my parent’s mortgage, does that impact their medicaid eligibility if they are already on Medicaid? What if they are applying?
Helping to pay your parent’s mortgage could impact their Medicaid eligibility if they are currently a Medicaid beneficiary, or if your parent is applying for Medicaid, it could cause them to be denied Medicaid benefits. On the other hand, paying your parent’s mortgage doesn’t necessarily have to be cause for your parent’s Medicaid benefits to be terminated or reason for them to be denied Medicaid approval. The simple answer is that it might all come down to how you help to pay your parent’s mortgage; whether you give your parent cash (or deposit the money in their bank account) OR pay the mortgage directly yourself. (We will go into more detail on this below).
In order to be eligible for long-term care Medicaid, a senior must have limited income and assets. As of 2020, the income limit is commonly $2,349 / month and the asset limit is $2,000. (Eligibility criteria does vary by state. To see income and asset limits for a specific state, click here.) In the case of helping a parent pay the mortgage, the income limit may be relevant.
This is because if money is deposited into your parent’s bank account (or given to your parent) each month to help pay the mortgage, the Medicaid agency may consider it to be unearned income, counting towards Medicaid’s income limit. Depending on the amount of income your parent already receives each month, the money to help pay the mortgage may push your parent’s income over Medicaid’s monthly income limit. This, in turn, can cause your parent to lose their Medicaid benefits or be denied eligibility for Medicaid.
However, paying part of your parent’s mortgage directly to the lender likely will not count towards Medicaid’s monthly income limit, which means Medicaid benefits will not be terminated nor will benefits be denied. While there should be no issue with this method of helping pay the mortgage, if you are considering doing so, it is best to consult with a professional Medicaid planner first. (Find one here). This is because Medicaid rules are not consistent across all of the states and some states may treat partial payment of mortgages differently than other states.
Another consideration when it comes to helping to pay your parent’s mortgage is Medicaid’s estate recovery program. Every state has an estate recovery program, and when a Medicaid recipient passes away, the state attempts to collect reimbursement for long-term care for which it paid. Generally, the house is the largest valued asset one has remaining and it is this asset that the state generally tries to collect against. Therefore, if your parent is not living in their home and you are considering paying part of their mortgage, it may not be worth it. Essentially, you could be putting money into something that Medicaid will benefit from when your parent passes away. Since all situations are different, it may be helpful to discuss your specific circumstances with a Medicaid professional.