Thursday, May 05, 2011
A big change that will affect many current and future Medicaid applicant is rule regarding joint ownership of real property. It is effective April 1, 2011.
Jointly held real estate cannot be sold without the consent of both joint owners. As such, jointly held real estate, in the eyes of Medicaid, has been "exempt", or more specifically, "unsalable" without any questions asked. The new law requires states that a joint owner can only refuse to sell under a "hardship" exception. What constitutes a hardship? The rule states:
“For jointly owned real property count the individual’s share unless sale of the property would cause undue hardship. Undue hardship for this item is defined as: a co-owner uses the property as his or her principal place of residence and they would have to move if the property were sold and there is no other readily available housing.”
I have a current client who has been in a nursing home and on Medicaid for years. Until now, the vacation home jointly-owned by my client and her child has been deemed "exempt" as "unsalable" (per normal, the joint owner / child refuses to sell).
Under the new regulations, the joint owner / child arguably cannot refuse to sell unless the "hardship" criteria is met, I.e. the joint property is the child's principal place of residence and no other readily available housing."
For this client, medicaid may stop until the jointly held property is sold, either to a third party or by the son "buying-out" the client's 1/2 share. In either event, the client will need to utilize the 1/2 value of the jointly held real estate on the nursing home before Medicaid will resume payments.
I'm am sure this law with be challenged in the next few months, so stay tuned to see the how the Michigan courts rule on this very important issue. If you've got questions about the new changes, be sure to contact me and I'll be happy to help.